Italy: EU Commission approves €1.3bn support to Silicon Box’s semiconductor packaging facility

The European Commission has approved, under EU State aid rules, a €1.3 billion Italian measure to support Silicon Box in the construction of a semiconductor advanced packaging and testing facility in Novara. The measure will strengthen Europe’s security of supply, resilience and technological autonomy in semiconductor technologies, in line with the objectives set out in the European Chips Act Communication and the Political Guidelines for the European Commission 2024-2029.

The Italian measure

Italy notified the Commission of its plan to support Silicon Box’s project to set-up a new semiconductor advanced packaging and testing facility in Novara, Italy. Advanced packaging allows multiple chips, often with different functions, to be integrated into one package, creating a multi-chip module, or a “chiplet”. This approach enables the chiplet to function like a single chip, offering improved performance and power efficiency.

The new facility will deliver advanced packaging solutions that integrate chiplets using panel-level instead of wafer-level packaging, along with 3D integration techniques. The plant will handle key manufacturing steps, namely chip assembly, packaging and testing. The plant, which is expected to be operating at full capacity in 2033, is expected to process approximatively 10,000 panels per week.

The aid will take the form of an approximately €1.3 billion direct grant to Silicon Box to support its investment worth €3.2 billion in total. Under the measure, Silicon Box agreed to:

• ensure that the project will have a broader impact with positive effects on the EU semiconductor value chain;
• contribute to the development of the next generation of advanced packaging technologies in the EU;
• implement priority rated orders in the case of a supply shortage in line with the European Chips Act; and
• develop and deploy educational and skills training to increase the pool of qualified and skilled workforce.

The Commission assessment

The Commission assessed the Italian measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU (‘TFEU’), which enables Member States to grant aid to facilitate the development of certain economic activities subject to certain conditions, and based on the principles set out in the European Chips Act Communication.

The Commission found that:

• The measure facilitates the development of certain economic activities, by enabling the establishment of a new advanced packaging facility in Europe using innovative technologies.
• The facility is first-of-a-kind in Europe, as there is currently no comparable advanced packaging facility for the specific technological features. Silicon Box’s project will be the first advanced packaging facility in Europe to offer advanced packaging solutions at panel-level.
• The aid has an ‘incentive effect’, as the beneficiary would not carry out this investment in Europe 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 Europe’s semiconductor supply chain. In addition, the aid is proportionate and limited to the minimum necessary based on a proven funding gap (i.e. the aid amount necessary to attract the investment that otherwise would not take place). Finally, Silicon Box has agreed to share with Italy potential profits beyond current expectations.
• The measure has wide positive effects for the European semiconductor ecosystem and contributes to strengthening Europe’s security of supply, in particular by setting up an advanced packaging facility covering the relevant manufacturing steps and committing to comply with priority rated orders to produce in Europe in case of a supply crisis, as defined in the EU Chips Act Regulation. The Novara plant will help reverse the tendency of overreliance on packaging services offered outside of Europe. The Commission also took note that Silicon Box has committed to apply to be recognised as an Open EU Foundry under the EU Chips Act Regulation and will comply with all obligations linked to this status.

On this basis, the Commission approved the Italian measure under EU State aid rules.

Background

On 8 February 2022, the Commission adopted the European Chips Act Communication. It is part of a comprehensive Chips Act package, which also included the European Chips Act that entered into force on 21 September 2023.

In the European Chips Act Communication, the Commission recalled that investments in new advanced production facilities in the semiconductor sector are important to safeguard the EU’s security of supply and supply chain resilience, while generating significant positive impacts to the wider economy. The Commission recognised in that Communication also a number of factors relevant for a case-by-case assessment directly under Article 107(3)(c) TFEU.

Today’s approval is the fifth decision by the Commission based on these principles. On 5 October 2022, the Commission approved, under EU State aid rules, an Italian measure to support STMicroelectronics in the construction of a SiC wafer plant in Catania, Sicily y. In addition, on 27 April 2023, the Commission approved a €2.9 billion French aid measure to support STMicroelectronics and GlobalFoundries in the construction of a new microchips manufacturing facility in Crolles, France. On 31 May 2024, an additional Italian measure was approved to support STMicroelectronics in setting up a new integrated SiC manufacturing facility in Catania, Sicily. Finally, on 20 August 2024, the Commission approved a German measure to support European Semiconductor Manufacturing Company in setting up a microchip manufacturing plant in Dresden, Germany.

More Information

The non-confidential version of the decision will be made available under the case number SA.113264 in the State aid register on the Commission’s competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.