State aid: Commission approves €292.5 million Italian measure under Recovery and Resilience Facility to support STMicroelectronics in construction of a plant in the semiconductor value chain

The European Commission has approved, under EU State aid rules, a €292.5 million Italian measure made available through the Recovery and Resilience Facility ('RRF') to support STMicroelectronics in the construction of a plant in the semiconductor value chain in Catania, Sicily. The measure will strengthen Europe's security of supply, resilience and digital sovereignty in semiconductor technologies, in line with the ambitions set out in the European Chips Act Communication. The measure will also contribute to achieving both the digital and green transition.

Executive Vice-President Margrethe Vestager, in charge of competition policy, said: “The Italian measure approved today will strengthen Europe's semiconductors supply chain, helping us deliver our green and digital transition. The measure will ensure that our industry has a reliable source of innovative substrates for power efficient chips. They are needed for electric vehicles, charging stations and other applications that play an important role in the green transition. Also, the measure will create high-skilled employment opportunities in Sicily, while limiting possible distortions of competition.”

The Italian measure

The measure notified by Italy will be funded by the RRF, following the Commission's positive assessment of Italy's Recovery and Resilience Plan and its adoption by the Council.

The aid will take the form of a €292.5 million direct grant to support STMicroelectronics' €730 million investment for the construction of a Silicon Carbide (‘SiC') wafer plant in Catania. SiC is a compound material used to manufacture wafers that serve as a base for specific microchips used in high-performance power devices, such as in electric vehicles, fast-charging stations, renewable energies and other industrial applications.

The project, which is planned to be completed in 2026, will be the first industrial scale, integrated epitaxy SiC wafers production line in Europe. It will integrate in the same production facility the whole SiC substrate value chain, namely from the production of the raw material (‘SiC powder') to the manufacturing of the SiC wafers. The SiC wafers will be ready for further use as a result of an additional treatment process at the facility, in which a specific epitaxial layer is applied to the SiC wafers, enhancing their technical capabilities (so-called ‘SiC epiwafers').

Under the measure, STMicroelectronics agreed to (i) satisfy EU priority rated orders in the case of a supply shortage, (ii) invest in the development of next generation of microchips, and (iii) continue contributing to the strengthening of the European semiconductor ecosystem.

The Commission's 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 European Union (‘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, in particular the establishment of a new SiC wafer plant.
• The aid has an “incentive effect”, as the beneficiaries would not carry out the investments without the public support.  In addition, the measure will have a positive impact on the European semiconductor value chain, by ensuring the security of supply and increasing qualified workforce.
• The measure facilitates the construction of a new facility that is first-of-a-kind in Europe, as it enables the integrated production of the wafer and the epitaxial layer in an integrated process on a large industrial scale.
• The measure has a limited impact on competition and trade within the EU. In particular, it 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 investments that otherwise would not take place). Finally, STMicroeletronics agreed to share potential additional profits beyond current expectations with Italy.

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

Background

All investments entailing State aid, also those included in national recovery and resilience plans presented in the context of the RRF, must be notified to the Commission for prior approval, unless covered by one of the State aid block-exemption rules.

The Commission assesses measures entailing State aid contained in the national recovery and resilience plans presented in the context of the RRF as a matter of priority and has provided guidance and support to Member States in the preparatory phases of the national plans, to facilitate the rapid deployment of the RRF. At the same time, the Commission makes sure in its decision that the applicable State aid rules are complied with, in order to preserve the level playing field in the Single Market and ensure that the RRF funds are used in a way that minimises competition distortions and do not crowd out private investment.

On 8 February 2022, the Commission adopted the European Chips Act Communication, as part of a comprehensive Chips Act package. In its Communication, the Commission recalled that investment in new advanced production facilities in the semiconductor sector is 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 the European Chips Act Communication a number of factors relevant for a case-by-case assessment directly under Article 107(3)(c) TFEU.

The non-confidential version of the decision will be made available under the case number SA.103083 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 State Aid Weekly e-News.