Giuseppe Fonte & Giulio Picovaccari

ROME, (Reuters) – Italy may fund 40% of Intel (NASDAQ)’s investment for the construction of a country-wide chip packaging plant and assembly facility. This initial $5Billion investment will be increased over time according to sources.

Prime Minister Mario Draghi’s government has a plan that shows how willing some European countries are to provide competitive terms for Intel and other chipsmakers looking to invest in the region, where labor and production costs can be higher than those in Asia.

Draghi’s office as well as the innovation ministry declined to comment.

Intel announced last week details about a $88 Billion investment program across Europe. The drive aims to reduce Europe’s dependence upon Asian chip imports, and alleviate a severe shortage in Europe’s strategic cars sector.

With an initial investment of 33 billion euro ($36.4 billion), the plan focuses on a new German chipmaking facility. It also includes an advanced Italian packaging and assembly plant with potential investments of as high as 4.5 billion.

It is anticipated that the Italian facility will open in 2025-2027. The additional 1,500 direct jobs would be created, while an additional 3,500 would come from suppliers and other partners.

The 40% capex that Intel would spend in Italy is comparable to similar investment made by the chipmaker in Asia. These sources declined to identify the source due to confidentiality.

One source said that the government has been in discussions with the European Union about state aid provided by Intel member countries.

The source said that while Brussels will ultimately decide the amount, I believe Italy will contribute between 30-40% and 40% of total investment.

Intel did not comment on details but said that the agreement was with Italy.

LEARNING FROM THE FIELD

The funding mechanism for Italy is still unclear. Rome has already set aside 4.15 Billion Euros to attract chipmakers, and for new investments in innovative technology.

Intel is using new funding guidelines for its innovative semiconductor facilities to seal a deal, which were announced last month by European Commission under Chips Act.

Brussels made available an additional 15 billion euro in public and private investments by 2030. This is on top of the 30 billion euros already allocated from NextGenerationEU and Horizon Europe, as well as national budgets and public investment plans of over 30 billion.

The Intel chief executive Pat Gelsinger said last week that the European Union might help even the costs with Asia. But he did not give any further detail.

Gelsinger stated that Intel would spend any remaining funds from the 80 billion Euro investment it made over the next ten years on the construction of the entire German site as well as further development in Italy and other countries.

The source stated that Intel is trying to get Intel to invest even more in Italy than the original 4.5 billion euro.

According to the source, Rome has identified five possible locations in Italy for Intel’s new packaging and assembly plant. These could be located in Lombardy and Piedmont as well Veneto and Veneto regions.

The source stated that the goal is to create a shortlist of two possible alternatives in less than a month. It will then be up to Intel to choose where it is built.

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