The Spanish government wants to invest over $12.3B in developing a local semiconductor industry. As a result, a major complication arose; chip manufacturers are onboard to withstand any challenges.

Funded by the European Union, the finances were allotted to balance the economic consequences of the pandemic. Spain’s plan to accelerate chip production is being delayed by the firm competition in other EU countries to attract prominent investors.

According to anonymous sources, a major challenge for Spain’s government is encouraging companies to create lasting funds to generate millions.

Spain’s government’s efforts align with the EU’s goal of becoming the 5th biggest microchip industry by 2030. Moreover, ‘The Chip’s Act’ aims to allow participants to fund EU-based chipmakers.

Many manufacturers showed deep interest in the government’s initiatives when it was announced. However, according to a statement made by prime minister Pedro Sanchez, said manufacturers need some time to consider where they should invest. “We are fully confident that these conversations will soon bear fruit in relevant announcements”, he said.

The EU government seeks investment

The United States and European Union have accelerated their chip production after facing countless complications during the Coronavirus pandemic. The goal is to minimize dependability on chip supply from countries like South Korea and Taiwan.

Last week, the US Chips Act was passed in Congress (both houses). This agreement also includes incentives and grants for local manufacturing of semiconductors worth $52 billion.

The future of the EU chip Industry

So far, Spain has made efforts to attract TSMC. However, the company wants to capitalize on the German market, as a huge chip ecosystem resides in Saxony’s Eastern state. TSMC has been in talks with Germany’s government to build a factory for almost a year.

In March, Intel announced setting aside €17 billion to build an outclass production plant in Magdeburg, East Germany. STMicroelectronics and Global Foundries have unveiled their project worth €5.7 billion to build energy-efficient microchips and semiconductors in France. On the other hand, Samsung Electronics budged an idea of European expansion a year ago, which hasn’t happened yet.

A trained and proficient economist, Spain’s Sanchez views the government’s chip project as an effective way to improve the country’s semiconductor industry, which has diminished since the century’s turn due to fierce competition from all around.

Most of the funds will be allocated for research projects through the EU’s microelectronics IPCEI or other projects of European interest. This funding allows the governments to distribute funds to minor research-based projects.

Spain will probably receive European Union’s funds to invest in a pilot production line starting IImec, a research center based in Belgium.