Italy intensifies talks with Intel over new chip factory

Intel and Italy are intensifying talks over investments expected to be worth about 8 billion euros to build a state-of-the-art semiconductor packaging plant, according to two sources close to the matter.

A deal of this magnitude 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.

It would also deal a blow to Irish hopes that investment would come here.

Intel CEO Pat Gelsinger told RTÉ News earlier this year that Ireland was on the shortlist of countries that could benefit from the company’s plan to boost its chip production in Europe by building a number of new manufacturing plants.

It was later reported that Intel was looking into a potential site in Galway that could accommodate such development under the plan.

As part of the plan, Germany, the EU’s largest economy, is at the forefront of setting up Intel’s planned European “megafab” plant, although France is still up and running, Reuters reported in October.

Intel declined to comment on the talks or how much investment it might make, adding that it has not announced any changes to its plans.

Chip makers are scrambling to boost production after massive demand for consumer electronics such as smartphones and computers stemmed 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.

However, CEO Pat Gelsinger said earlier this month that he hopes to announce the locations of new chip factories in the US and Europe early next year.

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

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