The European Commission has approved, under EU State aid rules, a €920 million German aid measure for the construction of a new semiconductor manufacturing plant in Dresden. The measure will allow Infineon to complete the MEGAFAB-DD project which will be able to produce a wide range of different types of chips. This new manufacturing plant will bring flexible production capacity to the EU and thereby strengthen Europe's security of supply, resilience and technological autonomy in semiconductor technologies, in line with the objectives set out in the European Chips Act Communication and the Political Guidelines for the European Commission 2024-2029 .
The German measure
Germany notified the Commission of its plan to support Infineon's project to set up a new semiconductor manufacturing facility in Dresden, Germany. The plant will produce two technology families: (i) discrete power technologies used for power switching, management and control in electronic systems, and (ii) analog/mixed-signal integrated circuits that are crucial for bridging the gap between the analog and digital worlds. The produced semiconductors will be used in industrial, automotive and consumer applications.
The new facility will be the first one in Europe that will be able to rapidly switch its production between the two technology families while maintaining its high output capacity. It will be a front-end facility, covering wafer processing, testing and separation. The plant will reach its full capacity in 2031.
The aid will take the form of a direct grant of up to €920 million to Infineon to support its investment amounting to €3.5 billion. Under the measure, Infineon agreed to:
- ensure that the project will bring wider positive effects to the EU semiconductor value chain;
- invest in the research and development of the next generation of chips in Europe;
- contribute to crisis preparedness by committing to implement priority-rated orders in the case of a supply shortage in line with the European Chips Act Regulation; and
- provide access to its new facility to SMEs and research organisations for testing and prototyping.
The Commission assessment
The Commission assessed the German measure under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU ('TFEU'), which enables Member States to grant aid to facilitate the development of certain economic activities subject to certain conditions, and based on the principles set out in the European Chips Act Communication .
The Commission found that:
- The measure facilitates the development of certain economic activities, by enabling the establishment of a new semiconductor manufacturing facility in Europe.
- The facility is a first-of-a-kind in Europe, as there is currently no semiconductor manufacturing facility that would be able to flexibly change its output between discrete power and analog-mixed signal technologies in a comparable manner.
- The aid has an 'incentive effect', as the beneficiary would not carry out this investment in Europe without public support.
- The measure has a limited impact on competition and trade within the EU. The measure is necessary and appropriate to ensure the resilience of Europe's semiconductor supply chain. In addition, the aid is proportionate and limited to the minimum necessary based on a proven funding gap (i.e. the aid amount necessary to attract the investment that otherwise would not take place in Europe). Infineon has agreed to share with Germany potential additional profits going beyond current expectations.
- The measure has wider positive effects for the European semiconductor ecosystem and contributes to strengthening Europe's security of supply. The Commission also took note that Infineon will apply to be recognised as an integrated production facility under the EU Chips Act Regulation and will comply with all obligations linked to this status.
On this basis, the Commission approved the German measure under EU State aid rules.
Background
On 8 February 2022, the Commission adopted the European Chips Act Communication . It is part of a comprehensive Chips Act package , which also included the European Chips Act that entered into force on 21 September 2023.
In the European Chips Act Communication , the Commission recalled that investments in new advanced production facilities in the semiconductor sector are important to safeguard the EU's security of supply and supply chain resilience, while generating significant positive impacts to the wider economy. The Commission recognised in that Communication also a number of factors relevant for a case-by-case assessment directly under Article 107(3)(c) TFEU.
Today's approval is the sixth decision by the Commission based on these principles. On 5 October 2022 , the Commission approved, under EU State aid rules, an Italian measure to support STMicroelectronics in the construction of a SiC wafer plant in Catania, Sicily. In addition, on 28 April 2023 , the Commission approved a €2.9 billion French aid measure to support STMicroelectronics and GlobalFoundries in the construction of a new microchips manufacturing facility in Crolles, France. On 31 May 2024 , an additional Italian measure was approved to support STMicroelectronics in setting up a new integrated SiC manufacturing facility in Catania, Sicily. On 20 August 2024 , the Commission approved a German measure to support European Semiconductor Manufacturing Company in setting up a microchip manufacturing plant in Dresden, Germany. Finally, on 18 December 2024 , the Commission approved an Italian measure to support Silicon Box in setting up a new advanced packaging and testing facility in Novara, Italy.
