$4.6 Billion Italian Incentive Bill Designed to Land Intel’s Next EU Fab

The Italian government recently announced a $4.6 billion investment in domestic chip manufacturing, to be completed by 2030. This is a direct attempt to secure the country as the location of Intel’s next European fab site, and all the attending jobs and tax revenues that come along with it. Rome will use tax revenue, along with a portion of the funds made available by the EU Chips Act, to finance the effort.

Prime Minister Mario Draghi’s government approved the plan just weeks after Intel chose Magdeberg, Germany as the site of their first new European plant, a move that’s a part of Intel’s approximately $100 billion, eight-phase investment in diversifying the global semiconductor supply chain. 

Rome has been wooing Intel for months in an effort to become home to an innovative new chip packaging fab that’s expected to cost $9 billion over the course of a decade. The U.S. chip titan is reportedly asking for favorable energy rates and labor assistance among other concessions. 

Italy will use the money for “research and development of microprocessor technology and investments in new industrial applications of innovative technologies,” along with upgrading existing industrial sites to be fab-friendly.

Interestingly enough, and potentially to set his nation up for Intel success, Draghi invoked his government’s “Golden Power” and blocked the acquisition of Italian semiconductor equipment supplier LPE by Chinese investment group Shenzhen Invenland Holdings in spring of 2021. LPE’s machinery treats silicon with chemicals that make it ready to become chips, and is crucial to the semiconductor supply industry.

It’s no surprise, and nothing new, that governments want semiconductor fabs within their borders. Fabs mean jobs, often good ones. Take Intel’s recently announced plant just outside of Columbus, Ohio. Its $20 billion investment promises to bring:

• 1 new mega-site
• 2 confirmed new fabs
• 6 more potential fabs
• 140 Intel-supported Ohio companies that will receive additional business
• 3000 Intel jobs
• 7000 construction jobs

There will be other indirect benefits as well. Jobs supporting Intel’s Ohio site, but not directly involved, could easily number in the tens of thousands between contractors, consultants, and suppliers. There’s a lot to gain by having Intel show up with their proverbial moving truck!

But the competition between Germany and Italy to land an Intel site runs counter to one of the EU CHIPS Act’s main principles–to adapt and refine grants and funding at the national level so as not to undercut a coordinated European effort towards domestic semiconductor production. 

The Act is still making its way through the legislative process, and these Intel negotiations started before it was announced, but regulating how countries compete to land crucial foreign investment doesn’t sound simple or straightforward. 

However, semiconductors are crucial in today’s world, and the EU has a strong foothold in the industry. Let’s hope they can set aside the competition and work together. We’ll all benefit from that.