The FDI angle:

• Singaporean Silicon Box announced a €3.2bn advanced packaging foundry in Novara, Piedmont, Italy. 
• Why it matters: The EU Chips Act aims to secure a European value chain for the production of microchips. Italy is emerging as a key piece in this strategy, with foreign investors committing to the development of semiconductors hubs in the northwest between Piedmont and Lombardy, as well as in the south around Catania, Sicily. 

A new €3.2bn investment by Singaporean Silicon Box into Piedmont, north-western Italy, has boosted the prospects of the local semiconductor ecosystem as the region leverages its industrial heritage to hop onto strategic value chains. 

“Silicon Box’s investment in Italy can act as a catalyst for further investments by ecosystem companies and for building and attracting the talent needed to support a thriving European semiconductor industry,” co-founder Weili Dai said in June.

Silicon Box is active in the packaging of microchips. Once considered a relatively low-value function in the semiconductor value chain, packaging has become one of the new frontiers of innovation in the industry as sophisticated architectures and smaller chips demand increasingly sophisticated packaging solutions. The Singaporean company pioneered the packaging of chiplets, which are the building blocks of a so-called system-in-a-package (SiP), where different chiplets, each one with their own functions, are assembled together in a single SiP, providing the final product more flexibility than system-on-a-chip alternatives. 

Silicon Box will bring its packaging foundry to Novara, a city with a population of 105,000 lying in between Milan and Turin, Italy’s traditional industrial hubs. The new facility is expected to create 1600 jobs and begin production in 2028 pending the approval of planned support by Italian and European authorities. 

The Italian press reported Made in Italy minister Adolfo Urso as saying that the overall public incentive is “less than 40%” of the total investment, and it is being assessed by the European commission. 

SILICON BOX'S ITALIAN ADVANCED PACKAGING FOUNDRY : 

• Company: Silicon Box
• Location: Novara, Piedmont, Italy
• Investment: €3.2bn
• Direct Jobs creation: 1600
• Operations kick-off: 2028

The ecosystem in Piedmont

The Silicon Box investment adds momentum to the European Chips Act, which aims to secure a European supply chain of semiconductors, and the role Italy will play in it. In May, Swiss chips producer STMicroelectronics announced a €5bn investment in a production site in Catania, Sicily, for which it received €2bn in public incentives, while Intel had also announced its intention to set up an advanced packaging and assembly facility in Italy, only to shelve the project a few months later. 

The Singaporean company plugs into a regional ecosystem that already sees Taiwanese GlobalWafer producing silicon wafers in its Italian subsidiary, Memc, which has a factory in Novara, as well as US-based Vishay, which produces discrete semiconductors in Borgaro, in the outskirts of Turin. 

The region is also home to tier-1 and tier-2 suppliers to the semiconductor ecosystem, which also strengthens the overall ecosystem, notes Luciano Scaltrito, a professor at the Polytechnic University of Turin. 

“Clearly incentives help, but there is an ecosystem that can offer talent as well as suppliers,” he notes. 

The appeal of the regional semiconductors ecosystem also features some key tertiary education institutions like the Turin Polytechnic, as well as private research centres like Italian state energy firm Eni’s in Novara, from which Memc originated back in the 1970s. 

Besides, the region has been witnessing the slow decline of legacy industries like automotive, which, among many challenges, has also freed up resources and talent, as highlighted by Felix Grawert, CEO of Germany’s Aixtron, a tier-1 supplier producing deposition equipment to the semiconductor industry, which announced a €100m investment into a new production site in Orbetello, also in the outskirts of Turin, able to create 300 jobs in early June. 

“We were able to secure the rare opportunity to purchase an existing production facility at very attractive commercial terms, which provides almost all of the specialised operations and test infrastructure for the manufacturing of our equipment. Furthermore, we will be located in the heart of the manufacturing ecosystem of northern Italy, being close to many strong suppliers and world-class universities,” said Dr Grawert in a statement in early June. 

The hype generated by these investments will soon come up against possible talent bottlenecks. 

“The challenge is the fact that these new investments will create much competition for talent for the other companies that are already operating in the ecosystem,” Mr Scaltrito says. 

He estimates that there are currently 3500 people employed in the ecosystems at the moment. In other words, the projected 1900 new jobs created by Silicon Box and Aixtron account for more than half the active talent in the local semiconductor industry. He also notes that the Turin Polytechnic can produce about 700 graduates per year with relevant skills for the semiconductor value chain. 

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