EU Commission approves €623 million German State aid
The aid will take the form of a direct grant of €495 million.
The European Commission has approved €623 million in German State aid to support the establishment of two new semiconductor manufacturing plants in Dresden and Erfurt. The funding includes a €495 million grant for GlobalFoundries and €128 million for X-FAB. These measures aim to strengthen the EU’s technological leadership and autonomy in semiconductor production, in line with the European Chips Act and the Commission’s 2024–2029 Political Guidelines.
Support for GlobalFoundries
Germany notified the Commission of its plan to support GlobalFoundries’ “SPRINT” project. GlobalFoundries is a pure-play semiconductor foundry that manufactures chips exclusively for other companies. The project involves expanding the company’s existing Dresden site to create new 300 mm wafer production capacity.
The facility will produce technologies originally developed under the IPCEI Microelectronics & Communication Technologies initiative, now adapted for dual-use applications in aerospace, defense, and critical infrastructure. This requires incorporating enhanced security and reliability features and conducting the entire manufacturing process within Europe. These technologies will be produced at scale for the first time in the EU, making the process a first-of-its-kind in Europe.
The support will be provided as a direct grant of €495 million.
Support for X-FAB
Germany also notified plans to support X-FAB’s “Fab4Micro” project, which involves building a new open foundry at its Erfurt site. The facility will integrate X-FAB’s existing micro-electromechanical systems (MEMS) capabilities with innovative packaging and integration processes. These chip technologies are vital for the automotive, AI, and medical sectors.
The open foundry will serve fabless chip companies, including start-ups and SMEs, which currently rely heavily on foundries outside Europe. Commercial operations are expected to begin by 2029. This facility will also be first-of-its-kind in the EU, offering manufacturing services not currently available domestically.
The support will take the form of a €128 million direct grant.
Commitments by Beneficiaries
Both GlobalFoundries and X-FAB have committed to:
Maximizing the broader impact of the projects on the EU semiconductor value chain;
Continuing innovation to advance semiconductor technologies and prepare for next-generation solutions;
Implementing priority-rated orders during supply shortages, as outlined in the European Chips Act;
Developing training programs to expand the pool of skilled workers.
Additionally, both companies plan to apply for recognition as Open EU Foundries under the European Chips Act, a process separate from the State aid approval.
Commission’s Assessment
The European Commission evaluated the German aid under EU State aid rules, particularly Article 107(3)(c) of the Treaty on the Functioning of the EU (TFEU), which allows support for certain economic activities under specified conditions. The assessment also considered the European Chips Act guidelines.
The Commission concluded that:
The measures enable the development of new semiconductor manufacturing capacity in Europe;
The planned facilities are first-of-their-kind in the EU;
The aid has an incentive effect, as the investments would likely not occur without public support;
The measures are necessary, proportionate, and have minimal impact on competition and trade, ensuring Europe’s semiconductor supply chain resilience;
The projects have wider positive effects for the European semiconductor ecosystem, including cross-border collaborations with research organizations and SMEs, and strengthen security of supply;
GlobalFoundries and X-FAB will comply with priority-rated orders in case of a supply crisis and pursue recognition as Open EU Foundries.
Based on this assessment, the Commission approved the German measures under EU State aid rules.
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