behind the projects, billions of subsidies

2023-06-05 18:07:00

The State pulls out the checkbook for STMicroelectronics. Bruno le Maire confirmed on Monday that more than a third of the industrial investment of STMicroelectronics and GlobalFoundries in the Crolles semiconductor factory, near Grenoble, will come from subsidies. Or 2.9 billion of the 7.5 billion euros of the project which should create 10,000 jobs. A few months ago, the State expected the total investment to be 5 billion euros.

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The subsidy is already financed within the framework of the “France 2030” recovery plan, which provides for an envelope of 5.5 billion euros in the field of semiconductors. It is one of the most expensive industrial aids since 2017, announces Bercy. Thanks to its subsidy, France will be able to reserve 5% of the factory’s production for French industrialists, in the event of a shortage of semiconductors.

Subsidies, engine of reindustrialization in the world

“These significant amounts for France show a real desire to reindustrialise. We must subsidize strategic sectors, as China has done with solar panels, as the United States is doing with electric cars,” observes Anne-Sophie Alsif, chief economist of BDO France.

Like the STMicroelectronics plant in Crolles, many of the industrial projects announced or inaugurated in recent weeks benefit from significant subsidies. The automotive battery production site in Douvrin in the North is to receive a total of 1.3 billion euros in subsidies, including 800 million euros from the State plus 121 million from local agglomerations and the region.

The Hauts-de-France are now preparing to release 60 million euros in subsidies for the Verkor battery factory in Dunkirk. ProLogium, XTC-Orano will surely follow… All future battery projects in Dunkirk receive public funding. But the amount and the origin of the subsidies, fiercely negotiated, are often revealed when the production lines are already running like at ACC or STMicroelectronics.

« Without subsidies, cthe plans would have been made, but not so quickly »

State support is often decisive in initiating investment decisions. “Without subsidies, cThe plans would have been made, but not so quickly. Public subsidies reassure and attract other private capital ». Or, “there is a very strong deadline issue”, insists Anne-Sophie Alsif in the face of competition from China and the United States, whose industrial subsidies within the framework of l’Inflation Reduction Act (IRA) are simple, fast and much more important.

The race for reindustrialization is currently taking the form of a subsidy war. During the presentation of the future law on green industries in mid-May, Bruno Le Maire said he wanted to “ pull out all the stops, in a difficult budgetary period, with rising interest rates, so that financing does not come only from public funds but also tax credits and the mobilization of private savings.

According to the Minister of the Economy, a dozen other industrial projects should be unveiled in the coming weeks, fueled by PIIEC (Important Projects of Common European Interest) funds. Worried regarding the power of attraction of the IRA, the European capitals would like to rain down billions in subsidies to bring out of the ground on their national soil the gigafactories in hydrogen, solar, wind, batteries or semiconductors.

Berlin prepares its subsidy for a semiconductor factory

On the other bank of the Rhine, the German authorities are concocting a massive subsidy for the Taiwanese semiconductor giant TSMC to set up a factory near Dresden. Berlin and Paris are taking advantage of the new flexibility offered by Brussels in terms of support for the critical semiconductor sector, present in all renewable and digital technologies. THE Chip Act voted on April 18 by the European Parliament aims to double the European Union’s market share in semiconductors by 2030 from 10 to 20% by mobilizing 43 billion euros of public and private money.

“Deindustrialisation was indeed an ideological decision” (Anne-Sophie Alsif, economist)

“These sums remain small compared to the subsidies from the United States and China. With its limited envelope, France will have to make choices and target priority projects. The EU would need more cross-financing on strategic sectors to have a leverage effect. This implies no longer looking at industrial subsidies from a budgetary point of view as expenditure, but as investments, synonymous with repercussions in terms of taxation and growth in ten years”, argues Anne-Sophie Alsif.