Intel's planned Italian facility now tied up in election politics

Government may foot up to 40% of the bill for a fab that runs on time

As Intel looks to expand its rebooted foundry empire, the x86 giant's next chip plant may be an advanced packaging facility in the northern Italy.

Citing people familiar with the matter, Reuters reports today that the town of Vigasio, located roughly half way between Milan and Venice, is Intel’s preferred site for its next European chip factory. The facility is reportedly favored for its close proximity to the Brenner motorway, which links Italy and Austria via the Alps, over which Intel can transport chips built at its Magdeburg fab in Germany.

During the past year Intel has laid out plans to build a vast network of semiconductor R&D, design, packaging, and manufacturing powerhouses across Europe as it looks to compete more directly with the likes of TSMC, and Samsung Electronics on the global stage. The Italian job comes after extensive negotiations with the locals.

The Italian government could end up funding as much as 40 percent of the facility if a deal for the Vigasio site negotiated with Mario Draghi’s outgoing administration is continued by newly elected far-right Prime Minister Giorgia Meloni.

The location, in the northeastern Veneto region, therefore isn’t a sure bet for the American chipmaker, according to Reuters, as the incoming government may have something to say about it. That said, we're told Draghi's aides are negotiating behind the scenes with Rome's next leaders to ensure the agreement with Intel remains intact.

While it remains unclear how much the facility will ultimately cost, as with most things related to chip manufacturing, it's likely to be a multi-billion dollar affair. Intel said it would spend roughly $7 billion constructing a packaging facility in Malaysia, late last year.

If Italy’s new leadership moves forward with the packaging plant, the facility is hoped to employ 1,500 workers and create up to 3,500 jobs — likely in supply and construction-related fields — in the region, once the facility comes online between 2025 and 2027, Reuters reports. Intel indicated this assembly line will cost at least 4.5 billion euros ($4.3 billion).

Intel’s interest in Vigasio may stem in part from its proximity to Milan, home of Tower Semiconductor's Italian facilities. Intel acquired Tower, an Israel-headquartered foundry operator, in February in a deal valued at $5.4 billion. That takeover vastly expands Intel's foundry services portfolio to include legacy process nodes, Intel Foundry Services president Randhir Thakur recently told The Register.

If the plans for Vigasio fall through, Intel may be able to fall back to Lombardy, Apulia, and Sicily as alternative locations for the plant, as it previously had its eye on those three.

The reported location and tentative deal with the Italian government shed new light on Intel’s planned European expansion.

This spring the x86 titan announced it would spend 17 billion Euros ($19 billion) on constructing a chip fab in Germany. The “megafab” is be located in Magdeburg, west of Berlin; is slated to come online by 2027; and will be responsible for producing Intel’s most advanced process tech.

That project is part of a larger €33 billion ($36 billion) investment in which the chipmaker intends to expand operations in Ireland, and construct research and development, design, and packaging facilities in France, Poland, Italy, and Spain.

Intel declined to comment on the report. ®