EC approves €2 billion aid for STMicroelectronics' new Italian facility

Green Forum
The European Commission has approved a €2 billion aid measure under EU State aid rules to support STMicroelectronics (ST) in building and operating an integrated chip manufacturing plant for Silicon Carbide (SiC) power devices in Catania, Sicily.

This initiative aims to bolster Europe's security of supply, resilience, and digital sovereignty in semiconductor technologies, aligning with the objectives of the European Chips Act. Additionally, it will aid in the digital and green transitions.

Italy notified the Commission of its plan to support ST's Catania Campus project. This project involves the construction and operation of an integrated chip manufacturing plant for SiC power devices, which are crucial in high-performance power applications like electric vehicles, fast-charging stations, renewable energy, and other industrial uses. The plant will handle all manufacturing steps, from raw materials to finished devices, including power transistors and modules.

The aid consists of a direct grant of approximately €2 billion to support ST's €5 billion investment. This project will establish a large-scale manufacturing facility for high-performance SiC chips, using 200mm diameter wafers to produce modules and devices for industries such as automotive, both in Europe and globally. Full capacity operation is expected by 2032.

ST has agreed to:

Ensure the project positively impacts the EU semiconductor value chain beyond ST and Italy.
Contribute to the development of next-generation 200 mm SiC technology and a technology roadmap for SiC modules in the EU.
Implement priority-rated orders during supply shortages in line with the European Chips Act and ensure the project is not subject to external public service obligations.
Develop and deploy educational and skills training programs to enhance the qualified workforce pool.
This project builds on technologies developed under the Important Projects of Common European Interest (IPCEIs) for research and innovation in microelectronics, approved in December 2018 and June 2023. On March 4, 2024, ST applied for recognition of the Catania Campus as an integrated production facility under the European Chips Act, separate from the State aid assessment.

The Commission's Assessment
The Commission assessed the Italian measure under EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows Member States to grant aid for developing certain economic activities under specific conditions, and based on the European Chips Act Communication principles.

The Commission concluded that:

The measure facilitates the development of economic activities by establishing a new mass-production facility for innovative technologies and chips in Europe.
The Catania Campus is the first-of-its-kind in Europe, covering all production steps from powder material to finished devices, including SiC module manufacturing, using 200mm-diameter wafers for SiC, achieving significant efficiency through tight manufacturing integration.
The aid provides an 'incentive effect,' as the investment would not occur without public support.
The measure has a limited impact on competition and trade within the EU, being necessary and appropriate to ensure the resilience of Europe's semiconductor supply chain. The aid is proportionate and limited to the minimum necessary, addressing a proven funding gap. ST also agreed to share potential profits beyond current expectations with Italy.

The measure positively impacts the European semiconductor ecosystem, strengthening Europe's supply security by establishing an integrated facility and committing to comply with priority orders for crisis-relevant products. It reduces reliance on imports of crucial devices, boosts research and development, and fosters collaboration with academia and suppliers in SiC technology. Additionally, it aids in developing a highly skilled workforce and contributes to regional cohesion by fostering economic activity in Sicily, a region eligible for aid under Article 107(3)(a) TFEU.

Green Forum  |  20 June, 2024 at 8:04 AM