The European Commission has approved a state aid grant of up to €920 million from the German government to support Infineon’s new semiconductor factory in Dresden, the EU executive said on Friday. The funding aligns with state aid regulations and aims to bolster Europe’s semiconductor production capacity.
The financial support will contribute to the €3.5 billion investment required for the plant, which is expected to reach full production capacity by 2031. The facility will also advance Infineon’s MEGAFAB-DD project, designed to manufacture various semiconductor technologies. According to the EU Commission, the plant will enhance Europe’s supply security, resilience, and technological autonomy in the semiconductor sector.
The factory will focus on two key semiconductor families: discrete power technologies, which support power switching, management, and control in electronic systems, and analogue/mixed-signal integrated circuits, which enable communication between analogue and digital systems. Infineon says the facility will have the capability to switch between production modes while maintaining high output capacity. The factory will function as a front-end facility, covering wafer processing, testing, and separation.
In exchange for the state funding, Infineon has agreed to conditions set by the EU, including commitments to R&D investments, strengthening the EU semiconductor supply chain, and contributing to crisis preparedness by prioritizing orders during supply shortages, in line with the European Chips Act Regulation. The company will also provide SMEs and research organizations access to the factory for testing and prototyping.
Although the EU approval was only recently granted, construction has already begun. Infineon secured early approval from the German Federal Ministry of Economics in January 2023 to start work ahead of the formal funding authorization.
Commenting on the approval, Teresa Ribera, the EU Commission’s Executive Vice-President for Clean, Just, and Competitive Transition, stated: “The €920 million German measure approved today supports a cutting-edge megafab in Dresden. This project will support the development of a strong and resilient digital economy in Europe and ensure a secure supply of semiconductors for the industry while limiting any potential distortion of competition.”
Germany had outlined plans to support the plant late last year, and Infineon is also involved in a separate semiconductor plant project in Dresden through a joint venture with TSMC, Bosch, and NXP. In addition, the company recently opened a silicon carbide (SiC) semiconductor production facility in Malaysia, underscoring its expanding global manufacturing footprint.