Italian Tech Volcano Set to Erupt
By Mila Fiordalisi
Wired News, Feb 2001
ROME - Italy's answer to Silicon Valley has taken root and is beginning to thrive. The surprising thing is that this isn't happening in the north — Italy's traditional region for industry and commerce — but in the deep south, hard by Sicily's Mt. Etna.
After decades of economic domination by the northern part of the country, the more rural and agrarian south — including the island of Sicily — is showing signs of flexing some economic muscle. The reason: the influx of technology and Internet companies, a trend that people living there hope means the dawn of better economic times.
The towns of Catania and Palermo, in particular, are being eyed with keen interest by entrepreneurs, telecom operators and Web companies who see this as fertile — and affordable — ground to develop. A lot of Italian and international companies are opening offices in Sicily, where the intellectual resources are plentiful and firms can benefit from additional national and European funding. The region of Sicily, in fact, is part of the EU's Zone One for investments.
Government help aside, it's the arrival of high technology that has really stoked the fires of economic change in southern Italy. According to Federcomin (The Federation of Confindustria, which represents roughly 1,000 telecoms), "the penetration of the new technologies [among] Italian families is higher in the south than in the rest of the country."
Although the north still leads the south in terms of wired families (38 percent have computers, compared to 33 percent in the south), the overall growth rate is higher south of Rome. Italians are already cell phone crazy (they spend an average of 2.4 million Lira (US$1,150) per person per year), and analysts expect an annual 40 percent increase in pay-TV subscriptions.
Cities On Line, for example, employs 410 network systems analysts, projectors and Web applications experts at offices in Catania, Palermo and Ragusa. STMicroelectronics is looking for 1,500 engineers, information specialists and technicians, while Computer Science Corporation is expected to add 1,500 jobs within two years.
Says Pasquale Pistorio, president and CEO of STMicroelectronics: "Contrary to Silicon Valley, Catania's Etna Valley, with its more than 50,000 students at the local university ... offers privileged access to that most important resource: brains; highly skilled, highly educated brains."
INSIDE TRACK: A high-tech eruption in Etna Valley:
ITALY'S TECHNOLOGICAL REVOLUTION: Long plagued by poverty and crime, the south is becoming a centre of the new economy.
By Paul Betts
Ministro per l'Innovazione e le Tecnologie, 2002
But first impressions are deceptive and no more so than in Catania. In a country where they still believe in miracles, this rambling port city under Europe's biggest active volcano, long a stereotype of Italy's desperate and depressed deep south, is undergoing a high-tech resurrection.
"This is still a baby valley," says Pasquale Pistorio [left], the affable Sicilian chairman of ST Microelectronics, who has transformed what was a loss-making Franco-Italian semiconductor group into the world's seventh-largest chip-maker. "But Catania has all the ingredients to become a significant high-tech phenomenon and is developing fast."
Across the Tyrrhenian Sea at Cagliari, you can find a similar, even more recent phenomenon taking place. Like the rest of the south, the Sardinian port once relied on state hand-outs and ill-conceived, state-inspired heavy industrial investments. Now it is making a serious bid to become Italy's internet capital.
"Already, 50 per cent of families here access the net compared with an internet penetration of barely 7 per cent for the country as a whole," says Mario Mariani, marketing director of Tiscali, the Sardinian free-internet pioneer that was started two years ago by Renato Soru [right], a local businessman.
When Mr Pistorio joined ST Microelectronics 20 years ago, the company's big plant in Sicily had losses reaching 120 per cent of sales. But the island also had a well educated population and, as Mr Pistorio says, "when you operate in high-value activities, hard or soft, old or new economy, the basic resource is brain".
Sicily has this abundant pool of intellectual labour thanks partly to unemployment of 26 per cent. In the absence of a thriving job market, young people are more motivated to study. ST has encouraged this, working with Catania University, hosting masters' courses inside the plants, and employing many of the graduates.
ST now employs nearly 4,000 people in Catania. Its operations have indirectly created a further 4,000 jobs. More than 200 small and medium-sized companies have established themselves in the area around ST. Large, high-tech Italian and foreign companies such as Nokia, Omnitel and Alcatel have set up operations in Catania. The numbers are likely to rise, with ST planning a further Dollars 1.5bn (Pounds 1.02bn) of investment in the area during the next three years.
Like Catania, Cagliari had a university, an advanced research centre, and abundant brains. It did not have an ST Microelectronics, but it did have the paradoxical advantage of isolation.
"The island's remote geographical position stimulated its search for new communications technologies to communicate cheaply and easily with the world (as well as) the Italian mainland," argues Mr Mariani of Tiscali. "Even if the new network economy was not born here and was already flourishing in the US, Sardinia became an internet pioneer in Europe...."