STMicroelectronics will develop a silicon carbide wafer facility in Italy for 730 million euros ($728 million), the first such project allowed as part of the European push to bring chip manufacturing closer to home.

Supply chain bottlenecks have caused mayhem in various global industries, including automotive, healthcare, and telecommunications, as demand for processors used in everything from smartphones to vehicles has risen.

To increase European production capacity, Brussels introduced the EU Chips Act in February, allowing for more than 40 billion euros in public and private investment in the industry by 2030. ST’s upcoming plant in Italy is made possible by the EU Chips Act.

Helping the EU achieve its objectives

According to ST, the new integrated silicon carbide (SiC) substrate production plant will address rising demand from automotive and industrial clients as the world undergoes electrification.

The five-year investment will be backed by €293 million of public funds from Italy as part of the country’s National Recovery and Resilience Plan, alongside the grant greenlit by the European Commission.

In a separate statement, Eurocommissioner Margrethe Vestager stated that Italy agreed to improve Europe’s semiconductor supply chain, assisting the bloc in delivering its green and digital transformation.

Intel in talks with Italy

Vestager said the move would ensure that the EU has a consistent supply of inventive substrates for power-efficient chips, referring to their usage in electric cars and charging stations.

ST will construct the new factory alongside an existing SiC device production facility at its Catania campus in eastern Sicily. It will generate around 700 new job opportunities in one of the country’s weaker districts.

Intel has also declared plans to establish a multibillion-euro chip facility in Italy and is in talks with Rome to finalize the contract, with a location in the affluent north considered most likely.