EU approves state aid for the construction of microchip plant in Sicily

The European Commission has given the green light to Italian state aid for semiconductor manufacturer STMicroelectronics to construct a €5 billion microchip plant in Sicily. This approval comes as Europe seeks to reduce dependence on Asian imports for critical manufacturing components. The plant in Catania will specialise in producing microchips that enhance energy efficiency in electric vehicles and will receive a direct grant of about €2 billion from Rome.

The move comes amidst heightened scrutiny of Europe’s reliance on Asian chip supplies due to pandemic-related disruptions and trade tensions with China. To address these concerns, the EU has introduced its Chips Act, aiming to attract chip manufacturers and secure vital components for hi-tech industries. European antitrust chief Margrethe Vestager emphasised the strategic importance of diversifying chip supply chains and reducing dependencies on single suppliers.

As major shareholders in STMicro, the governments of France and Italy are backing the project. The new plant, STMicro’s second facility in Sicily, will produce silicon carbide chips known for their energy efficiency. This initiative signals a shift towards self-sufficiency in semiconductor production and supports Europe’s digital and green transition objectives. With operations expected to reach full capacity by 2032, the plant aims to bolster regional security of chip supply and meet the growing demand from automakers like Tesla, BMW, and Renault.