STMicro, GlobalFoundries plan new $5.7 billion French chip factory

By Sudip Kar-Gupta and Supantha Mukherjee

PARIS/STOCKHOLM (Reuters) -Chipmakers STMicroelectronics and GlobalFoundries announced on Monday plans to build a semiconductor factory in France, drawing on funding from the government, the latest move to boost output in the region.

The news comes as President Emmanuel Macron prepares to announce some 6.7 billion euros ($6.8 billion) worth of investment from major global companies at this week’s Choose France summit.

The United States and the European Union have been pushing for home-grown chip factories by offering billions in state subsidies to cut dependency on Asian suppliers and ease a global chip shortage, which has created havoc for carmakers.

This facility, which will be next to STM’s existing plant in Crolles, is targeted to reach full capacity by 2026, with up to 620,000 wafers per year of production at a size of 18-nanometers, the statement said.

Those are used in automotive, internet-of-things and mobile applications.

The companies did not disclose the amount of investment at the new site near the Italian and Swiss borders or how much funding the French state would provide.

A person familiar with the matter said that the total investment would be about $5.7 billion.

Macron’s office said the French President would visit the factory site and it represented an investment of more than 5.7 billion, without specifying the currency to which it referred.

Spokespeople for GlobalFoundries and STMicro declined to comment.

The new factory would create around 1,000 new jobs and also help STMicro reach its target to boost revenue to above $20 billion.

“We will have more capacity to support our European and global customers as they transition to digitalisation and decarbonisation,” STMicroelectronics CEO Jean-Marc Chery said.

The European Commission earlier this year eased funding rules for innovative semiconductor plants as part of the European Chips Act as the bloc seeks to double its global market share to 20% in 2030.

In March, Intel laid out plans for a $88 billion investment across Europe and picked Germany as the site for a huge new chipmaking complex. In France, it plans to build its new European research hub, creating 1,000 new high-tech jobs.

Intel’s site will make the latest 2-nanometer chips, which are comparatively newer than the STM-GlobalFoundries project.

Chipmakers have seen huge demand since late 2020 as higher orders from electronics manufacturers boosted by work-from-home practices fuelled a surge in sales of gadgets and led to supply crunches for other industries such as autos and telecom suppliers.

However, Gartner and other research firms have said that PC and smartphone sales will fall later this year, easing the shortage of chips for other industries.

($1 = 0.9862 euros)

(Reporting by Sudip Kar-Gupta in Paris and Supantha Mukherjee in Stockholm; Editing by Christopher Cushing, Kirsten Donovan)