Italy, Intel intensify talks over $9 billion chip factory, sources say

Italy, Intel intensify talks over $9 billion chip factory, sources say

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Rome: Two sources close to the matter told Reuters that Intel and Italy are negotiating an investment estimated to be worth approximately 8 billion euros ($9 billion) to build an advanced semiconductor packaging plant.

A transaction of this magnitude will give Italy 10% of the 80 billion euros. The American company plans to use cutting-edge manufacturing capacity in Europe in the next 10 years to help avoid a shortage of semiconductor chips in the future.

Sources previously told Reuters that the investment scale was between 4 billion and 8 billion euros.

According to a Reuters report in October, as part of the plan, Germany, the EU’s largest economy, will be the first to acquire Intel’s planned large European factories, even though France is still operating.

Intel said it is “having constructive investment conversations with government leaders in multiple EU countries” but declined to comment specifically on talks 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 boost output after explosive demand for consumer electronics such as smartphones and computers resulting from the work-from-home trend during the COVID-19 pandemic led.

Meanwhile EU countries, where many jobs still rely on industries such as automobile manufacturing, are eager to reduce their dependence on semiconductor supplies from China and the United States after recent supply chain problems.

The proposed Italian factory would be an advanced packaging plant using innovative technologies to weave full chips.

Intel and the Italian government of Prime Minister Mario Draghi are discussing an overall investment of $9 billion over 10 years from when construction begins, the sources said.

They added that the negotiations are complicated and Rome hopes that Intel will clarify its plans for Italy before formalizing the package of favorable conditions, especially in terms of employment and energy costs.

Sources said that if Rome and Intel reach an agreement, they will continue to choose factory locations.

However its Chief Executive Pat Gelsinger earlier this month said he hoped to announce the locations of new chip plants in the United States and Europe early next year.

In April, the Italian government used anti-takeover legislation to block a planned sale of a controlling stake in a local semiconductor equipment maker to China s Shenzhen Invenland Holdings Co Ltd. 

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