Spain to spend 12.25 billion euros on microchip industry


FILE PHOTO: Semiconductor chips are seen on a circuit board of a computer in this illustration picture taken February 25, 2022. REUTERS/Florence Lo/Illustration

MADRID (Reuters) - Spain's government has approved a plan to spend 12.25 billion euros ($13.12 billion) on the semiconductor and micro chip industry by 2027, Economy Minister Nadia Calvino said on Tuesday, including 9.3 billion euros 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 11 billion euros 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 semi-conductor 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 micro chips 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 5 nanometers) and mid-range (above 5 nanometers) semiconductor manufacturing with a 9.3 billion euro investment, the government said.

It will fund research and development with a 1.1 billion euro subsidy and 1.3 billion euros will be allocated to chip design. It will also support Spanish companies in strategic projects developed at the European level and will create a 200 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.

($1 = 0.9334 euros)

(This story corrects figure in paragraph 1 to 9.3 billion euros from 9.3 euros.)

(Reporting by Christina Thykjaer and Belen Carreno; Writing by Emma Pinedo and Inti Landauro; Editing by Bernadette Baum)

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