By KEVIN J. O’BRIEN Published: July 22, 2013
STMicroelectronics, the largest chip maker in Europe, said Monday that it planned to invest almost 2 billion euros in conjunction with the French government to develop a new line of microprocessors for smartphones, TV set-top boxes and home routers.
The company, which is based in Geneva, said it planned to spend 1.3 billion euros ($1.7 billion) through 2017 on new research and development and to expand chip production at its factory in Crolles, France, a town near Grenoble in the French Alps.
France, along with regional and municipal governments in and around Crolles, would contribute 600 million euros to the project, which is part of an industry the government is eager to promote.
France and Italy hold a combined 27.5 percent stake in STMicro, making them the biggest shareholders in the chip maker.
A spokesman for the company, Alexis Breton, said that most of the investment would be used to develop faster and more efficient chips for TV set-top boxes, smartphones and routers to control home security, heating, air and entertainment systems wirelessly.
The market for such chips is expected to grow to 67 billion euros this year, according to World Semiconductor Trade Statistics, an industry research organization in San Jose, Calif. The investment would allow STMicro to double its production capacity of such chips at Crolles, potentially making it a stiffer rival to Broadcom, Texas Instruments, Infineon Technologies and Sony.
Because of the government subsidies involved, the investment must be approved by Joaquín Almunia, the European Union competition commissioner.
STMicro employs 48,000 people, almost half of them in France and Italy, and had sales of $8.5 billion last year.
The company’s factory in Crolles, which employs 2,500 workers, expanded recently with 1.8 billion euros in public and private investments.
But continuing losses at ST-Ericsson, a joint venture with the Swedish equipment maker Ericsson to produce chips for handsets, have put pressure on STMicro, which has reported losses for the last six quarters. The venture with Ericsson is set to close later this year.
In a speech to factory workers in Crolles on Monday, the French prime minister, Jean-Marc Ayrault, said the investment reflected an “exemplary” partnership between private business and local governments, among others. “There are more than 24,000 jobs that depend on this ecosystem,” Mr. Ayrault said.