Banking Law and Semiconductor Industry Financing in Spain

1. Introduction

Semiconductor industry financing in Spain concerns loans, guarantees, project finance, equity-linked financing and other financial support for businesses involved in chip design, semiconductor manufacturing, packaging, testing, equipment, materials and related research infrastructure.

There is no separate Spanish “Semiconductor Banking Law.” Financing is governed by the ordinary Spanish and EU banking framework together with specialized rules concerning state aid, strategic investments, public financing, competition, environmental regulation and the semiconductor industry.

The principal framework includes:

• Law 10/2014 on the regulation, supervision and solvency of credit institutions;
• the EU Capital Requirements Regulation (CRR) and CRD framework;
• Regulation (EU) 2023/1781 — European Chips Act;
• EU State-aid rules, especially Articles 107–109 TFEU;
• Spain's PERTE Chip / PERTE de Microelectrónica y Semiconductores;
• foreign-direct-investment screening rules;
• Spanish company, insolvency and security law; and
• ECB, Banco de España and EBA prudential requirements.

Semiconductor finance is particularly significant because fabrication facilities can require very large initial capital expenditure, long construction periods and technologically specialized assets.

2. Spanish semiconductor strategy

Spain has sought to expand its semiconductor ecosystem through PERTE Chip, a strategic programme for microelectronics and semiconductors.

Public intervention can support areas including:

• semiconductor research;
• chip design;
• fabrication capacity;
• advanced packaging;
• technology development;
• workforce and industrial ecosystem development.

A project can therefore have a financing structure such as:

Private equity + commercial bank debt + public grants/loans + EU-supported financing.

Each component has a different legal basis.

3. European Chips Act

The European Chips Act, Regulation (EU) 2023/1781, establishes an EU framework intended to strengthen Europe's semiconductor ecosystem and resilience.

Its objectives include promoting technological capacity, investment and security of supply.

From a banking perspective, the Chips Act does not mean that a bank must lend to semiconductor companies.

Instead, it creates an industrial-policy environment within which qualifying projects may obtain public support or special recognition while private lenders continue making their own credit-risk decisions.

4. Ordinary banking regulation still applies

Suppose a Spanish bank considers a €600 million syndicated loan for construction of a semiconductor facility.

The strategic importance of the project does not exempt the bank from prudential requirements.

The bank must still assess:

• borrower's financial strength;
• projected cash flows;
• construction risk;
• technology risk;
• collateral;
• concentration risk;
• counterparty risk;
• environmental risks;
• repayment capacity.

The transaction must then be reflected appropriately within the bank's regulatory capital framework.

5. Credit risk

Semiconductor lending can involve substantial credit risk.

A lender must consider factors such as:

technology obsolescence – production technology can become outdated rapidly;

construction risk – fabrication plants are technically complicated;

market-cycle risk – chip markets can experience periods of shortage and oversupply;

customer concentration – manufacturers can depend heavily on a small number of major customers;

supply-chain risk – production requires specialized equipment and materials;

geopolitical risk – export controls and trade restrictions can affect supply chains.

These factors influence credit pricing and capital allocation.

6. Project finance

Large semiconductor facilities can potentially be financed using project-finance structures.

A simplified structure is:

Sponsors → Project Company (SPV) → Semiconductor Facility

while:

Banks → loans → SPV.

The lenders rely substantially on project cash flows and contractual arrangements.

Important documents can include:

• facility agreements;
• security agreements;
• construction contracts;
• supply agreements;
• equipment contracts;
• offtake agreements;
• insurance;
• government-support documentation.

7. Security package

Banks financing semiconductor facilities normally seek strong security.

Depending on the transaction and Spanish law, security could potentially involve:

• real-estate mortgages;
• pledges over shares;
• pledges over bank accounts;
• security over receivables;
• security interests over equipment;
• assignments of contractual rights where legally available.

However, semiconductor assets create a practical problem.

A highly specialized lithography or fabrication machine may have enormous purchase value but limited resale possibilities outside the semiconductor sector.

Therefore:

purchase price ≠ recovery value.

Banks must assess collateral realistically.

8. Intellectual property

Semiconductor businesses can hold valuable:

• patents;
• chip designs;
• software;
• manufacturing processes;
• trade secrets;
• licensing rights.

These intangible assets can be economically important in financing decisions.

However, banks need to examine:

• who legally owns the IP;
• whether it is licensed;
• whether licenses are transferable;
• whether third parties have rights;
• what happens following default;
• whether the technology becomes obsolete.

A valuable patent portfolio does not automatically create easily enforceable collateral.

9. Syndicated lending

Because semiconductor projects can require very large financing, several banks may participate through a syndicated loan.

For example:

Bank A: €300 million
Bank B: €250 million
Bank C: €200 million
Bank D: €150 million

Total:

€900 million

A facility agent can administer the financing, while a security agent or equivalent structure manages agreed security arrangements where legally appropriate.

Syndication reduces the exposure borne by a single lender but does not eliminate risk.

10. Large-exposure regulation

Very large semiconductor projects raise concentration-risk issues.

EU prudential law limits excessive exposure by banks to individual clients or connected groups.

A Spanish bank therefore cannot simply finance an unlimited portion of a multibillion-euro semiconductor project because it regards the industry as strategically important.

Large-exposure requirements and internal concentration limits must still be observed.

This is one reason syndicated financing can be particularly useful.

11. Public guarantees

Public guarantees can reduce certain financing risks.

Suppose:

Project cost = €1 billion

Financing:

• Sponsor equity: €300 million
• Public support: €250 million
• Bank financing: €450 million

If part of the bank financing receives a legally valid public guarantee, the lender's economic and prudential position can differ from that of a completely unsecured exposure.

However, the precise capital treatment depends upon whether the guarantee satisfies applicable CRR requirements.

12. ICO financing

Spain's Instituto de Crédito Oficial (ICO) can play an important role in strategic industrial financing.

Depending upon the applicable programme, ICO support can take different forms and may operate directly or through financial intermediaries.

Semiconductor companies may therefore combine commercial bank financing with eligible public financing instruments.

But access depends upon the conditions of the particular programme; there is no universal legal entitlement to ICO financing simply because a company operates in semiconductors.

13. European Investment Bank

The European Investment Bank (EIB) can also finance eligible innovation and industrial projects.

EIB participation can potentially support:

• R&D;
• manufacturing capacity;
• digital infrastructure;
• energy efficiency;
• strategic technology.

Its involvement can also help attract private financing, although each project remains subject to the EIB's own appraisal and eligibility requirements.

14. State-aid law

Public financing creates one of the most important legal issues.

Under Article 107(1) TFEU, state aid that satisfies the Treaty criteria is generally incompatible with the internal market unless an exemption or approval applies.

Suppose Spain provides:

€500 million on unusually favorable terms to one semiconductor manufacturer.

The legal questions include:

1. Are state resources involved?
2. Does the measure confer an economic advantage?
3. Is it selective?
4. Can it affect competition and trade between Member States?
5. Is the aid compatible with EU law?

A strategically important industry is not automatically exempt from State-aid law.

15. Important Projects of Common European Interest

Semiconductor investments can potentially form part of Important Projects of Common European Interest (IPCEIs).

The EU has approved substantial State aid for microelectronics and communication technologies through the IPCEI framework.

This mechanism can permit government support for strategically significant cross-border innovation projects where the applicable legal criteria are met.

For banks, approved public support can materially change the project's financing structure and risk profile.

16. Foreign direct investment screening

Semiconductors can constitute strategically sensitive technology.

Spain's foreign-investment screening framework therefore can become relevant where foreign investors acquire significant interests in semiconductor businesses.

Spanish rules introduced through Royal Decree-Law 8/2020 and subsequent legislation established controls over certain foreign direct investments, with the detailed regime further developed by Royal Decree 571/2023.

The screening framework can apply to investments affecting strategic sectors and technologies.

A bank financing an acquisition should therefore examine whether governmental authorization is required.

17. Acquisition finance example

Suppose a non-EU investor seeks to acquire a Spanish semiconductor-design company for €800 million.

A Spanish bank agrees to provide €400 million acquisition financing.

The bank must consider more than ordinary credit risk.

It should also consider:

• FDI screening;
• competition approval;
• technology restrictions;
• change-of-control clauses;
• intellectual-property ownership;
• sanctions;
• completion conditions.

The loan documentation can make regulatory approvals conditions precedent to funding.

18. Export controls and sanctions

Semiconductor technology is closely connected with international export-control regimes.

Banks financing the industry must therefore consider whether:

• equipment may legally be exported;
• customers are subject to sanctions;
• technology transfers are restricted;
• counterparties are sanctioned;
• transaction routes create compliance risks.

A loan agreement may contain representations, undertakings and events of default concerning compliance with applicable sanctions and export-control laws.

19. AML obligations

Spanish banks remain subject to Law 10/2010 on the prevention of money laundering and terrorist financing.

Large industrial projects can involve complex structures with:

• foreign sponsors;
• subsidiaries;
• joint ventures;
• sovereign investors;
• investment funds.

Banks therefore need appropriate customer and beneficial-ownership due diligence.

The fact that the underlying project receives public support does not remove AML obligations.

20. Environmental financing risks

Semiconductor fabrication can require substantial quantities of:

• electricity;
• water;
• chemicals;
• industrial gases.

Environmental permits and compliance can therefore affect bankability.

A lender may require the borrower to maintain:

• environmental authorizations;
• water rights;
• waste-management compliance;
• emissions requirements;
• insurance.

Failure to obtain a critical permit can delay construction and undermine repayment projections.

21. Sustainable finance

Some semiconductor projects can support digitalization and energy-efficient technologies, but this does not automatically make all semiconductor lending “green.”

Where a bank markets financing as environmentally sustainable, the applicable EU sustainable-finance framework and anti-greenwashing considerations may become relevant.

Banks should distinguish:

strategic technology financing

from

environmentally sustainable financing.

The two categories can overlap but are not legally identical.

22. Construction risk

A semiconductor fabrication facility may take years to become commercially operational.

A project might proceed through:

financing → site preparation → construction → equipment installation → testing → qualification → commercial production.

A delay at any stage can increase financing costs.

Banks therefore commonly use:

• milestone-based drawdowns;
• cost-overrun provisions;
• completion tests;
• sponsor-support obligations;
• contingency reserves.

23. Technology obsolescence

Technology risk is unusually significant.

Suppose a factory is designed around a particular production process.

Before construction is completed, market demand shifts toward a more advanced technology.

The facility could become less competitive.

Banks therefore examine:

• technological roadmap;
• equipment flexibility;
• customer commitments;
• R&D capacity;
• licensing agreements.

This risk differentiates semiconductor finance from conventional property lending.

24. Insolvency law

If a semiconductor borrower becomes insolvent, Spanish Royal Legislative Decree 1/2020 approving the consolidated Insolvency Law, as substantially amended by Law 16/2022, becomes important.

Modern Spanish insolvency law emphasizes restructuring as well as liquidation.

Financial creditors may therefore become involved in:

• restructuring plans;
• debt rescheduling;
• debt-for-equity arrangements;
• security enforcement;
• creditor-class voting.

A bank's position depends heavily on the legal character and priority of its claim and security.

Case Laws

There is relatively little Spanish case law specifically labelled “semiconductor industry banking finance.” Relevant jurisprudence instead arises from EU State aid, banking regulation, guarantees, competition and strategic public financing.

The following authorities establish principles directly relevant to financing structures used in Spain.

25. Altmark Trans GmbH, C-280/00, CJEU

Altmark is one of the leading EU State-aid judgments.

The CJEU established criteria under which public compensation for public-service obligations does not constitute State aid.

Semiconductor-finance relevance

Not every transfer of public money automatically constitutes unlawful State aid.

The legal characterization of government support depends upon its structure and economic effect.

For semiconductor projects receiving Spanish public financing, this distinction can be important.

26. France v Commission (Stardust Marine), C-482/99, CJEU

This case concerned financial support involving a publicly controlled undertaking.

The Court examined when measures can be attributed to the State.

Relevance

Where financing comes through publicly influenced financial institutions, the mere existence of public ownership does not automatically resolve the State-aid analysis.

The circumstances surrounding the measure must be examined.

27. Commission v EDF, C-124/10 P, CJEU

The CJEU considered the market economy operator principle.

The question was essentially whether the State acted in a manner comparable to a private investor operating under market conditions.

Semiconductor relevance

Suppose Spain invests in a semiconductor company.

The fact that the State provided capital does not by itself establish incompatible State aid. The economic terms and circumstances of the investment matter.

28. Residex Capital IV CV v Gemeente Rotterdam, C-275/10, CJEU

This case is particularly relevant to public guarantees.

The CJEU considered a guarantee granted in circumstances involving unlawful State aid.

Banking relevance

A bank cannot assume that a government guarantee is legally risk-free merely because a public authority issued it.

Where a guarantee constitutes unlawful State aid, difficult questions can arise concerning recovery and legal consequences.

For semiconductor project lenders, State-aid due diligence is therefore important.

29. Eventech Ltd v Parking Adjudicator, C-518/13, CJEU

The Court considered the concept of advantage under State-aid law.

The case reinforces that an advantage does not necessarily have to take the form of a direct cash subsidy.

For semiconductor financing, favorable loans, guarantees or other preferential financial arrangements may potentially constitute an economic advantage.

30. Banco Santander and Santusa v Commission, C-53/14 P and C-65/14 P

These cases concerned Spanish tax measures and the concept of selectivity under State-aid law.

They are particularly relevant because they demonstrate how Spanish financial advantages can fall within EU State-aid scrutiny even where the benefit operates through tax legislation rather than a direct grant.

For semiconductor financing, tax incentives therefore also require careful State-aid analysis.

31. World Duty Free Group and Others v Commission, C-20/15 P and C-21/15 P

This litigation further developed the State-aid concept of selectivity in relation to Spanish tax measures.

The broader lesson is that preferential financial treatment can constitute State aid even where it is implemented through general-looking fiscal rules if the legal criteria for selectivity and advantage are met.

32. Kotnik and Others, C-526/14, CJEU

Although arising from banking-sector restructuring rather than semiconductor manufacturing, Kotnik is useful for understanding the interaction between public financial intervention and EU State-aid control.

The case confirms the importance of EU State-aid principles where governments deploy public resources to support strategically important economic actors.

It should not, however, be treated as a semiconductor-specific precedent.

33. Practical financing example

Assume Iberia Semiconductor Manufacturing S.A. proposes a new Spanish fabrication facility.

Total cost

€2.5 billion

Financing

Sponsor equity: €700 million

Public grant: €500 million

EIB/other institutional financing: €300 million

Syndicated bank debt: €1 billion

The lending banks would need to examine at least:

Credit risk

Can projected chip sales support €1 billion of debt?

State aid

Has the €500 million public support been structured consistently with EU law?

Security

What assets and rights secure the bank debt?

Technology

Could the manufacturing process become obsolete?

Construction

Who bears delay and cost-overrun risks?

Environmental regulation

Are necessary permits available?

Supply chain

Can specialized manufacturing equipment be obtained?

FDI

Do sponsors or ownership changes require investment-screening authorization?

AML/sanctions

Who ultimately owns and controls the sponsors?

Insolvency

What happens to lender rights if the project company requires restructuring?

This demonstrates why semiconductor financing combines banking, industrial, competition, technology and public-law considerations.

34. Public money does not eliminate bank responsibility

One particularly important principle is:

Government support reduces certain risks; it does not convert a weak project into a legally risk-free bank exposure.

Banks must independently assess repayment capacity.

For example, a €300 million grant can reduce the project's financing requirement, but the remaining €1 billion bank loan must still satisfy applicable underwriting and prudential requirements.

Likewise, lenders need to confirm the legal effectiveness of public guarantees rather than simply assuming their value.

35. Main legal risk matrix

Conclusion

Semiconductor industry financing in Spain is governed by ordinary banking law combined with an unusually important layer of EU industrial-policy and State-aid regulation.

Spanish banks financing chip companies remain subject to Law 10/2014, the CRR/CRD prudential framework, ECB/Banco de España supervision, concentration limits, AML obligations and ordinary credit-risk requirements. At the industrial-policy level, the European Chips Act and Spain's PERTE Chip can facilitate strategic investment, while public grants, guarantees and EIB/ICO financing may complement private bank debt.

EU State-aid law is especially important. Altmark, Stardust Marine, Commission v EDF, Residex, Banco Santander/Santusa and World Duty Free provide major principles for determining whether public grants, investments, guarantees or fiscal advantages constitute State aid and whether they can lawfully support a project.

The central banking principle is that strategic importance does not replace creditworthiness. Even where a semiconductor project receives substantial Spanish or EU support, lenders must independently assess its cash flow, technology, construction, collateral, concentration, environmental, supply-chain and regulatory risks.

For major Spanish semiconductor projects, the strongest financing structure will therefore typically combine private capital, carefully structured bank debt, legally compliant public support and robust security/contractual protections, while separately satisfying EU State-aid, FDI, competition and prudential banking requirements.