The German aid measure
Germany has notified to the Commission for approval the planned support for Infineon’s project to build a new semiconductor manufacturing plant in the German city of Dresden. The facility will produce two types of products: (i) discrete power semiconductors for power switching, management and control in electronic systems and (ii) integrated circuits, which process both digital and analog signals and are crucial for bridging the gap between the analog and digital worlds. The semiconductors produced are destined for industrial, automotive and consumer applications.
The new factory will be the first in Europe to be able to quickly switch its production between both product groups while maintaining its high production capacity. It is a front-end facility covering wafer processing, testing and separation. The plant will reach full capacity in 2031.
Infineon will receive the aid in the form of a direct grant of up to EUR 920 million to support its EUR 3.5 billion investment. As part of the measure,
- Infineon has committed to ensure that the project will have a wider positive impact on the EU semiconductor value chain,
- investing in the research and development of the next generation of chips in Europe,
- execute priority orders in the event of a supply shortage in line with the European chip law, thus contributing to crisis preparedness and
- give SMEs and research institutions access to its new facility for prototype testing and validation.
The Commission’s assessment
The Commission assessed the German measure under EU state aid rules, in particular under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows Member States to promote the development of certain economic activities under certain conditions, and under the principles set out in the Communication on the European Chip Law.
The Commission has come to the following conclusion:
- The measure facilitates the development of certain economic activities by enabling the establishment of a new semiconductor manufacturing plant in Europe.
- The plant is novel in Europe, as there is currently no semiconductor manufacturing plant that allows a flexible switch of production between discrete semiconductors and integrated circuits processing both digital and analog signals in a comparable way.
- The aid has an incentive effect as the beneficiary would not make the investment in Europe without the public support.
- The measure has a limited effect on competition and trade within the EU. It is necessary and appropriate to ensure the resilience of the European semiconductor supply chain. Furthermore, the aid is proportionate and limited to the minimum necessary in view of the demonstrated funding gap (i.e. the aid is limited to what is necessary to ensure that the investment takes place in Europe). Infineon has agreed to share potential additional profits beyond current expectations with Germany.
- The measure has a wider positive impact on the European semiconductor ecosystem and contributes to strengthening Europe’s security of supply. In addition, Infineon has committed to apply for recognition as an Integrated Production Facility under the European Chip Act and to comply with all obligations related to this status.
On this basis, the Commission has approved the German measure under EU state aid rules.
Background
On February 8, 2022, the Commission adopted the Communication on the European Chip Act. It is part of a comprehensive package on the Chip Act, which focuses on the European Chip Act that will enter into force on September 21, 2023.
In the Communication on the European Chip Act, the Commission recalled that investment in new advanced manufacturing equipment in the semiconductor sector is important to ensure security of supply in the EU and supply chain resilience, and has a significant positive impact on the economy as a whole. In addition, the Commission identified in the Communication a number of factors that are directly relevant for a case-by-case assessment on the basis of Article 107(3)(c) TFEU.
Today’s approval is the sixth Commission decision based on these principles. On October 5, 2022, the Commission approved under EU state aid rules an Italian measure to support STMicroelectronics in the construction of a SiC wafer manufacturing plant in Catania (Sicily). On April 28, 2023, the Commission approved a €2.9 billion French aid measure to support STMicroelectronics and GlobalFoundries in the construction of a new microchip plant in Crolles (France). On May 31, 2024, another Italian measure was approved to support STMicroelectronics in the construction of a new integrated production facility for SiC wafers in Catania (Sicily). On August 20, 2024, the Commission approved a German measure to support the European Semiconductor Manufacturing Company in the construction of a microchip production facility in Dresden (Germany). Finally, on December 18, 2024, the Commission approved an Italian measure to support Silicon-Box in the construction of a new advanced packaging and testing facility in Novara (Italy).
Further information
Once all confidentiality issues have been resolved, the non-confidential version of the decision will be made available on the Commission’s DG Competition website under the case number SA.106117 via the State Aid Register. The electronic newsletter Competition Weekly e-News provides information on new state aid decisions published on the internet and in the Official Journal.
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Further links
👉 https://commission.europa.eu/index_de
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