Wooing Intel, Italy plans over 4 billion fund to boost chipmaking

According to a draught regulation seen by Reuters on Tuesday, Italy plans to set aside more than 4 billion euros ($4.6 billion) until 2030 to enhance domestic chip manufacturing in order to lure greater investment from tech companies like Intel.

The government is attempting to persuade the American corporation to invest billions of euros in a sophisticated chipmaking plant in Italy that will employ cutting-edge technology to weave entire chips.

According to Reuters, Rome is prepared to provide Intel public money and other favourable terms to support a portion of the overall investment, which is projected to be worth roughly 8 billion euros ($9 billion) over ten years.

Italy is also in talks with French-Italian STMicroelectronics, Taiwanese-controlled MEMC Electronic Materials Inc, and Israeli Tower Semiconductor, which is due to be acquired by Intel, to strengthen domestic chipmaking.

Negotiations with Intel are difficult since the US group has made very harsh demands, according to a government source involved in the talks.

Rome is also counting on new funding regulations for innovative semiconductor facilities unveiled last month by the European Commission under the so-called Chips Act to seal a deal with Intel.On top of the 30 billion euros in public investments previously planned from NextGenerationEU, Horizon Europe, and national budgets, Brussels has made available 15 billion euros in extra public and private investment by 2030.

Intel announced in September that it plans to invest up to $95 billion in Europe over the next ten years. A person familiar with the situation told Reuters on Feb. 26 that the US group had chosen the east German city of Magdeburg as the site for a new multibillion-euro European chip facility as part of the plan.

According to the decree, Italy wants to invest 150 million euros in 2022 and 500 million euros each year from 2023 to 2030 as part of an 8 billion euro package to boost the economy and reduce rising energy costs.

Rome intends to utilise the funds to renovate existing industrial sites and encourage the building of new factories in the country.

Chipmakers are scrambling to increase output after the COVID-19 epidemic triggered a surge in demand for consumer gadgets such as cellphones and PCs due to the work-from-home trend.

Meanwhile, following recent supply chain issues, EU countries are eager to lessen their reliance on semiconductor supplies from China and the United States.