France signs €2.9 billion semiconductor factory deal with STMicroelectronics and GlobalFoundries

France has recently signed an agreement with STMicroelectronics and GlobalFoundries to set up a new semiconductor factory in France. This agreement is supported by a public subsidy of €2.9 billion and guarantees that the French state can potentially seize 5% of the factory’s industrial production for French manufacturers only if France faces a supply chain disruption. This agreement aims to reduce supply chain dependencies, de-risk France from geopolitical instability and increase production by 2030, making France the first nation in the world to achieve thinner engravings.

The demand for semiconductors is increasing, and global players such as the United States, China and the EU have heavily subsidised their domestic manufacturing capacity. Intel has even asked the German government to increase the already-agreed state aid funding for building two mega fabs. Chipmaking is a hugely energy-intensive industry; however, the technology chosen for this factory should reduce the water consumption of the industrial process by 60% and use 130 MW less than comparable factories. The French subsidy of €2.9 billion amounts to almost 40% of the project’s total cost. 

Overall, this agreement aims to bridge the French industrial gap and ensure ‘industrial independence’. With the help of this agreement, France hopes to reduce supply chain dependencies, de-risk France from geopolitical instability and increase production by 2030.