Intel and the Italian government are on the verge of finalizing a $5 billion (€4.9 billion) chip factory deal. Reuters learned the news from two insiders.

Intel announced plans to invest €80 billion in European chip production facilities back in 2021. The first phase kicked off in March 2022. Intel pledged €33 billion to research and manufacturing sites in Germany, France, Ireland, Italy and Spain.

The German contracts were quickly drawn up. Intel will start the construction of two chip factories in Magdeburg in 2023. Negotiations with Italy are taking longer. Intel confirmed talks of an Italian manufacturing site in March, but the outcome remains uncertain. That could change shortly. Insiders told Reuters that Intel and Italy are on the verge of closing a $5 billion (€4.9 billion) chip factory deal.

The sources are anonymous because the information is confidential. According to the insiders, Prime Minister Mario Draghi attempts to reach an agreement before the end of August. Reuters contacted Draghi’s office, which declined to comment.

EU Chips Act

Intel is expanding in Europe due to a favourable climate for chipmakers. Earlier this year, the European Commission presented the EU Chips Act, a legislative proposal to boost chip production in Europe. The EU wants to be less dependent on chip factories outside of Europe.

European governments will be allowed to invest in chip manufacturers as part of the EU Chips Act, which was previously prohibited. The United States is currently working on a similar bill.

The announcement of the EU Chips Act sparked a race. The governments of Germany and Italy set aside large sums of money to attract chip manufacturers through subsidies. The Italian government budgeted €4.2 billion. Earlier this year, insiders told Reuters that the government is willing to fund 40 percent of Intel’s investments in Italy.

The Netherlands responded to the Chips Act as well. In April 2022, the government pledged €470 million euros to PhotonDelta for the development of photonic chips.