Executive Vice-President of the Commission in charge of competition policy Margrethe Vestager said: “This €5 billion German measure will strengthen semiconductor manufacturing capacity in Europe, support our green and digital transitions and create highly skilled jobs. As the measure is geared towards open manufacturing, it will ensure broad access to energy-efficient chips, including for smaller companies and start-ups, without unduly distorting competition.”
The German aid measure in detail
Germany has notified to the Commission for approval a planned support to the ESMC project to build and operate a new semiconductor manufacturing facility in Dresden.
The aim of the project is to meet the demand for microchips for applications in the automotive industry and other industrial sectors. The funded new large-scale production facility will manufacture high-performance chips on 300 mm silicon wafers with structure widths of 28/22 nm and 16/12 nm. These chips, which are manufactured using FinFet technology and into which several additional functions can be integrated, are more powerful and at the same time reduce overall energy consumption. The manufacturing facility is expected to reach full capacity by 2029, producing 480,000 silicon wafers annually.
The facility will be an open manufacturing operation, meaning that its customers – including the three other shareholders besides TSMC – can commission specific chips. This operating model is important for the EU semiconductor ecosystem as a whole, especially given ESMC’s commitments to provide targeted support to small and medium-sized enterprises (SMEs) and start-ups in Europe to strengthen their know-how and skills. In addition, SMEs and European universities will have special access to the production capacity, which will also promote research and knowledge creation in Europe.
The Commission’s assessment under state aid rules
The Commission has assessed the German measure under EU state aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU), which allows Member States to facilitate the development of certain economic activities under certain conditions, and the principles set out in the Communication on the European Chip Law.
The Commission’s investigation found that:
The measure promotes the development of certain economic activities by enabling the construction of a new plant for the mass production of innovative technology products and microchips in Europe.
The plant is novel in Europe, where there is no comparable plant for the mass production of products with these technological functions. ESMC will be the first open manufacturing facility to produce silicon wafers with structure widths of 28/22 nm and 16/12 nm using FinFet technology with technology processes for logic, mixed signal and radio frequency applications and embedded non-volatile memories.
These specific technologies differentiate it from other existing capacities and complement the production capacities required by European customers.
The aid has an “incentive effect” as the aid beneficiary would not make the investment 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 proven funding gap (i.e, the aid is limited to the minimum necessary (i.e. only to the extent necessary for the investment to materialize).
Finally, ESMC has agreed to share potential profits beyond current expectations with Germany.
The measure has a far-reaching positive impact on the European semiconductor ecosystem and contributes to strengthening Europe’s security of supply, in particular through the establishment of an open manufacturing facility producing for European customers, including SMEs and start-ups. It will also enable additional support for European universities. In addition, ESMC has committed to fulfill priority contracts under the EU Chip Act to manufacture crisis-relevant products in Europe in the event of a crisis. The Commission also noted that ESMC has committed to apply for recognition as an EU Open Manufacturing Company under the EU Chip Act and will fulfill all obligations related to this status.
ESMC also committed to invest in continuous innovation in the EU to make concrete progress in semiconductor technology by preparing next generation technologies and investing in the Union’s talent pipeline.
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 also includes the European Chip Act that entered 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. The Commission identified 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 fourth Commission decision based on these principles. On October 5, 2022, the Commission approved an Italian measure to support STMicorelectronics in the construction and operation of a 150 mm silicon carbide wafer production plant in Catania. On April 27, 2023, the Commission approved a €2.9 billion French aid measure to support STMicorelectronics and GlobalFoundries in the construction and operation of a new microchip plant in France. Most recently, on May 31, 2024, another Italian measure was approved to support STMicroelectronics in the construction of a new integrated SiC wafer production facility in Italy.
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Further links
👉 https://commission.europa.eu/index_de
Photo: European Commission
