Exclusive: Italy and Intel set to strike $5bn chip factory deal

by Giuseppe Fonte and Giulio Piovaccari

ROME (Reuters) – Italy is set to strike an initial $5 billion (4.91 billion euros) deal with Intel to build a packaging and semiconductor assembly plant, two sources briefed on the talks told Reuters on Thursday.

Intel’s investment in Italy is part of a broader plan announced by the US chipmaker earlier this year, which plans to invest $88 billion to increase production capacity in Europe, to reduce the region’s dependence on Asia and alleviate the shortage that has reduced production in the strategic automotive sector.

Declining to be identified due to the sensitivity of the matter, the sources said the government of resigning Council President Mario Draghi was working to strike a deal by the end of August, ahead of snap national elections scheduled for 25 september.

Sources previously told Reuters that Rome was ready to fund up to 40% of Intel’s total investment in Italy, which is expected to increase over time from the initial $5 billion.

Both Mario Draghi’s and Intel’s services declined to comment on the information.

The factory would use new technologies to manufacture complete chips from tiles.

Intel and the government have pre-selected potential sites in two Italian regions, the sources said, with one specifying the northern regions of Piedmont and Veneto.

A final decision on where to build the plant has yet to be made, the two sources said.

The government is also in discussions with the Franco-Italian company STMicroelectronics, the Taiwanese chipmakers MEMC Electronic Materials Inc and TSMC, and the Israeli Tower Semiconductor, which Intel acquired at the beginning of the year.

STMicroelectronics last month signed an agreement with GlobalFoundries to build a $5.7 billion chip factory in France.

(Report Giuseppe Fonte in Rome, Giulio Piovaccari in Milan, Supantha Mukherjee in Stockholm and Jane Lanhee Lee in Oakland; French version Augustin Turpin, edited by Jean-Michel Bélot)

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