Spain to Invest $868 Million in Diamond Foundry Chip Plant

Spain's $868M Investment in Diamond Foundry's Chip Plant

MADRID (Reuters) -The Spanish government will invest 753 million euros ($868 million) in a new microchip manufacturing plant belonging to U.S. company Diamond Foundry in the western Extremadura region, government spokesperson Pilar Alegria said on Tuesday.

The plant in the city of Trujillo, located some 250 km (155 miles) southwest of Madrid, will produce synthetic semiconductor diamond wafers in a bid to overcome chip overheating, one of the industry's biggest limitations.

The announcement confirmed earlier reports that the project will see SETT - the state's tech investment vehicle - contribute the funds from the country's semiconductor support programme.

Diamond Foundry, which is backed by U.S. actor Leonardo DiCaprio, is set to invest another 1.6 billion euros by 2029, according to a report by newspaper CincoDias.

It already operates a synthetic diamond-making plant in the area, though the products are used for jewellery and industrial machinery rather than microchips.

Diamonds have very high thermal conductivity compared to silicon, the standard material used for most semiconductors, allowing them to disperse heat much more quickly from the base of the chip.

Researchers have long chased the synthetic "holy grail" of diamond semiconductors with limited commercial success, as roadblocks around cost and production have largely thwarted developers.

The new facility in Trujillo would be Europe's first large-scale producer of diamond substrates, the wafer-like base material on which semiconductor materials and metal conductors are layered to electronic devices.

($1 = 0.8674 euros)

(Reporting by David Latona; Editing by Kirsten Donovan)