The European Commission has approved an €81 million State aid measure from Spain to support the establishment of a factory for the production of semiconductor-grade synthetic diamonds in Trujillo, Extremadura.
Led by Diamond Foundry Europe, this project aims to align with EU objectives in regional development, job creation, and the transition to a more sustainable economy.
Project Overview
The new facility will produce synthetic diamond wafers using plasma reactor technology. These wafers are intended for use in the semiconductor industry as an alternative to silicon, particularly in key sectors such as 5G communications and electric vehicles.
The factory’s production capacity is expected to reach 4–5 million carats per year. It will be designed to operate with carbon-neutral credentials, relying on renewable energy generated by a solar photovoltaic plant.
The project represents a total investment of €675 million, supported in part by an €81 million direct grant from the Spanish government. Approximately 300 direct jobs are expected to be created, along with additional indirect employment opportunities in the region.
Strategic Location and Regional Support
Extremadura, where the factory will be located, qualifies for regional aid under Article 107(3)(a) of the Treaty on the Functioning of the European Union (TFEU), which supports economically disadvantaged areas.
The investment in Trujillo aims to improve the region’s economic performance, create employment, and support sustainable manufacturing practices.
Commission’s Assessment
The Commission evaluated the measure under EU State aid rules, particularly Article 107(3)(a) of the TFEU and the 2022 Regional Aid Guidelines. It concluded that:
- Economic Impact: The project is expected to support economic development in a disadvantaged area by creating approximately 300 direct jobs and additional indirect employment opportunities.
- Incentive Effect: The aid was deemed necessary to ensure the investment proceeded, as the project would not have been undertaken without public support.
- Competition and Trade: The aid’s impact on competition within the EU was assessed as limited, with the measure considered appropriate and proportionate.
The aid amount has been capped at the minimum necessary to trigger the investment and complies with the Spanish regional aid map. On this basis, the measure was approved under EU State aid rules.
Implications for Jewellers
Although the factory’s primary focus is on semiconductor applications, large-scale synthetic diamond production may also have implications for the jewellery sector. Increased manufacturing capacity and advancements in production technology could affect the availability and cost of synthetic diamonds, with potential impacts on market dynamics.
