Apple Supplier STMicroelectronics to Build $5.4 Billion Chip Plant in Italy — Update

By Adria Calatayud and Mauro Orru

STMicroelectronics is planning a new chip-manufacturing plant in Italy for a total investment of around 5 billion euros ($5.42 billion) with state support, as the chip maker jockeys for position in the recovering semiconductor market.

The group, which counts Apple, Tesla and Samsung Electronics among its customers, said the new facility in Catania, Sicily, would produce silicon-carbide semiconductor products for power devices and modules.

Silicon-carbide chips are more resistant and energy-efficient than traditional ones, and are a key growth driver for semiconductor manufacturers since they are rapidly becoming mainstream in electric vehicles and data centers.

The announcement shows that STMicroelectronics is seeking to expand production capacity as analysts expect the semiconductor market to recover.

STMicroelectronics and the wider chip industry have been grappling for months with low demand for their semiconductors in consumer devices as manufacturers of smartphones and computers held off ordering more chips that they had stockpiled in recent years.

The automotive industry, which had long provided a lifeline to the sector as car makers sought smaller and more energy-efficient chips in their push for electric vehicles, wasn't spared either by a slowdown in demand.

Elon Musk's electric-vehicle maker Tesla in April reported its first year-over-year decline in quarterly deliveries since 2020, a sign that the EV market is slowing and translating into fewer orders for chip makers.

The roughly EUR5 billion investment earmarked for the plant includes about EUR2 billion in state support from Italy, after European Union antitrust authorities approved the package in the form of a direct grant.

The European Commission--the EU's executive arm and antitrust enforcer--said the state aid is necessary and appropriate to support Europe's semiconductor supply chain, with positive effects for the regional chip industry.

STMicroelectronics said the facility should start production in 2026, with full capacity expected by 2033.

Write to Adria Calatayud at adria.calatayud@wsj.com and Mauro Orru at mauro.orru@wsj.com

(END) Dow Jones Newswires

May 31, 2024 04:05 ET (08:05 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.