Two sources close to the situation told Reuters that Intel and Italy are accelerating negotiations over an investment of roughly 8 billion euros ($9 billion) to establish an advanced semiconductor packaging plant.
A transaction of this magnitude would secure Italy around 10% of the 80 billion euros that the US business plans to invest in Europe over the next decade on cutting-edge production capacity to help avoid future semiconductor chip shortages.
Reuters had earlier reported that the investment will be in the range of 4 billion to 8 billion euros. According to Reuters, Germany, the largest economy in the European Union, is in the lead to land Intel Corp.’s (INTC.O) proposed European’megafab’ plant, though France is still in the running.
PARIS, FRANCE – OCTOBER 29: The logo of the US semiconductor manufacturer Intel is displayed during the ‘Paris Games Week’ on October 29, 2019 in Paris, France. ‘Paris Games Week’ is an international trade fair for video games that runs from October 29 to November 03, 2019. (Photo by Chesnot/Getty Images)
Intel stated that it is “having fruitful investment dialogues with government leaders in numerous EU nations,” but did not elaborate on its discussions with Italian officials.
“We are encouraged by the many possibilities to support the EU’s digital agenda and 2030 semiconductor ambitions. While current negotiations are ongoing and confidential, we plan to make an announcement as soon as possible,” the company said in a statement.
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, where many employers still rely on industries such as automobile manufacture.
The projected Italian factory would be a cutting-edge packaging facility that would weave complete chips using cutting-edge technologies. According to the sources, Intel and Prime Minister Mario Draghi’s Italian government are contemplating a $9 billion investment over ten years from the start of construction.
They noted that because the negotiations are complicated, Rome wants Intel to clarify its objectives for Italy before formalizing a package of favorable terms, particularly on jobs and energy prices. According to the sources, if Rome and Intel reach an agreement, they will move forward with selecting a location for the factory.
However, Pat Gelsinger, the company’s CEO, indicated earlier this month that he wanted to disclose the locations of additional chip facilities in the US and Europe early next year. In April, the Italian government utilized anti-takeover legislation to prevent China’s Shenzhen Invenland Holdings Co Ltd from buying a controlling position in a local semiconductor equipment manufacturer.
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