Italy courts Intel over multibillion-euro chip factory: sources

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Signage at the entrance to Intel’s corporate headquarters in Santa Clara, California, United States, Tuesday, October 19, 2021.

David Paul Morris | Bloomberg | Getty Images

Rome is preparing an offer to try to convince Intel to invest billions of euros in an advanced chip manufacturing plant in Italy, as Germany emerges as the forerunner to land an even bigger megausine planned by the American company, three sources said.

The factories are said to be part of an initiative by the US group to develop advanced manufacturing capabilities in Europe to avoid future supply shortages such as those currently crippling the auto industry in particular.

Rome is already in talks with Intel over the potential investment, which preliminary estimates are worth more than € 4 billion ($ 4.7 billion), sources involved in the talks said.

One of them said the total could even reach around 8 billion euros, according to Intel’s plans.

They declined to be identified as the details are confidential.

Rome is ready to finance part of the overall investment with public money and to offer favorable terms to Intel, including on labor and energy costs, the sources said.

The plant would create more than 1,000 direct jobs in Italy, they added.

“The government is preparing a very detailed offer with the aim of reaching a deal by the end of the year,” one of the sources told Reuters.

“Discussions with Intel are at an advanced stage. There is no agreement yet, but if the government works hard on this, there is a good chance of bringing the plant to Italy.”

Potential locations include the Mirafiori region in Turin, the Italian home of automaker Stellantis, and Catania in Sicily, where French-Italian chipmaker STMicroelectronics already operates, the sources said.

Intel declined to comment on its plans.

The US group’s largest project in Europe is a planned mega-factory, where Dresden in Germany has become a top candidate site, the sources said. They are not directly involved in discussions about the site selection for the megausine.

No final decision has been made for either site and plans could change in the coming weeks, the sources said.

From the United States to the EU

The Italian plant is said to be an “advanced packaging” factory that uses new technology to weave complete chips from tiles produced by Intel and other chipmakers, the sources said.

Intel is using the technology to attract new customers such as Amazon’s cloud computing unit, but its only locations are in the United States.

France is also seen as a candidate for the mega-factory, while Italy faces competition from Poland, where Intel is also present, for the packaging plant.

Intel CEO Pat Gelsinger said last month the company would announce the location of two new chip manufacturing plants in the EU by the end of the year, as it plans to spend 80 billion euros over the next decade on the continent.

Tokens are falling

The plans come as the European Union aims to reduce its dependence on semiconductor supplies from the United States and China, and the chip supply crisis shows no signs of abating.

Chipmakers are scrambling to ramp up production after the trend towards working from home during the pandemic led to explosive demand for consumer electronics such as smartphones and computers.

Shortages have hit the auto industry – a major pillar of the European economy – the hardest, as chipmakers have generally preferred consumer electronics customers because they buy more advanced, higher-margin chips. .

Italian Prime Minister Mario Draghi said this week that the EU must act “now and decisively” to increase production in order to meet its target of producing 20% ​​of global semiconductor production by 2030.

“China and the United States are already investing tens of billions each in this sector,” he said.

Still, building the mega-factory and the packaging plant will take years and likely won’t help European carmakers in the short term.

For that, Gelsinger said Intel plans to reserve the capacity of its chip factory in Ireland for automakers and help them switch to using its technology, but that too could take time.

Germany in the lead

Talks could accelerate after the formation of a new government in Germany, following the federal elections in September.

The EU’s largest economy, with a large auto industry, is in the lead to land the “megafab” plant, the sources said, although France remains in the race.

One of the sources said Italy also has “playing cards” to secure a research facility, which is another part of the overall investment Intel is planning for Europe.


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