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Intel edges closer to $5 billion chip factory deal with Italy

Italy and Intel eyeing Piedmont or Veneto regions as potential locations for the new assembly plant

Intel is reportedly close to sealing a $5 billion deal with Italy to build an advanced semiconductor packaging and assembly plant in the country.

According to Reuters, two sources briefed on discussions revealed that Rome is willing to fund as much as 40% of the chip maker’s total investment in Italy, which they said is expected to rise over time from the initial $5 billion. 

The government of outgoing Prime Minister Mario Draghi is currently working to secure an agreement by the end of August, the unnamed sources added, which would see the deal secured before the country’s snap general election on September 25. 

The new factories would leverage the latest technology to “weave together full chips out of tiles,” the news outlet reports.

Several Italian regions reportedly registered their interest in Intel’s investment, with Apulia, Lombardy, Piedmont, Sicily, and Veneto early contenders. 

According to the sources, Intel and the Italian government have now shortlisted sites in two of the regions, with those said to be the northern regions of Piedmont and Veneto.

Back in March, Intel announced a €33 billion investment to go towards semiconductor research and development (R&D) and manufacturing in the EU, to include a rumoured €17 billion mega plant in Magdeburg, Germany. 

It was also revealed the chipmaker was planning a new R&D and design hub in Plateau de Saclay in France, as well as a €4.5 billion factory in Italy. The company had also previously considered the UK but abandoned the plans following Brexit.

“This broad initiative will boost Europe’s R&D innovation and bring leading-edge manufacturing to the region for the benefit of our customers and partners around the world,” said Intel CEO Pat Gelsinger at the time. “We are committed to playing an essential role in shaping Europe’s digital future for decades to come.”

Under its Chips Act, the European Commission announced earlier this year that would provide around €15 billion in additional public and private investments by 2030, on top of €30 billion of public investments that were already planned. 

On Rome’s side, the Italian government has reportedly ringfenced €4.15 billion to entice chip manufacturers to the country and invest in new industrial technology. 

The move forms part of Intel’s drive to invest $88 billion in building resources across Europe as it looks to reduce its reliance on Asian manufacturers and avoid future supply chain issues like those seen in recent times.

As well as its investment in Europe, the chip maker also began construction on two new US chip factories back in September last year, based at its Octillo campus in Chandler, Arizona.

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