Substantial aid for a major strategic project: the Minister of the Economy, Bruno Le Maire, announced on Monday June 5 that 2.9 billion euros would be granted by the State to the new semiconductor factory of STMicroelectronics and GlobalFoundries in Crolles, near Grenoble, a project worth almost 7.5 billion euros.
This state aid is one of the most important for a factory since 2017, said Bercy. It will be financed by the France 2030 plan, which provides for a total of 5.5 billion euros for the semiconductor sector. The project, unveiled in July 2022, had been presented by Mr. Le Maire as “the largest industrial investment in recent decades, non-nuclear”, for the country.
On Monday, the Minister signed with the leaders of the Franco-Italian group STMicroelectronics, Jean-Marc Chéry, and the American GlobalFoundries, Thomas Caulfield, the contracts relating to this state aid, authorized at the end of April by the European Commission. Semiconductor production plants require colossal investments, in particular because of the fine etching of the components, which requires the implementation of extremely sophisticated manufacturing processes.
This future factory, which should lead to the creation of 1,000 jobs, is part of the “Chips Act”, the European Union’s program for it to reach 20% of the global semiconductor market by 2030, which means quadrupling current European production.
Mobilizing 43 billion in Europe
The plan, which was agreed between EU member states and the European Parliament on April 18, relaxes the rules on public subsidies to the sector. The European “Chips Act” thus plans to mobilize a total of 43 billion euros in public and private investment in the production of semiconductors. The EU’s objective is to regain a place alongside Asia and America in the world production of semiconductors.
“The project will add almost 6% of new production capacity to the existing European capacity,” said the Ministry of Economy. “The objective (is) to increase French production capacity by 620,000 semiconductor wafers per year by 2028,” he added.
Europe has seen its market share fall in recent decades to less than 10% of global production, while its dependence on the Asian producers who dominate the market has increased: Taiwan (where 90% of the most advanced chips in the world), South Korea, and increasingly China.
Significant shortages
However, the Covid-19, by paralyzing supply chains in Asia, has led to major shortages of chips to the point of putting the European automotive industry in difficulty, a shock for the continent.
The pandemic and geopolitical tensions around China have raised awareness of the need to produce these essential components in Europe and have convinced Brussels to adopt an interventionist industrial policy in a continent traditionally very open to global competition.
“Upon State request”, STMicroelectronics and GlobalFoundries “undertake to prioritize orders,” up to 5% of annual production capacity, to serve sovereign, national security, or VSE-specific needs and SMEs, according to Bercy. The semiconductors produced in Crolles will notably supply the automotive market, but also those of the “Internet of Things” or industrial machines.
