French defence group Thales, connector maker Radiall and Taiwan's FoxConn have begun preliminary discussions to establish a semiconductor assembly and test facility in France, the companies announced on Monday.

The proposed plant would focus on outsourced semiconductor assembly and test (OSAT) operations, with production capacity expected to exceed 100 million system-in-package (SiP) units annually by 2031.

The facility aims to address the European aerospace, automotive, telecoms and defence advanced packaging markets, representing a significant boost to Europe's semiconductor manufacturing capabilities as the region seeks greater technological sovereignty.

"This initiative is expected to aggregate additional European industrial actors," Thales said in a statement, adding that the total investment would exceed €250 million ($272 million).

The companies did not disclose potential locations within France or provide a timeline for final investment decisions.

The collaboration comes as Europe pushes for greater tech independence amid strained transatlantic relations. Semiconductors have been identified by EU officials as one of three critical sectors for technological sovereignty, alongside artificial intelligence and quantum computing.

The European Union has been actively promoting "European preference" in public procurement for critical technologies, with industry leaders calling for incentives to "buy European" in key sectors.

The project would bring together established European and Asian players in the semiconductor supply chain. Thales, a major French defence and aerospace contractor, would partner with Radiall, a specialist connector manufacturer, and FoxConn, the Taiwanese electronics manufacturing giant known for assembling Apple products.

The announcement follows broader European efforts to reduce dependence on US technology firms and build domestic capabilities. Around twenty-three per cent of the EU's total high-tech imports in 2023 came from the United States, highlighting the bloc's technological dependence.

The three companies stated that the initiative is expected to aggregate additional European industrial actors to sustain the investment and ensure strong European leadership for the project.

---