Spain to Spend EUR 12.25 Billion on Semiconductors, Microchips by 2027 to Boost Digital Economy

Spain's government has approved a plan to spend EUR 12.25 billion (roughly Rs. 1,01,600 crore) on the semiconductor and microchip industry by 2027, Economy Minister Nadia Calvino said on Tuesday, including EUR 9.3 billion (roughly Rs. 77,100 crore) to fund the building of plants.

The programme that consists mostly of European Union pandemic relief funds is directed towards the digital economy and demand created by chip shortages. It was originally set at EUR 11 billion (roughly Rs. 91,200 crore) when announced by Prime Minister Pedro Sanchez last month.

"The aim is to comprehensively develop the design and production capacities of the Spanish microelectronics and semiconductor industry, covering the entire value chain from design to chip manufacturing," Economy Minister Calvino said during a news conference after the weekly cabinet meeting.

An unexpected surge in demand amid the pandemic and supply chain problems had created a worldwide shortage of microchips and forced a wide array of global manufacturers to slow down output last year, including in Spain where car makers Volkswagen and Renault partly idled assembly lines.

The plan will finance domestic semiconductor production capacity in leading-edge (below 5nm) and mid-range (above 5nm) semiconductor manufacturing with a EUR 9.3 billion (roughly Rs. 77,100 crore) investment, the government said.

It will fund research and development with a EUR 1.1 billion (roughly Rs. 9,100 crore) subsidy and EUR 1.3 billion (roughly Rs. 10,800 crore) will be allocated to chip design. It will also support Spanish companies in strategic projects developed at the European level and will create a EUR 200 (roughly Rs. 1,700 crore) million Chip Fund to finance start-ups and scale-ups in the Spanish semiconductor sector.

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 added.

"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.

© Thomson Reuters 2022