Global Foundries and ST Microelectronics in talks to set up chip factory in France

Chip shortages have been a thorn in the side of many companies in the tech and auto industries for two years. There is no easy solution to the problem, but chipmakers are currently exploring options to diversify their supply chains and expand capacity. The EU is becoming an increasingly attractive manufacturing hub as they work to revive the region's semiconductor industry and reduce reliance on imported chips.

Intel, TSMC and Samsung are investing billions in ambitious expansion projects. They plan to build factories in multiple regions to create a more resilient global supply chain for advanced semiconductors, with their sights set on the United States, Japan and the European Union. Companies such as Foxconn and mining giant Vedanta are also considering India, but those ambitions rely more on government subsidies.

According to Bloomberg, chipmakers are increasingly interested in the EU as a semiconductor manufacturing base. For example, GlobalFoundries and STMicroelectronics are said to be in talks to build a factory somewhere in France. The companies hope to use the EU's proposed 43 billion euros ($44.8 billion) in funding for the "Chip for Europe" initiative, which would allow governments to incentivize semiconductor research and development and enable mass production in the region. And, while no final decision has been made on building a new chip factory, getting subsidies would greatly improve its chances.

If GlobalFoundries and STMicroelectronics decide to build a foundry in France, it may not produce cutting-edge chips. Both companies focus on making specialized chips, such as microcontrollers, sensors, flash memory and MEMS devices. Back in April, the two chipmakers announced a partnership to develop next-generation FD-SOI technology for automotive, industrial, and 5G/6G applications.

Meanwhile, Intel has received 6.8 billion euros ($7.1 billion) in subsidies to build a factory in Germany to produce chips on 3nm process nodes such as Intel 20A and Intel 18A. Lesser-known chipmakers such as Will Electronic SA are also adding capacity for DRAM and NAND products developed by Goodram.