Italy’s Talks With Intel ‘Intensifies’ Over $9bn Chip Factory – Report

Europe’s efforts to develop more chip plants in its economic zone may have moved one step closer, after a report suggested talks about a facility in Italy are ‘intensifying.’

It was back in October when it was reported that Italy was negotiating with Intel to convince it to build a 4 billion euro (£3.4bn) advanced chip packaging plant in the country, as the chip giant pushed ahead with major expansion plans within the EU.

It was reported that Italy was prepared to fund part of the overall investment in the plant and offer other favourable terms to Intel, including on labour matters and energy costs. The plant would employ more than 1,000 people directly in Italy.

Italian factory

On Christmas eve Reuters, citing two sources close to the matter, reported that Intel and Italy are intensifying talks over investments expected to be worth around 8 billion euros ($9 billion) to build an advanced semiconductor packaging plant in the country.

A deal of this size would reportedly secure Italy about 10 percent of the 80 billion euros Intel is looking to spend over the next decade in Europe on cutting-edge manufacturing capacity to help avoid future shortages of semiconductors.

Intel is said to be seeking two locations for two major EU chip plants, and is expected to make an announcement early next year.

France and Germany are vying for Intel’s chip manufacturing ‘megafab’ plant (although Germany is said to be the leading contender), while Poland is said to be competing with Italy for the advanced packaging plant.

Sources had previously told Reuters that the investment size was in a 4 billion to 8 billion euro range.

But now the investment amount on the table seems to be much larger.

Intel reportedly said it is “having constructive investment conversations with government leaders in multiple EU countries” but declined to comment specifically on talks with Italian officials.

“We are encouraged by the many possibilities to support the EU’s digital agenda and 2030 semiconductor ambitions,” Intel was quoted as saying. “While current negotiations are ongoing and confidential, we plan to make an announcement as soon as possible.”

Government negotiations

The proposed Italian factory would be an advanced packaging plant that reportedly utilised innovative technologies to weave full chips.

Chip packaging plants typically integrate different types of semiconductors onto wafers, and are a key part of the chip manufacturing process.

Reuters reported that Intel and the Italian government of Prime Minister Mario Draghi are discussing an overall investment of $9 billion over 10 years from when construction begins, the sources said.

Negotiations are complex and Rome reportedly wants Intel to clarify its plans for Italy before formalising a package of favourable conditions, especially on jobs and energy costs, they added.

If Rome and Intel clinch a deal, they will then proceed with the choice of a site for the plant, the sources said.

Intel’s plans to build chipmaking capacity within the EU coincide with an effort by the region to reduce its dependence for microprocessors on the US and Asia, amidst a global chip shortage that is having a particularly damaging effect on the car industry.