Intel Changes Plans to Build Facility in Italy and is Set to Receive Subsidies in the US Soon

Intel Rethinks Italian Chip-Packing Plant as Subsidies Await

Two years into his appointment as CEO of Intel, Patrick Gelsinger’s ambitions to expand the company’s footprint in the U.S and Europe might hit a snag without government subsidies. It is expected that U.S President Joe Biden will confirm the provision of these subsidies for Intel next week. In contrast, the tech giant has decided against setting up an establishment in Italy for now.

According to the agency Reuters, Adolfo Urso, Italy’s Minister of Industry, stated that Intel has chosen to pause its plans to construct a chip packing plant in Italy and a research center in France. The tech giant decided to concentrate on building two chip-making plants in Germany instead. Despite counting on European subsidies, even the Italian government’s willingness to support Intel’s local ventures has failed to persuade the firm to start building the chip-packing plant. Previously, the project, costing €4.5 billion and expected to provide employment for up to 1,500 locals, was slated for completion between 2025 and 2027.

While the Italian authorities remain ready to offer all possible assistance should Intel decide to revive the project, the company has yet to comment on these developments. In the meantime, Singapore-based startup Silicon Box, co-founded by Marvell Technology alumni, is going ahead with plans to build a promising ‘chiplet’ manufacturing plant in Italy. This initiative involves an investment of €3.2 billion and is expected to create 1,600 new jobs. In addition, Reuters also reported that the Italian government has held talks with Taiwanese business representatives about localizing chip production, indicating that the Silicon Box project might not be the only one of its kind.

Reuters also revealed that President Biden and Commerce Secretary Gina Raimondo will visit Arizona next week. The visit will see the provision of funds for Intel to go ahead with the construction of its plants in the U.S. Besides Arizona, Intel has plans to build two facilities in Ohio, though unofficial sources have suggested that these won’t be operational until at least 2026, mostly due to finance-related challenges. If the Ohio constructions are indeed delayed, Intel will first commence production of its advanced Intel 18A technology on a pilot line in Oregon, followed by Arizona, with the potential to serve third-party clients.

It is expected that the American authorities will provide about $10 billion to Intel to implement these projects, which could include preferential loans in addition to non-refundable subsidies. The Ohio project alone will require costs in the region of $20 billion, leading Intel to anticipate that government funding will cover between 20-30% of the new plant construction costs. Of the $39 billion provided under the ‘CHIPs Act’ for plant construction subsidies in the U.S, around $28 billion will be dedicated to advanced manufacturing lines in terms of lithographic norms, which certainly include Intel’s initiatives. Speculations suggest that Samsung will receive $6 billion of the funding and TSMC will gain $5 billion to aid in the construction of two plants in Arizona.

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