Brussels, 11/04/2002 (Agence Europe) - On Tuesday the European Commission decided that a EUR 542.3 million investment aid to STMicroelectronics Srl is compatible with the Common Market. Italy intends to grant this aid to STMicroelectronics that will build a new plant for the production of a new type of semiconductors. The overall eligible investment cost is EUR 2,066 million, one of the largest individual investments the Commission has ever assessed under the state aid rules. Production will start in 2004, and employment at the site will reach 1,150 by 2006. The Commission took into consideration that the project will lead to the creation of 650-800 indirect jobs. The envisaged project had to be assessed under the "Multisectoral Framework on regional aid for large investment projects", in line with which, the Commission calculated the maximum allowable aid for the project to be 26.25 % net grant equivalent (the NGE is the final benefit which a firm is deemed to derive from an aid after corporate taxes payable on this aid have been deducted). As the proposed aid intensity of 26.25 % equals the maximum possible, the Commission decided to consider the aid to be compatible with the EC Treaty. The semiconductor components STMicroelectronics intends to manufacture are a technological innovation at world level, as the present size of the silicon wafers is normally 8 inches. STM is one of the first enterprises to use the new technology of 12" (300 mm) silicon wafers. The flash memories STMicroelectronics intends to produce have a storage capacity of 16 MB and will be used for digital cellular handsets, PC and hard disk drivers, and are expected to capture new markets like digital cameras, DVD and other digital equipment. The demand for flash memories is expected to grow by 43 % between 1999 and 2004. The flash memories will be assembled by other units of the STM group, to be sold as components to the electronic systems industry all over the world.