Recent years have brought numerous changes for most manufacturing sectors. One of the visible trends is the increasing dependence on microprocessors and other semiconductor components. Without them, it is no longer possible to manufacture not only advanced products such as cars, but even simpler devices such as household appliances. The response to these trends is the support program for the semiconductor sector in Poland adopted in December 2023.
The 'National Framework for Supporting Strategic Semiconductor Investments' programme was established on the basis of Regulation (EU) 2023/1781 of the European Parliament and of the Council of 13 September 2023 and the Resolution of the Council of Ministers of 8 December 2023. Its total budget until 2026 will amount to more than PLN 7 billion, of which less than PLN 3 billion is foreseen for 2024, while for 2025 and 2026 - slightly more than PLN 2 billion per year. The Minister in charge of IT will be responsible for coordinating and monitoring the implementation of the programme.
For what and for whom?
Support under the programme will be granted to investors setting up an integrated production plant or an open EU factory in the territory of the Republic of Poland, which will conduct activity in the field of semiconductors. According to the definition adopted by the European Commission, a semiconductor is:
a) an elemental or composite material (including new materials), whose electrical conductivity can be modified; or
b) a component consisting of a number of layers of semiconducting, insulating and conductive materials, defined according to a predetermined pattern, and intended to perform a specific electronic or photonic function, or both.
Integrated Production Facilities (IPFs) are defined as facilities, the first of their kind, for the manufacture of semiconductors and, where applicable, the design, or for the production of equipment or key components of such equipment, primarily used for the manufacture of semiconductors in the European Union, which may integrate other stages of the supply chain and which contribute to the security of supply and to the resilience of the EU semiconductor ecosystem and may, where applicable, contribute to the security of global semiconductor supply chains.
Open EU Foundries (OEFs) are defined as facilities, the first of their kind, manufacturing semiconductors in the European Union that offer manufacturing capacity to unrelated companies and thus contribute to the security of supply of the internal market and to the resilience of the EU semiconductor ecosystem and may, where appropriate, contribute to the security of global semiconductor supply chains.
The term 'first-of-its-kind facility' is defined as a new or substantially upgraded semiconductor manufacturing facility or a facility for the manufacture of equipment or key components of such equipment used primarily in the manufacture of semiconductors. The facility must be innovative in terms of the manufacturing process or the final product. The requirement is that the innovation is not yet present in the EU or that its construction in the EU is not yet envisaged. This also includes innovations that relate to an increase in: computing power or safety, protection or reliability, energy and environmental efficiency, generation of technology or substrate material, or improvements in the implementation of manufacturing processes leading to increased efficiency or that lead to improved recyclability or reduction of inputs.
Financing
The maximum allowable state aid ceiling for a project to set up an integrated production facility or an open EU factory will be determined based on the identified financing gap in relation to the project costs. The financing gap determination mechanism refers to the difference between positive and negative cash flows over the lifetime of the investment, discounted to their present value based on an appropriate discount factor reflecting the rate of return the investor needs to earn in order to implement the project, particularly in terms of the risks involved. The final value of the aid will therefore be calculated based on the identified funding gap.
When can an application be submitted?
The support will be granted at the request of the Investor, who is obliged, among others, to submit the so-called project information and analysis of the incentive effect to the Polish Investment and Trade Agency (PAIH), and then, when the project receives PAIH's recommendation, to submit an application for granting state aid together with necessary attachments to the Minister in charge of IT.
Aid under the National Framework cannot be granted if the Investor has started work on the project before the date of submission of the application for state aid.
The programme does not specify specific call dates, so we anticipate that applications can be submitted on a rolling basis as soon as the Investor has documentation ready to apply for support.
The support programme will be launched in 2024 and will run until 2026.
Application conditions
Eligible to apply under the programme will be projects in which:
- the Investor will apply to the European Commission for formal recognition of the plant project as having IPF or OEF status (IPFs produce for their own commercial purposes and can incorporate other stages of the supply chain in addition to production, such as product design and sales, into their business model) or an open EU factory (OEFs offer production capacity to other companies),
- the Investor will ensure that the IPF or the OEF will not be subject to the extraterritorial application of public service obligations imposed by third countries in a way that could undermine the company's ability to fulfill the obligations arising from the triggering of the crisis phase due to a major disruption in the supply of semiconductors or a major obstacle to trade in semiconductors in the Union, and will undertake to inform the European Commission if such an obligation arises,
- the Investor will undertake to incur capital expenditure of at least PLN 850 million in connection with the establishment of a IPF or OEF over a project implementation period of no more than 20 years,
- at least 100 new jobs will be created and the Investor commits to maintaining them until the end of the project,
- the Investor will undertake to cooperate with the bodies that make up the higher education and science system,
- until the end of the project, the Investor undertakes to maintain in the IPF or in the OEF for which it has received aid assets whose initial value corresponds to at least 80% of the investment expenditure (replacement of obsolete installations or equipment due to rapid technological development is not excluded),
- the Investor will undertake to co-finance the project at least to the extent of the difference between the investment costs and the value of the aid provided, with funds free of any public support.
Moreover, projects involving integrated production facilities and open EU factories must meet a number of additional requirements, especially:
- by contributing to the development of start-ups and the SME sector, as well as meeting the objectives arising from the EU's green and digital transformation,
- by committing to continuous investment in innovation within the European Union to ensure concrete advances in semiconductor technology or to develop the next generation of technology,
- by developing and implementing education and skills training and increasing the pool of qualified and skilled staff.
PwC comment
The programme has already been passed, but is still in the early stages of implementation, so we do not yet know all the detailed requirements for applying for support. We will keep you updated on all details.
Information from a few months ago about Intel's investment plans near Wrocław, which will be the largest foreign investment in Poland's history, shows that our country is an attractive place to locate such ventures. Thanks to its strategic location, skilled IT workers and many universities, Poland has a chance to play an important role in the ongoing process of moving semiconductor production closer to consumer markets.
In addition, the semiconductor market is currently at a crucial stage of change. More and more manufacturers are announcing that they will start producing processors in 2 nm and smaller lithographies. This will enable the production of much more efficient and energy-efficient semiconductors, and thus their use in an even wider range of products.
It is worth being part of such a significant change for almost every industry branch. We encourage all entities interested in the programme to contact the experts of the Reliefs and Grants Team, who will be happy to answer all your questions in this regard.
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