2023-04-28 07:28:35 ET
STMicroelectronics ( NYSE: STM ) and GlobalFoundries ( NASDAQ: GFS ) fell fractionally in pre-market trading on Friday even as the pair received approval for French state aid to build a semiconductor plant in the country.
In a statement, the European Commission said the aid would be in the form of direct grants to both STMicroelectronics ( STM ) and GlobalFoundries ( GFS ) worth 7.4B euros or $8.13B.
The regulatory agency added that the two companies have agreed to terms on EU priority rate orders if a supply shortage happens and that profits beyond current expectations will be shared with France.
Earlier this month, the European Union passed the 45B€ ($47B) Chips Act to help the 27-country bloc better compete with the U.S. and Asia.
The U.S. CHIPs Act, which was passed last year, also has a similar profit-sharing provision for companies that "significantly exceed the projections."
STMicroelectronics ( STM ) and GlobalFoundries ( GFS ) first announced their plans to build a chip plant in Crolles, France in July 2022.
The facility is targeted to reach full capacity by 2026, with production up to 620,000 300mm wafers per year.
More on chips
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- U.S. proposes rules to block China, Russia-linked companies from CHIPS funding
For further details see:
STMicro, GlobalFoundries win $8B in aid to build French chip factory