Sanchez Wants Telefonica to Return Spanish Targets for Conductors

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(Bloomberg) — Spanish Prime Minister Pedro Sanchez said he hopes Telefonica SA’s new management will take the company in another direction and help develop his country’s semiconductor industry.

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“Telefonica has a big role to play in different sectors of our economy,” Sanchez said in an interview with Bloomberg TV’s Francine Lacqua at the World Economic Forum in Davos on Wednesday. “Regarding the semiconductor industry and the digital economy, of course I think it can play a very important role.”

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Telefonica’s new chairman, Marc Murtra, took office this week after Sanchez sacked his predecessor, Jose Maria Alvarez-Pallete, in a shock move at the weekend. The 52-year-old prime minister has grown frustrated with Pallete’s reluctance to invest in new technology and innovation, according to people familiar with his thinking.

The government owns 10% of Telefonica and has partnered with industrial firm Criteria Caixa SA, which controls the same stake, to ask Pallete to step down. Murtra was a Socialist government official close to Sanchez who once chaired the state-backed defense company Indra Sistemas SA.

“We are very happy and confident with the new team,” said Sanchez, adding that the business strategy will be decided by the company.

Sanchez also defended his decision to raise the tax to 100% for non-residents from outside the European Union buying real estate in Spain, saying the flow of investment shows that foreign investors are confident about the country’s economic prospects.

“Spain is facing a housing crisis,” he said. “What we need is affordable housing and a few airbnbs.”

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Spain is expected to post the largest economic expansion among major European countries for the second consecutive year in 2025, boosted by record tourism and increased exports. The nation has benefited from cheap electricity prices due to a combination of renewable energy production and large liquefied natural gas processing capacity.

At the same time, Sanchez is putting together a fragile coalition and is fighting to push even basic legislation like the 2025 budget. Last week, another key coalition partner said it was withdrawing support.

In an effort to boost Spain’s economy, Sanchez has set aside 12 billion euros ($12.5 billion) in European Union post-pandemic stimulus funds to boost the domestic semiconductor industry, but has struggled to attract the big investors it needs to help. make his plan.

Europe, it’s over

Governments across the European Union have found it difficult to persuade chipmakers to invest even with the promise of huge subsidies. Intel has halted plans for a €30 billion factory in Germany and postponed development of a Polish plant, while a €7.5-billion joint venture between autochip maker ST Microelectronics and GlobalFoundries in France is also on hold.

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Even with those subsidies, the EU is outspent by the $142 billion China has allocated to semiconductors, while the US is providing tax breaks in the Depreciation Act and $39 billion in aid through its CHIPS Act.

In Davos, Sanchez finds himself part of a dwindling number of left-leaning European leaders who oppose the policies of US President Donald Trump and his allies in the region. One clear point of tension is the new US administration’s approach to China.

In his struggle to attract investors, Sanchez has been reaching out to Beijing in recent years and said that Europe needs the Asian country “as a strategic partnership.” Carmaker Chery Automobile Corp recently opened a factory in the country and battery maker Contemporary Amperex Technology Co. Ltd. announced that it will form another joint venture with Stellantis NV.

“We are open to business from many countries – certainly China,” he said. “Because we want to have the best relationship with the most important country and the most important economy in the world.”

(Updates and comments about housing in section seven)

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