Spain is jumping on board the spending spree to boost semiconductor manufacturing, pledging nearly $12 billion in funding.
According to Reuters, the spending plan will be mainly financed through European Union pandemic relief funds with approval pending.
Spain is making the leap into the semiconductor manufacturing pool due to the worldwide chip shortage that is continuing to affect the supply chain.
The chip shortage began in late 2020 following the outbreak of COVID-19 where uncertainty caused many sectors to delay or reduce capacity for semiconductors. When demand returned, semiconductor manufacturers moved capacity to other areas such as consumer electronics and communications segments, which saw increased demand with the stay-at-home orders.
However, with semiconductor content increasing in all industries, demand is growing quickly and the forecast for the next decade is a growth rate of 5% in the semiconductor industry, according to the Semiconductor Industry Association (SIA).
Europe investing
In February, the European Union approved funding for the European Chips Act, a bill that would aid in the construction of future semiconductor plants to bolster manufacturing of these chips and help decrease the risk of its dependence on chipmakers outside of the region.
The European Chips Act would allow for $17 billion in additional and private investment by 2030. This is on top of the $34.3 billion of public investments already planned by EU agencies.
The European Commission said the recent chip shortage due to forced factory closures and capacity issues related to COVID-19 made evident the extreme global dependency on the semiconductor value chain and the limited number of vendors involved in production.
After the act was passed, Italy pledged to invest about $4.6 billion for semiconductor manufacturing until 2030 to boost its domestic chip manufacturing. This is to entice companies to develop fabs in the country.
These moves by Spain and Italy along with the European Chips Act and the plans by Intel Corp. will help to reach the EU’s goal of producing about 20% of global semiconductor manufacturing by 2030.
Intel’s European investment
Intel, one of the largest semiconductor manufacturers in the world, has a plan to invest some $87 billion over the next decade on fabs and R&D on the continent.
The first phase of the plan involves investing $18.6 billion into a leading-edge semiconductor mega-site in Madgeburg, Germany. Construction of this mega-site will begin in the first half of 2023 with production planned to come online in 2027. These fabs will deliver chips using Intel’s most advanced Angstrom-era transistor technologies and serve both foundry customers and Intel for Europe.
Intel is also investing in Italy and Ireland, spending about $13 billion in Ireland to expand its factory there and a $4.9 billion investment in Italy to enable a state-of-the-art back-end manufacturing facility. Finally, Intel will build an R&D hub in France and will increase its lab space by 50% at its operations in Poland.
The moves by Spain and other countries are to fight against potential problems that may crop up in the future — whether it be another pandemic or geopolitical issues. Diversifying the supply chain, specifically where semiconductors are manufactured, is designed to lessen the impact of the supply chain where the bulk of the manufacturing currently resides in Taiwan, Korea and China.
