Spanish Economy Minister Nadia Calvino said on Tuesday local time that the Spanish government plans to spend 12.25 billion euros to develop the semiconductor industry by 2027, of which 9.3 billion euros will be used to finance the construction of factories.

According to the report, the program is funded by the European Union's epidemic relief fund, which is mainly aimed at the needs caused by the digital economy and chip shortages. When Spanish Prime Minister Pedro Sanchez announced the plan in April, funding was initially set at 11 billion euros

"The goal is to fully develop the design and production capabilities of the Spanish microelectronics and semiconductor industry, covering the entire value chain from design to chip manufacturing," Calvino said at a press conference after the cabinet meeting on Tuesday.

It comes after an unexpected surge in demand amid the pandemic and supply chain issues that has created a global shortage of microchips and forced numerous global manufacturers to cut production last year, including automakers Volkswagen and Renault. Temporarily closed some factories in Spain.

The Spanish government said the plan would invest 9.3 billion euros to finance semiconductor production capacity in the country's leading (below 5 nanometers) and mid-range (above 5 nanometers) semiconductor manufacturing industries.

The plan will also provide 1.1 billion euros in research and development subsidies and allocate 1.3 billion euros for chip design. It will also support strategic projects developed by Spanish companies at the European level and will create a 200 million euro chip fund to finance start-ups and scale-up in the Spanish semiconductor industry.

Calvino added that the lack of support, commitment, vision and even a coherent strategy is part of the reason why Spain still has no chip industry, and hopes to take this opportunity to give Spain its due role in this field.