Spain Approves $13.1bn To Attract Chip Sector Investment

The Spanish government has officially approved a plan to spend 12.25 billion euros ($13.12 billion or £10.4bn) on the semiconductor industry by 2027.

The plan was first mooted by Spain’s Prime Minister Pedro Sanchez at a press conference last month, but he proposed a figure of 11 billion euros.

Essentially, Spain is to finance the investment via the European Union’s Coronavirus pandemic relief fund, which was made available to EU countries to provide aid in the recovery from the impact of Covid-19.

Spanish funding

Spain’s decision to try and encourage chip firms into the country, comes amid a global shortage of computer chips during the Coronavirus pandemic.

That shortage was caused by strong demand for chips during the pandemic, but supply chain bottlenecks, coupled with a severe drought in Taiwan (where most processors are made), triggered widespread shortages and big price increases.

The global car industry was badly impacted, and this shortage also directly impacted jobs in Spain.

In April 2021 Renault extended the furlough for 9,000 Spanish staff, and negotiated with trade unions to extend the partial idling of three of its four factories in Spain until the end of September 2021.

Now Spain is seeking to attract chip makers and designers to its country.

Reuters reported that Spain’s Economy Minister Nadia Calvino on Tuesday said the 12.25 billion euros ($13.12 billion) plan, includes 9.3 billion euros to fund the building of plants.

“The aim is to comprehensively develop the design and production capacities of the Spanish microelectronics and semi-conductor industry, covering the entire value chain from design to chip manufacturing,” Economy Minister Calvino was quoted as saying during a news conference after the weekly cabinet meeting.

The plan will finance domestic semiconductor production capacity in leading-edge (below 5 nanometers) and mid-range (above 5 nanometers) semiconductor manufacturing with a 9.3 billion euro investment, the Spanish government reportedly said.

Chip design

The investment fund however will also be used to fund research and development via a 1.1 billion euro subsidy and 1.3 billion euros will be allocated to chip design.

It will also support Spanish companies in strategic projects developed at the European level and will create a 200 million Chip Fund to finance start-ups and scale-ups in the Spanish semiconductor sector, Reuters reported.

Lack of support, commitment, vision or even a coherent strategy were some of the reasons why the chip industry has no presence in Spain so far, Calvino was quoted as saying by Reuters.

“We want Spain to play a relevant role in this technological field, the role it deserves, and the European funds offer an extraordinary opportunity,” she said.

State aid

Spain is not the only country seeking to attract more chip facilities to its shores.

To solve the global chip crisis, the European Commission in February this year unveiled a multi-billion euro ‘Chips Act’ in to bolster the continent’s competitiveness in the sector.

The EC plan had first been announced by Ursula von der Leyen last year, and in March 2021 the European Union under its 2030 Digital Compass plan revealed the bloc wanted to produce at least 20 percent of the world’s cutting-edge semiconductors by the end of the decade.

Intel for its part was willing to engage with the Europeans.

In September last year CEO Pat Gelsinger said Intel could potentially invest as much as 80 billion euros ($95bn or £69bn) to expand chip production in Europe, but only if state subsidiaries were available.

Gelsinger also recently explained how semiconductor fabrication plants (fabs) are nowadays strategically important assets.

Germany has been the first to benefit. In March Intel confirmed that it would invest 33 billion euros in the EU, including 17bn euros for a ‘semiconductor fab mega-site in Magdeburg, Germany’.

In addition, Intel and Italy have entered into negotiations to enable a state-of-the-art back-end manufacturing facility.

This would be in addition to the foundry innovation and growth opportunities Intel expects to pursue in Italy based on its planned acquisition of Tower Semiconductor.

Intel said it will also create a new R&D and design hub in France.

In addition to all this, Intel at the time said it would invest in R&D, manufacturing and foundry services in Ireland, Italy, Poland and Spain.