STMicro, GlobalFoundries Unveil Plan to Jointly Build Chip Factory in France

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STMicro, GlobalFoundries Unveil Plan to Jointly Build Chip Factory in France
Credit: © Reuters.

By Scott Kanowsky -- STMicroelectronics NV ADR (NYSE: STM ) and GlobalFoundries Inc (NASDAQ: GFS ) are working together to construct a new semiconductor manufacturing factory in France, as the companies look to take advantage of a European Union push to expand chipmaking on the continent.

The two semiconductor manufacturers said in a statement on Monday that the multi-billion euro project will see them jointly operate a new facility in the town of Crolles in southeastern France.

Production at the factory is projected to be running at full capacity by 2026, with an expected output of up to 620,000 300-millimeter (12-inch) silicon wafers per year.

"By working together, ST and GF will leverage the economies of scale at the Crolles site as they accelerate semiconductor capacity the world needs with high capital efficiency," Switzerland-based STMicro and U.S. peer GlobalFoundries said in a statement.

The combined investment will be worth €5.7B, according to French President Emmanuel Macron's office.

The Élysée Palace will also provide "significant" support to the project, according to the firms. On Twitter, French finance minister Bruno Le Maire called the deal "the biggest industrial investment of recent decades outside of the nuclear industry" that helps reduce France's dependency on Asian chip manufacturing.

Meanwhile, the EU is also pursuing a sweeping plan to reduce the bloc's reliance on Asian semiconductors after a pandemic-induced supply crunch led to a shortage of key chips used by some of Europe's largest companies, particularly carmakers. Brussels now aims to have a fifth of all global semiconductors produced in the bloc by 2030.

Elsewhere, U.S. chipmaker Intel (NASDAQ: INTC ) unveiled plans in March to spend tens of billions of euros on its operations in Europe, including a proposal to build a new factory in Germany. The project is expected to receive substantial state and EU backing.

Nasdaq-listed shares in GlobalFoundries slid by around 6% on Monday, while STMicro shares were marginally lower.

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