Semiconductors

Stm, EU green light for 2 billion in aid from Italy to Catania

The Commission approved support in the construction and operation of an integrated chip production plant

31 May 2024

4' min read

Key points

The Italian plan
Direct Subsidy
St commitment
Europe's first plant
The incentive effect
Vestager: Chip development in Catania helps EU breakthrough

4' min read

The European Commission has approved, under EU state aid rules, a EUR 2 billion Italian measure to support STMicroelectronics ("ST") in the construction and operation of an chip integrated silicon carbide power device manufacturing plant in Catania, Sicily. The measure will strengthen Europe's security of supply, resilience and digital sovereignty in semiconductor technologies, in line with the objectives set out in the European Chips Act communication. The measure will also contribute to the achievement of the digital and green transitions.

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The Italian Plan

Italy has notified the Commission of its plan to support the Catania Campus of ST project to build and operate an integrated chip production plant for SiC power devices. SiC is a composite material used to produce wafers that serve as the basis for specific microchips used in high-performance power devices, such as in electric vehicles, fast-charging stations, renewable energy and other industrial applications. The integrated plant will cover all production stages from raw material to finished devices, i.e. power transistors and power modules.

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The Direct Subsidy

The aid will take the form of a direct grant of around EUR 2 billion to ST to support its investment worth a total of EUR 5 billion. The project will enable the development of a large-scale production plant for high-performance SiC chips, based on 200-mm-diameter wafers that will be processed into modules and other devices used, for example, by the automotive industry, in Europe and worldwide. The plant is expected to operate at full capacity in 2032.

St

Commitment by St

Under the measure, ST agreed to: ensure that the project will have a clear positive impact with spillover effects on the EU semiconductor supply chain beyond ST and Italy; contribute to the development of the next generation of 200 mm SiC technology, as well as a technology roadmap for SiC modules in the EU implement priority orders in the event of supply shortages in line with the European Chips Act and ensure that the project will not be subject to the extra-territorial application of public service obligations imposed by a third country; and develop and deploy training and skills courses to increase the pool of skilled and qualified workforce. The project is based on technologies that have been and will be developed as part of the Important Projects of Common European Interest ("Ipcei") for microelectronics research and innovation approved by the Commission in December 2018 and June 2023. On 4 March 2024, ST applied for recognition of the Catania Campus as an integrated manufacturing facility under the European Chips Act. This process is independent of the state aid assessment.

The first plant in Europe

The new STMicroelectronics mass production plant in Catania for innovative technologies and chips is the first of its kind in Europe, as there is currently no comparable mass production plant. This was written by the European Commission, which today gave the go-ahead for 2 billion in state aid from Italy for the plant. In particular, the Catania Campus will be the first integrated SiC production plant in Europe covering all production stages, from powder material to finished devices, including the production of SiC modules, the Commission writes. The Catania Campus will also utilise a production process based on 200 mm diameter wafers for SiC and will gain significant efficiency gains from the close integration of production within the Campus.

The incentive effect

The aid has an 'incentive effect', as the beneficiary would not carry out this investment without public support. The measure has a limited impact on competition and trade within the EU. The measure is necessary and appropriate to ensure the resilience of the semiconductor supply chain in Europe. Moreover, the aid is proportionate and limited to the minimum necessary on the basis of a demonstrated financing gap (i.e. the amount of aid needed to attract the investment that would otherwise not have taken place).

ST agreed to share potential profits beyond current expectations with Italy. The measure has wide-ranging positive effects for Europe's semiconductor ecosystem and helps strengthen Europe's security of supply, in particular by establishing an integrated structure covering all stages of SiC production and committing to priority orders to produce crisis-relevant products in Europe. The Catania campus will contribute to reversing the trend of over-dependence on imports of devices particularly relevant to Europe's digital and green transition goals. The project will stimulate research and development and collaboration with academia and suppliers active in SiC technology. Finally, the project will help to develop a highly qualified workforce and contribute to overall cohesion objectives by developing economic activity in Sicily, an area eligible for regional aid, the EU executive concludes.

Vestager: Chip development in Catania helps EU breakthrough

Italy's EUR 2 billion subsidy for STMicroelectronics (St) in Catania 'supports a unique integrated plant for silicon carbide chips' and will help the EU's 'digital and green transition', helping to 'create highly qualified jobs while limiting possible distortions of competition'. Thus the Vice-President of the EU Commission, Margrethe Vestager, after the green light for the aid. The plant will help 'ensure EU access to a reliable source of energy-efficient chips used in electric vehicles and charging stations,' she pointed out.