Italy and Intel choose Veneto region for new chip factory

The outgoing government of Mario Draghi and Intel (NASDAQ:INTC) have chosen the town of Vigasio in the northeastern Veneto region as their preferred location for a new multi-billion-euro chip factory in Italy, two people familiar with the matter said.

Intel's investment in Italy is part of a broader plan announced by the US chipmaker last March to invest up to 80 billion euros ($77.5 billion) to build capacity across Europe over the next decade. With an initial investment of around 4.5 billion euros, which is expected to increase over time, Intel said the Italian factory will create 1,500 jobs, as well as an additional 3,500 jobs among suppliers and partners, with operations starting between 2025 and 2027. The factory in Italy will be an advanced semiconductor packaging and assembly facility and will use new technologies to assemble complete chips from tiles. The sources, who requested anonymity because of the sensitivity of the matter, said the parties had detailed a comprehensive agreement in early September, but that no public announcement would be made before the outcome of Sunday's general election. A spokesman for Intel declined to comment, saying the talks were ongoing and confidential. Draghi's office also declined to comment. Vigasio, located near Verona on the strategic Brenner highway and railroad, was the preferred option in a shortlist of two sites that also included a site in the northwestern Piedmont region. Among other reasons, the site is well connected to Germany and in particular to the city of Magdeburg, where Intel will build two factories, one of the sources added. Intel and the government had also initially considered locations in Lombardy, Apulia and Sicily. Draghi's close aides aim to engage in behind-the-scenes negotiations with his possible successors to avoid the risk of the deal being questioned by Italy's new government, the people said, adding that the choice of location is highly politically sensitive. Opinion polls predict that Giorgia Meloni's nationalist Brothers of Italy group will emerge as the top party on Sunday and share power with allies Matteo Salvini's League and Silvio Berlusconi's Forza Italia. Sources declined to provide further details, but Reuters previously reported that Rome was ready to finance up to 40% of Intel's total investment in Italy. The state contribution to Intel's investment program is something that needs to be shared with the next government before any deal is formalized, one of the sources said, adding that Draghi could let the next government make the announcement. Rome is also in talks with French-Italian STMicroelectronics, Taiwanese chipmakers MEMC Electronic Materials Inc and TSMC, and Israel's Tower Semiconductor (NASDAQ:TSEM), which Intel acquired earlier this year, to boost domestic chip production. Follow Global Economic Developments on Social Media! Click here to follow Ieconomy official Facebook account! Click here to follow Ieconomy official Instagram account! Click here to follow Ieconomy official Twitter account!