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EU approves Italian aid for $5.4 billion STMicro chip plant
Global Banking and Finance Review
Company
By Toby Sterling
CATANIA, Italy (Reuters) -The European Commission on Friday approved Italian state aid for STMicroelectronics to build a 5 billion euro ($5.4 billion) chip plant, as Europe battles to reduce its reliance on Asian imports for vital manufacturing components.
The plant in Catania, Sicily, will receive a direct grant of about 2 billion euros from Rome to make specialist microchips that boost energy efficiency in electric cars.
Massive supply chain disruptions during the pandemic and a rise in trade tensions with China have heightened scrutiny on Europe’s reliance on Asia for chip supplies, with recent disruptions on the Red Sea trade route adding to concerns.
With the United States also offering big incentives to try to attract chip manufacturers, the European Union has responded with its own Chips Act seeking to do the same for components vital to hi-tech industries from computing to carmaking.
“The Catania campus will help reverse the tendency of over-reliance on imports of devices that are particularly relevant for the European digital and green transition objectives,” the Commission said in a statement.
The STMicro plant will produce chips made from silicon carbide, which is more energy-efficient than standard silicon.
The company’s plans show its confidence that recent weakness in the electric vehicle market is temporary and that silicon carbide chips will become more widely adopted by automakers.
Having a large, integrated European plant making and packaging silicon carbide chips will have “wide positive effects for the European semiconductor ecosystem” and help to guarantee regional security of supply, the Commission said.
The plant is expected to be operating at full capacity in 2032.
STMicro is the largest maker of silicon carbide chips, which are more expensive to manufacture than regular silicon chips but favoured by automakers because they are energy-efficient, lightweight and tough.
The company’s customers include Tesla, BYD, BMW and Renault.
($1 = 0.9241 euros)
(Reporting by Toby SterlingAdditional reporting by Diana Mandia and Tassilo HummelEditing by David Goodman and Mark Potter)
Silicon carbide is a compound made of silicon and carbon. It is known for its high thermal conductivity and is often used in high-performance electronic devices, especially in electric vehicles.
The European Chips Act is a legislative initiative by the European Union aimed at boosting the semiconductor industry in Europe, reducing dependency on imports, and enhancing technological sovereignty.
Energy efficiency refers to using less energy to provide the same service or achieve the same result. It is crucial for reducing energy consumption and minimizing environmental impact.
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