Intel will be building a new A$7.2 billion advanced semiconductor packaging and assembly plant, part of its plan to reduce reliance on Chinese-based factories.

The factory will be built in Italy, and is part of Intel’s commitment to invest $A126.3 billion into European semiconductor factories. Intel has shortlisted two possible sites for the factory, in the northern regions of Piedmont and Veneto.

Sources claim the government of outgoing Prime Minister Mario Draghi is aiming to have an agreement locked down by the end of this month.

Reuters reports that the government may fund as much as 40 per cent of Intel’s investment in Italy. The country has earmarked 4.15 billion euros (A$6.1 billion) to attract international chipmakers.

The European Commission has also committed A$66.1 billion in funding for semiconductor facilities by 2030.