EU clears 2 billion Italian state aid for STMicroelectronics chip plant in Sicily

All-Italian European semiconductor industrial hub? Now you can. The European Commission approved the 2 billion in public aid proposed by Italy for a project that is good for the country and the interests of the entire EU. It is the first of its kind and will be set up in Catania, Italy: it is the integrated silicon carbide chip manufacturing plant for electrical devices, which will cover all stages of silicon carbide fabrication—essential in the process of producing specific microchips used in high-performance devices, such as for renewable energy—and will contribute to the development of a highly skilled workforce in Sicily.

In the eyes of Brussels, it will also help end the over-reliance on imports of devices that are key to achieving the digital and green transition in Europe because it will be committed to orders prioritized for the production of crisis-relevant products in Europe. All this prompted the European Commission to authorize, without objection, Italy’s €2 billion measure to support STMicroelectronics in building and operating an integrated silicon carbide electrical device chip production plant in Catania, Italy. The EU executive recalled that Italy has notified the Commission of its plan to support STMicroelectronics’ Catania Campus project to construct and operate an integrated production plant for silicon carbide electrical device chips.

“Silicon carbide is used to fabricate wafers that serve as the basis for specific microchips used in high-performance devices, such as electric vehicles, fast charging stations, renewable energy and other industrial applications,” the Commission explained. The Sicilian facility will cover all stages of fabrication of this key material for the successful dual green-digital transition, from raw material to finished devices, namely power transistors and power modules.

The project will enable the development of a large-scale production plant for high-performance silicon carbide chips using 200-mm-diameter wafers that will be processed into modules and other devices used, for example, by the automotive industry in Europe and worldwide. The plant is expected to operate at full capacity in 2032.

More specifically, the project is based on technologies that have been and will be developed under major projects of common European interest (IPCEI) for microelectronics research and innovation approved by the Commission in December 2018 and June 2023. Then, last March 4, STMicroelectronics applied for the Catania Campus to be recognized as an integrated manufacturing facility under the Chip Rules for Europe. However, the Commission clarified that this procedure is independent of the state aid assessment.

Regarding the investigation, the EU executive assessed the aid in light of EU state aid rules and noted several positive points. The first concerns the fact that “the measure facilitates the development of certain economic activities, enabling the creation of a new mass production facility for innovative semiconductor technologies and semiconductors in Europe,” and the second positive point is that “the facility is the first of its kind in Europe, as there is currently no comparable mass production facility.” In this context, it also specified that the Catania Campus project represents the first integrated silicon carbide production plant in Europe, covering all stages of production, from powdered material to finished devices, including the fabrication of silicon carbide modules.

Moreover, “the aid produces an incentive effect, since, without public support, the beneficiary would not invest”. Added to this is its strategic nature: the Italian measure turns out to have “broad positive effects for the European semiconductor ecosystem and contributes to strengthening security of supply in Europe.”

Broad satisfaction with the yes vote on the measure was expressed by the Minister of Enterprise and Made in Italy, Adolfo Urso, who spoke of a “historic milestone for Sicily” because “the most important, most significant and most competitive pole in Europe is being built in this land, in microelectronics and green technology. In the dual transition, digital and green,” Urso continued, “Sicily, and therefore Italy, will be able to play an extremely important role for all of Europe. And he announced, “By the end of the year, Italy will reach €10 billion of investment in the microelectronics sector.”

For European Commission Vice President Margrethe Vestager, “the €2 billion Italian measure approved today supports a unique integrated plant for silicon carbide chips,” which will “strengthen the European semiconductor supply chain and ensure that we have access to a reliable source of energy-efficient chips.”