France to allocate $3.1bln of state aid to microchips factory
The state aid will go toward a 7.5-billion-euro project declared last year and to be managed by European multinational STMicroelectronics and US company GlobalFoundries.
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A new type of 300-millimeter wafer with semiconductor chips and finished microchips from the German manufacturer Bosch (AFP)
French officials announced on Monday that they are investing 2.9 billion euros ($3.1 billion) of public money into a microchip factory, in an attempt to compete in a lucrative market.
Both the US and Europe have passed so-called Chips Acts as fears swell over China gaining leverage in the tech market. Chips, or semiconductors, are intrinsic to every electronic device, ranging from smartphones to electric cars.
France's economy ministry called the state aid investment the biggest subsidy the ministry has offered since 2017. The state aid will go toward a 7.5-billion-euro project that was declared last year and is to be managed by European multinational STMicroelectronics and US company GlobalFoundries.
According to the French Ministry, the project, which lies in the town of Crolles near Grenoble in southeastern France, is bound to boost European production capacity by nearly 6% by 2028.
The European Chips Act already is targeting 43 billion euros of investment and aims for the EU to produce 20% of the world's chips by 2030.
Following the disruption of global supply chains during the Covid pandemic, which led to dramatic shortages of various products, especially semiconductors, the EU moved toward boosting local manufacturing of the critical tech component.
Read more: Scholz, Macron want "Buy European Act" to counter US trade hegemony
'100% protectionism'
The US Chips Act is one of several acts with the objective to direct hundreds of billions of dollars to US companies at the expense of foreign competitors.
In August last year, President Joe Biden signed a multibillion-dollar bill into law to boost domestic semiconductor and other high-tech manufacturing sectors that US leaders fear will be dominated by China.
The Chips and Science Act includes approximately $52 billion in funding to promote the production of microchips, the tiny but powerful and relatively difficult-to-manufacture components at the heart of almost every modern piece of machinery.
China has previously denied seeking to seize global supply lines and condemned the US Chips Act as "100-percent protectionism".
On May 22, Chinese Foreign Ministry Spokesperson Mao Ning announced that Chinese authorities have reportedly banned critical infrastructure operators from buying chips manufactured by US tech giant: Micron. After the necessary investigations, it was inferred that banning Micron chips is necessary to ensure national cybersecurity.
