EC Approves €5 Billion Italian State Aid for STMicroelectronics’ New Microchip Plant in Sicily

The European Commission approved on Friday a substantial state aid package from Italy to support the construction of a new €5 billion ($5.4 billion) microchip plant by STMicroelectronics (STMPA.PA) in Catania, Sicily. The French-Italian semiconductor manufacturer will receive approximately €2 billion in direct grants from the Italian government to produce specialist microchips designed to enhance energy efficiency in electric vehicles.

This decision comes as Europe seeks to mitigate its dependence on Asian imports for critical components, an issue that has been thrust into the spotlight by the pandemic’s massive supply chain disruptions and escalating trade tensions with China. Recent disturbances on the Red Sea trade route have further underscored the vulnerability of Europe’s chip supply chains.

The new plant in Sicily is part of a broader strategy by the European Union to secure its semiconductor supply chain. The EU’s Chips Act aims to attract chip manufacturers to the continent, mirroring similar efforts by the United States, which has been offering substantial incentives to lure chipmakers.

EU antitrust chief Margrethe Vestager emphasized the strategic importance of this initiative during a press conference in Catania. “I think it’s really important that we do this, because it’s also signaling to the rest of the world, you should not build up capacity to think that you can own this market, because it’s so strategically important to us not to have single supplier dependencies,” Vestager stated.

The approved state aid for STMicroelectronics’ new plant is seen as a critical step in the EU’s commitment to ensuring a stable and secure supply of semiconductors, vital for high-tech industries ranging from computing to car manufacturing.

Source: Reuters