Exclusively in Italy, Intel is ramping up talks over a $9 billion chip factory, sources

  • Rome aims for ‘advanced packaging’ chips plan
  • Talks with Intel took more than 10 years of investment
  • An American group plans to invest 80 billion euros in Europe
  • Germany tops the European “megafab” list

ROME (Reuters) – Intel and Italy are intensifying talks on investments expected to amount to about eight billion euros ($9 billion) to build an advanced semiconductor packaging plant, two sources familiar with the matter told Reuters.

A deal of this size would secure Italy about 10% of the 80 billion euros the US company is looking to spend over the next decade in Europe on advanced manufacturing capacity to help avoid future shortages of semiconductor chips.

Sources told Reuters earlier that the investment volume ranged between 4 and 8 billion euros. Read more

As part of that plan, Germany, the EU’s largest economy, is in the forefront of setting up a planned European “megafab” plant for Intel Corp. (INTC.O), although France is still up and running, Reuters reported in October.

Intel said it was “constructive in investment talks with government leaders in several 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 the 2030 aspirations for semiconductors. While current negotiations are ongoing and confidential, we plan to announce as soon as possible,” the company said in a statement.

Chip makers are scrambling to boost production after massive demand for consumer electronics such as smartphones and computers resulted from the trend of working from home during the COVID-19 pandemic.

Meanwhile, European Union countries, where many jobs still depend on industries such as car manufacturing, are keen to reduce their dependence on semiconductor supplies from China and the United States after recent supply chain problems.

The proposed Italian plant will be an advanced packaging plant that will use innovative technologies to weave whole chips.

Sources said Intel and the Italian government headed by Mario Draghi were discussing a total investment of $9 billion over 10 years from the time construction began.

They added that negotiations are complex and that Rome wants Intel to clarify its plans for Italy before formalizing a package of favorable terms, particularly in terms of jobs and energy costs.

The sources said that if Rome and Intel reach an agreement, they will then proceed with the selection of a site for the station.

But its chief executive, Pat Gelsinger, said earlier this month that he hoped to announce the locations of new chip factories in the United States and Europe early next year. Read more

In April, the Italian government used anti-acquisition legislation to prevent a planned sale of a controlling stake in a local semiconductor equipment maker to China’s Shenzhen Invenland Holdings Co Ltd.

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Additional reporting by Giuseppe Fonte in Rome and Giulio Piovaccari in Milan; Additional reporting by Stephen Niles. Editing by Alexander Smith and Jonathan Otis

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