In context: For the past two years, the chip shortage has been a thorn in the side of many companies operating in the tech and automotive industries. A simple solution to the problem doesn't exist, but chipmakers are currently exploring all options to diversify their supply chain and expand capacity. The EU looks increasingly attractive as a manufacturing hub thanks to its efforts to rejuvenate the semiconductor industry in the region and reduce its reliance on chip imports.
Intel, TSMC, and Samsung are pouring billions into ambitious expansion projects. They plan to build factories in multiple regions to create a more resilient global supply chain for advanced semiconductors, and their eyes are set on the US, Japan, and the EU. Companies like Foxconn and mining giant Vedanta are also considering India, but those ambitions rely much more heavily on government subsidies.
According to a Bloomberg report, interest in the EU as a location for semiconductor manufacturing is growing among chipmakers. For instance, GlobalFoundries and STMicroelectronics are said to be in talks to build a fab somewhere in France.
Close-up of GlobalFoundries wafer
The two companies are hoping to tap into the EU's proposed €43 billion ($44.8 billion) fund for the Chips for Europe Initiative, which will allow governments to incentivize semiconductor research and development as well as volume manufacturing in the region. And while a final decision has not been made on whether or not to build the new chip factory, getting access to subsidies would greatly improve the chances of it materializing.
If GlobalFoundries and STMicroelectronics do decide to build a foundry in France, it probably won't make cutting-edge chips. Both companies are focused on producing specialized chips like microcontrollers, sensors, flash memory, and MEMS devices. Back in April, the two chipmakers announced a partnership to develop the next generation of FD-SOI technology that's geared towards automotive, industrial, and 5G/6G applications.
Meanwhile, Intel has secured subsidies of €6.8 billion ($7.1 billion) to build a fab in Germany that will produce chips on sub-3nm process nodes like Intel 20A and Intel 18A. Lesser-known chipmakers like Will Electronic SA are also building additional capacity for DRAM and NAND products designed by Goodram.