How Italy is positioning itself at the centre of Europe’s emerging advanced packaging and semiconductor integration strategy

CHIPS ACT 2.0 — The New European Semiconductor Architecture

As Europe searches for greater semiconductor resilience, Italy is quietly emerging as one of the continent’s most strategic locations for advanced packaging, chiplet integration and AI infrastructure development.

For decades, Europe’s semiconductor geography largely revolved around a familiar industrial axis stretching from the Netherlands and Belgium into Germany and France. The continent’s technological power concentrated around lithography, research institutes, automotive electronics and industrial manufacturing.

But the rise of advanced packaging is beginning to reshape that map. Increasingly, attention is shifting toward Italy.

While much of Europe’s semiconductor debate initially focused on attracting front-end fabs, Italy recognized a different strategic opportunity. Rather than competing directly with Asia on sheer manufacturing scale, the country has started positioning itself around one of the semiconductor industry’s fastest-growing bottlenecks: advanced integration and packaging.

That shift may prove far more important than it initially appears.

The new bottleneck of the AI era

The rapid expansion of artificial intelligence infrastructure is fundamentally changing how semiconductors are designed and assembled.

Modern AI systems increasingly depend on heterogeneous integration — combining multiple specialised chiplets, memory systems and accelerators into one high-performance architecture. This requires highly advanced packaging technologies capable of handling enormous data flows, thermal pressure and power density.

In practice, packaging has become one of the semiconductor industry’s most strategic infrastructure layers.

“Advanced packaging and heterogeneous integration are becoming central to Europe’s semiconductor resilience.”

European Chips Joint Undertaking (Chips JU)

The problem for Europe is that much of this capability still remains concentrated in Asia, particularly around Taiwan, Malaysia, Singapore and China. This creates a structural vulnerability inside Europe’s emerging AI ambitions.

Even if Europe manufactures more chips domestically, the continent still risks depending on external packaging ecosystems to transform those chips into functioning AI systems.

That is precisely the gap Italy now aims to address.

Silicon Box and the rise of Novara

The clearest symbol of this shift is the arrival of Singapore-based Silicon Box in Novara, northern Italy.

The project represents one of Europe’s most ambitious investments in advanced semiconductor packaging to date. Backed by billions in investment and supported under the broader framework of the European Chips Act, the facility is expected to become Europe’s first large-scale hub for advanced panel-level packaging and three-dimensional chip integration.

Importantly, the European Commission granted the project Open EU Foundry (OEF) status — one of the clearest signals yet that advanced packaging is increasingly being treated as strategic semiconductor infrastructure rather than a peripheral manufacturing activity.

In many ways, this reflects a quiet but important shift inside Europe’s semiconductor thinking itself. Even within the institutional framework of the Chips Act, the definition of what constitutes a “foundry” is already expanding beyond traditional front-end fabrication.

Unlike traditional wafer-based approaches, panel-level packaging allows semiconductor components to be assembled more efficiently and at larger industrial scale. This is becoming increasingly important as AI systems grow more modular and computational architectures more complex.

The future of computing may depend less on building one perfect chip and more on integrating multiple specialised components into larger computational ecosystems. Packaging therefore becomes the physical architecture connecting the AI era together.

And Europe increasingly wants that layer to exist on European soil.

From manufacturing to integration

Italy’s emerging role inside the semiconductor ecosystem also reflects a broader transformation in how industrial power is understood.

For years, semiconductor prestige largely revolved around front-end manufacturing: smaller nodes, more transistors and cutting-edge fabs. But the AI era is redistributing strategic importance across the entire supply chain.

Integration capacity now matters alongside manufacturing capacity.

This shift plays directly into Italy’s existing industrial core — moving the focus toward its deeply rooted strengths in advanced automation, precision materials engineering and automotive supply chains, all anchored by a strategic cross-Mediterranean logistics network.

At the same time, Italy already hosts one of Europe’s most important semiconductor players: STMicroelectronics.

The company’s expanding investments in Catania, Sicily — particularly around Silicon Carbide technologies for electric vehicles and industrial systems — further strengthen Italy’s role inside Europe’s broader semiconductor architecture.

Together, these developments suggest that Italy is no longer merely participating in Europe’s semiconductor strategy. Increasingly, it is helping define one of its most important infrastructure layers.

Europe’s southern semiconductor corridor

The geopolitical implications are significant.

As semiconductor supply chains become more fragmented and strategically sensitive, Europe is beginning to think less in terms of isolated factories and more in terms of interconnected industrial corridors.

Northern Europe may remain dominant in lithography and research infrastructure. Germany continues to anchor industrial manufacturing capacity. France maintains deep capabilities in aerospace, defense electronics and research ecosystems.

Italy, however, may be positioning itself as something slightly different: Europe’s integration corridor.

Geographically, the country sits at the intersection of European manufacturing, Mediterranean logistics and global trade routes connecting Europe with Asia and the Middle East. As geopolitical tensions increasingly disrupt traditional shipping routes and global supply chains, that positioning becomes strategically more valuable.

In many ways, Italy functions as a southern logistical bridge between Europe’s industrial core and the broader semiconductor ecosystems emerging across Asia and the Gulf region.

“Semiconductor leadership increasingly depends on ecosystem coordination across the full value chain.”

European semiconductor policy analysis

In this emerging architecture, advanced packaging is no longer simply a technical process occurring at the end of production.

It is becoming a strategic coordination layer between manufacturing, AI infrastructure, energy systems and industrial sovereignty.

Chips Act 2.0 and the logic of indispensability

The developments unfolding in Italy also illustrate a deeper philosophical shift inside Europe’s semiconductor thinking.

The original Chips Act was often interpreted through the lens of autonomy: reducing dependence by rebuilding domestic production capacity. But the contours of Chips Act 2.0 increasingly suggest a more nuanced approach.

Europe may not need to dominate every layer of the semiconductor ecosystem. But it does need to become structurally indispensable within it.

That means controlling enough critical technologies, integration capabilities and infrastructure layers that Europe remains impossible to ignore inside the global semiconductor system.

Advanced packaging fits perfectly within that logic. Because in the AI era, the power of semiconductor ecosystems may increasingly depend not only on who designs chips — but on who can physically integrate entire computational architectures together.

And in that emerging race, Italy is quietly becoming one of Europe’s most important strategic experiments.

This article is part of the series CHIPS ACT 2.0 — The New European Semiconductor Architecture, in which Altair Media Europe examines how semiconductors are evolving from an industrial sector into a foundational layer of modern infrastructure, AI systems and geopolitical power. Across four articles, the series explores advanced packaging, OSAT, AI infrastructure and Europe’s growing search for technological indispensability.

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Credit

Artwork generated with AI for Altair Media Europe

Caption

A minimalist illustration of Italy as semiconductor infrastructure. The image symbolizes the country’s growing role in advanced packaging, systems integration and Europe’s emerging AI and semiconductor architecture.