Italy has finalized a financial framework for a 3.2 billion euro semiconductor facility in Novara

Italy has finalized a financial framework for a 3.2 billion euro semiconductor facility in Novara, backed by 1.3 billion euros in public support approved by Invitalia, reported. The project, known as the Vulcan Project, marks a major step in the national strategy to strengthen Europe’s semiconductor industry and reduce supply chain vulnerabilities, attract high-tech investments, create jobs, and establish Italy as a strategic European hub for advanced digital manufacturing.

The Vulcan Project Funding And Structure

The total investment involves roughly 3.2 billion euros, with the Italian government providing 1.3 billion euros through the semiconductor business unit fund established under the European Chips Act. Invitalia, Italy’s national investment agency, approved this public support, which accounts for about 41 percent of the total project cost.

The facility represents Silicon Box’s first European manufacturing site. Upon reaching full capacity, it is expected to generate approximately 1,600 direct jobs in Novara, focusing on advanced chipset integration, packaging, and testing.

According to the Italian Ministry of Enterprises and Made in Italy, the Novara facility introduces advanced chipset and packaging capabilities into the European Union that were previously unavailable at this scale.

Advanced Packaging Focus And Market Projections

The Novara facility targets the back-end stage of semiconductor production, specializing in advanced packaging and testing that are increasingly critical for artificial intelligence, data centers, electric and autonomous vehicles, communications, and high-performance computing. Instead of producing one large chip, chipset architecture divides computing power into smaller components that can be integrated within a single package, allowing manufacturers to combine different technologies and potentially reduce design and production costs.

Italy's semiconductor sector is forecast to yield approximately $2.3 billion in revenue in 2025, with STMicroelectronics poised to emerge as a dominant national player.

Strengthening European Supply Chain Resilience

The European Commission notes that while Europe accounts for 9 percent of global semiconductor manufacturing, it holds about 10 percent of the world semiconductor market, while accounting for 56 percent of global wafer fabrication capacity. Disparities in the supply chain previously led some European countries to experience up to a one-third reduction in automobile production during the 2020–2022 chip shortages.

Automotive chips account for 37 percent of European semiconductor demand, while industrial applications represent another 28 percent. By adding capacity to previously limited segments of the European value chain, the Novara project complements the European Union Chips Act goal of increasing Europe’s global semiconductor market share to 20 percent by 2030, supported by policy-led investments exceeding 100 억.

Broader Italian Digital And Industrial Strategy

The Novara investment aligns with Italy’s broader microelectronics strategy, which includes a € 1 억 chip fund committed to the EU’s Important Projects of Common European Interest framework, a € 225 million semiconductor design center in Pavia, and an identified € 4 억 in resources allocated toward the national microelectronics strategy.

Italian Industry Minister Adolfo Urso described the project as reinforcing the country’s role as a productive platform for the digital economy. The government has designated the Silicon Box investment as a project of strategic national interest, applying fast-track mechanisms to accelerate vital high-tech investments and boost domestic industrial competitiveness.

Data Center Expansion and Digital Ecosystem Growth

Italy recorded 513 MW of installed data center IT capacity in 2024, accompanied by a 17 percent annual growth rate. Further investments exceeding 10 억 were anticipated across 2025 and 2026. Within the broader digital economy, Italy’s artificial intelligence market reached € 1.8 억 in 2025, achieving a 50 percent one-year growth rate. Furthermore, 71 percent of large Italian companies launched at least one AI project in 2025, supported by an ecosystem comprising 1,010 companies providing AI solutions and 135 AI startups established over the preceding five years.