Prime Minister Pedro Sanchez announced on Monday that Spain will spend 11 billion euros on a strategy to develop the semiconductor and microchip industries.

He said the revised expenditure plan, which is primarily funded through European Union pandemic relief money, will be approved 'soon'.

Due to an unexpected surge in demand following the pandemic and supply chain bottlenecks, manufacturers such as automobile manufacturers have been compelled to reduce output.

In an effort to lessen its dependence on US and Asian supplies, the European Commission had announced it will ease funding rules for innovative semiconductor plants on February 8th. 

The regulation's aim is said to prevent unlawful and unjust subsidies given to corporations by EU members for innovative chip manufacturing.

In a statement, Commission President Ursula von der Leyen divulged that the European Chips Act will "enable 15 billion euros ($17 billion) in additional public and private investment by 2030."

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In reference to ongoing projects within the EU, von der Leyen added "This will come on top of 30 billion euros of public investments already planned from NextGenerationEU, Horizon Europe, and national budgets. And these funds are set to be matched by further long-term private investments."

 "We are, therefore, adapting our state aid rules, under strict conditions. This will allow - for the first time – public support for European 'first-of-a-kind' production facilities, which benefit all of Europe."

Intel invests in EU, fuels chips race with Asia

In another context, US chip giant Intel said on March 15 that it had plans to invest tens of billions of euros in the European Union as the bloc's member states want to reduce their reliance on Asia for semiconductors amid an international shortage.

According to the firm, the project would boost the entire production process, intensifying research of new technologies and upping the manufacturing and packaging of semiconductors. Intel also revealed that it could be a costly $87.9 billion over the next decade.

Intel's prospects for investment include many EU member states, from Spain to Poland, and its CEO claimed that the plans were to address "the global need for a more balanced and resilient supply chain."

Semiconductors were "more critical than ever" and were the "brains powering essential digital technologies", Intel CEO Pat Gelsinger told a press conference.

Intel's plans include building a "landmark mega site" in Germany, which would cost some 17-billion-euros, and it is set to begin building it in the first half of the next year, while production is scheduled for 2027.

As part of its package, the American group will also expand its lab capacity in Poland and develop joint centers with the Barcelona Supercomputing Center in Spain.