Producing semiconductors in Italy: mission impossible?

The semiconductor industry is one of the crucial sectors on which the new European industrial policy is focusing. In a context of global instability and returning geopolitical tensions, dependence on other countries in a sector that is at the heart of industrial development in the coming decades is risky. This is why the European Union has launched the Chips Act through which it aims to double chip production in Europe from the current 10% to 20% of world production. The semiconductor industry, like many other hi-tech industries, is organised along global supply chains where a few big players in the sector are the main nodes, while small and medium-sized enterprises (SMEs) assume a position of dependence on the investments of the big guys. In Italy, the sector is characterised by the presence of a plethora of SMEs, around 1900 with 36,000 employees. Italy is also home to the French-Italian STMicroelectronics, a global company whose main production sites are in Catania, where silicon carbide devices and other advanced energy technologies are produced, and Agrate Brianza, where the production and development of cutting-edge technologies are concentrated. In addition to these, STM has an important research and development centre in Naples. The competitive advantage of large companies lies in particular in their ability to finance the huge research expenditures that underpin product development. In order to understand Italy's role in this sector, however, it is necessary to focus on the ecosystem of SMEs, their potential for growth and technological development, and the role they can play in a technologically complex sector dominated by large companies. Italian SMEs have in fact managed to carve out niche positions for themselves, often doing research with high added value and professional skills in very specific areas, and then 'reselling' it to large manufacturers. A first problem encountered by entrepreneurs is the lack of supply of qualified human capital. Even in cases where companies manage to hire staff, this requires huge investments in training by the companies themselves. Another need is the creation of research and training centres where ideas, knowledge, and new human capital can be exchanged. A first step in this direction is the recent Chips.it competence centre, the Italian centre for semiconductor integrated circuit design based in Pavia, which should act as a competence centre and aggregator of public-private cooperation, providing an important stimulus for the growth of future projects. Another step is to strengthen the presence of large companies, for which a strategy is needed to attract foreign investment, especially in that part of the supply chain that is most innovative and technologically advanced. One example is the agreement that the Italian government is negotiating with the Singaporean company Silicon Box, which envisages an investment of over $3.5 billion to build a new factory in Piedmont. While these investments are welcome for obvious reasons, they must also be scrutinised. In fact, not all phases of semiconductor production bring the same value and some companies could benefit from public incentives to brand themselves as 'made in Eu' which would be useful to overcome possible duties, but with little economic impact on our production chain. A careful selection of agreements and investments is therefore necessary if a high-tech semiconductor industry is to be created. The SME substratum already present has the potential to strengthen itself in an ecosystem driven by large companies, public research and strategic policies such as competence and training centres. In a European context of revitalising the sector with a view to greater strategic autonomy, Italy can play its part.

*CNR-Issirfa **Luiss