France’s economy minister, Bruno Le Maire, has signed an agreement to construct a new semiconductor factory in the country with STMicroelectronics and GlobalFoundries CEOs, bolstered by €2.9 billion in public funds.

As semiconductor demand grows, countries such as the US and China have subsidised their manufacturing capacity with the aim of reducing supply chain reliance.

The economy minister said the deal, which was signed on Monday, guaranteed France could potentially seize “5% of the industrial production of the factory for French manufacturers only” if France were faced with a supply chain disruption.

GlobalFoundries CEO Thomas Caulfield described the agreement as a “partnership” with France amid “harsh” global competition. Indeed, the US has allocated $52 billion in public subsidies solely for semiconductor production, Euractiv reports.

France’s subsidy of €2.9 billion makes up around 40% of the total cost of the project. The funding should allow the two manufacturers to double their production by 2030, increase energy efficiency and develop pioneering technology.

Le Maire went on to say his aim is for the country to become the “first nation in the world” to accomplish thinner engravings to permit semiconductors to cater to all future market demands.

The economy minister added that the French government aims to ensure “industrial independence,” and this latest move was not included within a “decoupling strategy” with China – which “would not make sense and is unattainable,” the Euractiv report adds.

He continued that the €2.9 billion subsidy is included within the so-called “France 2030” investment plan, which aims to “bridge the French industrial gap.”#

“There is no new expenditure,” he said in reference to the “budgetary discipline” that the government opted for to reduce debt, which, as it stands, is 111.6% of GDP.