The Spanish government’s plan to pour more than 12 billion euros ($12.3 billion) into building a domestic semiconductor industry from scratch has run up against a major problem: Chipmakers ready to take on the challenge are few and far between.
Financed by European Union cash allocated to offset the economic impact of the Covid-19 pandemic, Spain’s chips push is being hampered by stiff competition from other EU countries to win over major investors, according to people familiar with the situation.
The main challenge has been to attract companies willing to commit to long-term investments that can run into billions of euros, said the people, who asked not to be identified discussing confidential information. Firms have opted instead for nations like Germany that have a semiconductor ecosystem with suppliers and talent already established.
A shortage of chips for automotive applications has severely constrained global production, with wait times for popular models of more than a year or more. Analysts estimate that the production deficit in the past 18 months is several million vehicles.
Spain’s ambitious effort is meant to contribute to achieving the EU’s goal of producing a fifth of the world’s microchips by 2030, up from about 10 percent in 2020. Enshrined in the bloc’s so-called Chips Act, the plan allows member nations to provide state aid to chip producers with projects designated “first of a kind” on the continent.
Manufacturers have shown interest in the government’s chips drive since it was unveiled two months ago but they need time to make investment decisions, according to an emailed statement from Spanish Prime Minister Pedro Sanchez’s office in response to Bloomberg questions. “We are fully confident that these conversations will soon bear fruit in relevant announcements,” the statement read.