The European Commission said Thursday it had approved 920 million-euro of German state aid, or $960 million, to Infineon Technologies 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 computer chips, the Commission said.

Chipmakers across the globe are pouring billions of dollars into new plants, as they take advantage of generous subsidies from the United States and the EU to keep the West ahead of China in developing cutting-edge semiconductor technology.

The European Commission has earmarked 15 billion euros for public and private semiconductor projects by 2030.

"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 said in a statement.

The Commission said the plant -- which is slated to reach full capacity in 2031 -- will be a front-end facility, covering wafer processing, testing and separation, adding that its chips will be used in industrial, automotive and consumer applications.

The aid will take the form of a direct grant of up to 920 million euros to Infineon to support its overall investment, amounting to 3.5 billion euros. Infineon, Germany’s largest semiconductor manufacturer, which was spun off from Siemens 25 years ago, has said the plant will be the largest single investment in its history.

Infineon has agreed with the EU to ensure the project will bring wider positive effects to the EU semiconductor value chain and invest in the research and development of the next generation of chips in Europe, the Commission said.

It will also 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.

Reuters

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