The Spain attacker feels the Euro 2012 runners-up are worse off without the flamboyant striker and is confident his side can get a positive result
The AC Milan striker left the Azzurri camp earlier this week due to a strained thigh muscle and the 25-year-old thinks Italy will be a weaker team without their star attacker.
"Balotelli is a fundamental player for Italy," he was quoted as saying by Marca.
"We have seen plenty of videos of them and they rely heavily on Balotelli. His absence will be a blow, but they are still a competitive team."
The Chelsea star then went on to stress that Spain must remain cautious against Italy, but insisted that they will try and play their own game.
"Our style of play will remain attacking. We want to have a lot of possession to create chances and cause them trouble.
"It's true that this could prove to be problematic against Italy, though. They will be playing with a lot men behind the ball, but we will do our utmost to beat them."
Thursday's semi-final is scheduled to kick off at 21:00CET.