EU Approves €920 Million German State Aid for Infineon Semiconductor Plant

The EU’s European Commission has given the green light to a €920 million German state aid package for Infineon, paving the way for the construction of a new semiconductor manufacturing plant in Dresden. According to Reuters, this funding will support Infineon in completing its MEGAFAB-DD project, which is set to produce a diverse array of chips for various industries.

Per Reuters, the approval comes amid a global push by chipmakers to expand production capabilities, with companies leveraging substantial subsidies from the European Union and the United States. These initiatives aim to bolster the West’s competitiveness against China in the race for advanced semiconductor technology. The European Commission has earmarked €15 billion in funding for public and private semiconductor projects by 2030 as part of its broader strategy.

The Commission emphasized that the new Dresden plant will enhance Europe’s semiconductor supply security, resilience, and technological independence in line with the European Chips Act. “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,” the Commission stated.

Set to reach full operational capacity by 2031, the facility will function as a front-end manufacturing site, covering wafer processing, testing, and separation. Its semiconductor products will serve key sectors such as industrial, automotive, and consumer electronics, according to Reuters. The state aid will be provided in the form of a direct grant, supporting Infineon’s total investment of €3.5 billion. Notably, Infineon has described this venture as the largest single investment in its history.

In addition to expanding semiconductor production, Infineon has committed to collaborating with the EU to drive research and development efforts for the next generation of chips in Europe. The company will also contribute to crisis preparedness by prioritizing critical supply orders during shortages, aligning with the European Chips Act’s objectives.

Source: Reuters