The European Commission on Friday approved Italian state aid for chipmaker STMicroelectronics (STMPA.PA) to build a 5 billion euro ($5.4 billion) plant in Catania, Sicily, to make specialist microchips that boost energy efficiency in electric cars.
Chipmakers across the globe are investing billions of dollars in new plants, encouraged by rising use of semiconductors in everyday devices as well as U.S. and EU subsidies aimed at keeping the West ahead of China in the race for cutting-edge technology.
The aid approved by the EU executive will be a direct grant of about 2 billion euros to support STMicro's production of chips made from silicon carbide, which is more energy-efficient than standard silicon.
STMicro's plans demonstrate the company's confidence that recent weakness in the electric vehicle market is temporary and that silicon carbide chips will become more widely adopted by automakers.
Having a large, integrated European plant making and packaging the silicon carbide chips will have "wide positive effects for the European semiconductor ecosystem" and help to guarantee regional security of supply, a European Commission statement said.
"The Catania campus will help reverse the tendency of overreliance on imports of devices that are particularly relevant for the European digital and green transition objectives."
STMicro is the largest maker of silicon carbide chips, which are more expensive to manufacture than regular silicon chips but favoured by carmakers because they are energy-efficient, lightweight and tough.
The company's customers include Tesla (TSLA.O), BYD (002594.SZ), BMW (BMWG.DE) and Renault (RENA.PA).
($1 = 0.9241 euros)
