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UPDATE 2-Germany predicts chip investments of up to 50 bln euros in Europe

(Adds comment from GlobalFoundries)

BERLIN, Feb 3 (Reuters) - European countries are planning to support the local production of technology hardware with targeted aid that could result in overall investments of up to 50 billion euros ($60 billion), Germany said on Wednesday.

Germany, France and 17 other EU countries have joined forces to invest in processors and semiconductor technologies, key to internet-enabled devices and data processing, in a push to catch up with the United States and Asia.

Europe’s share of the 440 billion-euro global semiconductor market is around 10%, with the EU currently relying on chips made abroad. Its dependence on foreign chips and other products has come under the spotlight during the COVID-19 pandemic.

German Economy Minister Peter Altmaier said during a virtual panel discussion with his French counterpart Bruno Le Maire that he expected the European project to trigger overall investments in the chip industry of up to 50 billion euros.

Altmaier said he was expecting to raise “a double-digit billion euros amount - and not in the lower range, but rather in the middle range” from participants in the project.

He estimated that companies would contribute between 60% and 80% of overall investments, with state subsidies from EU members ranging between 20% and 40%.

The two chip-making companies with the biggest presence in Germany, Infineon Technologies and GlobalFoundries, welcomed Altmaier’s push to expand state aid.

The European Commission and member states should act quickly as the plan could make a significant contribution to increasing Europe’s competitiveness and geopolitical resilience, an Infineon spokesman said.

U.S.-based GlobalFoundries, which like Infineon has a large production base in Dresden, said it would like to take part in a planned project on microelectronics and communication technologies.

It said it was in talks with the German government on its plans and hoped for “a quick and resolute start”.

Companies can apply for subsidies by sending their investment plans to the German economy ministry until March 1. The European Commission will then examine individual projects, with a final decision expected later this year.

Germany and France have initiated similar projects in other sectors such as battery cells, cloud computing and artificial intelligence to make Europe less dependent on producers and tech giants from the United States and China. ($1 = 0.8317 euros)

Reporting by Michael Nienaber; Additional reporting by Douglas Busvine; Editing by Andrea Ricci, Steve Orlofsky and Jan Harvey

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