The European Commission has approved Italian state aid for STMicroelectronics to construct a €5 billion ($5.4 billion) microchip plant in Catania, Sicily, as part of Europe’s strategy to reduce dependency on Asian imports for essential components.
The French-Italian semiconductor maker will receive a direct grant of approximately €2 billion from the Italian government to produce specialized microchips designed to enhance energy efficiency in electric vehicles.
The decision comes amid heightened scrutiny of Europe’s reliance on Asia for chip supplies following pandemic-induced supply chain disruptions and increased trade tensions with China. Recent disturbances on the Red Sea trade route have further underscored these concerns.
In response to similar moves by the United States, which is offering substantial incentives to attract chip manufacturers, the European Union has enacted its own Chips Act to stimulate investments in components crucial to high-tech industries, from computing to automotive manufacturing.
“This approval demonstrates the EU’s commitment to ensuring a steady supply of vital materials,” said EU antitrust chief Margrethe Vestager at a press conference in Catania. “It sends a clear message globally that strategic independence in the semiconductor market is a priority for Europe.”
STMicroelectronics is currently the only company to have received state aid grants under the EU’s Chips Act. Major projects by Intel and TSMC in Germany are still awaiting approval.
“I am certain more investments will follow in other EU states soon, though I can’t specify exact timings,” Margrethe Vestager said.
The Italian and French governments jointly hold a 27.51 percent stake in STMicroelectronics. The new plant will be the company’s second facility on the Italian island and is expected to create 3,000 new jobs, according to Italy’s Economic Development Minister Adolfo Urso.
The Catania plant will manufacture silicon carbide chips, which are more expensive than traditional silicon chips but preferred by automakers for their energy efficiency, lightweight, and durability. STMicroelectronics CEO Jean-Marc Chery emphasized the company’s belief in the temporary nature of the current weakness in the electric vehicle market and anticipated widespread adoption of silicon carbide chips.
Production at the new plant is scheduled to commence in 2026, with full operational capacity expected by 2033. STMicroelectronics, the largest producer of silicon carbide chips, counts Tesla, BYD, BMW, and Renault among its customers.