(Reuters) – STMicroelectronics (ST) said on Wednesday it would build a 730 million euro ($728 million) silicon carbide wafer plant in Italy, the latest investment by a major chipmaker to ease a semiconductor shortage affecting global manufacturing.
As demand soars for chips used in everything from smartphones to cars, supply chain bottlenecks going on for almost two years have created havoc in several global industries, including automotive, healthcare and telecoms.
Franco-Italian ST said the new integrated silicon carbide (SiC) substrate manufacturing facility would meet increasing demand from automotive and industrial customers amid a transition to electrification.
The five-year investment, due to be completed in 2026, will be supported with 292.5 million euros of public funds from Italy, as part of the country’s National Recovery and Resilience Plan, with the grant approved by the European Commission.
“The Italian measure approved today will strengthen Europe’s semiconductors supply chain, helping us deliver our green and digital transition,” European Commission Executive Vice-President Margrethe Vestager said in a separate statement.
“The measure will ensure that our industry has a reliable source of innovative substrates for power efficient chips,” she added.
To boost production capacity in Europe, Brussels earlier this year launched the so-called Chips Act, enabling 15 billion euros in additional public and private investment in the industry by 2030, on top of 30 billion euros of public investments already planned from NextGenerationEU, Horizon Europe and national budgets.
ST will build the new plant at its Catania site in Sicily, alongside an existing SiC device manufacturing facility. It will create around 700 additional jobs, the group said.
“This new facility will be key to our vertical integration in SiC … as we further ramp up volumes to support our automotive and industrial customers in their shift to electrification and higher efficiency,” ST CEO Jean-Marc Chery said.
Production is expected to start in 2023, with a balanced supply of SiC substrate between internal and merchant supply, ST said.
Rival chipmaker Intel has also announced it will build a multibillion-euro chip factory in Italy and is in talks with Rome to strike a final deal and identify a suitable area for the investment.
($1 = 1.0031 euros)
(Reporting by Giulio Piovaccari in Milan and Michal Aleksandrowicz in Gdansk; Editing by Jason Neely and Mark Potter)