The European Commission has approved a €920 million German state aid measure to support Infineon Technologies in constructing a new semiconductor manufacturing plant in Dresden, under EU State aid rules.

The funding will enable Infineon to complete its MEGAFAB-DD project, which will produce a wide range of different types of chips crucial for industrial, automotive and consumer applications. The plant will manufacture discrete power technologies for power management and analog/mixed-signal integrated circuits.

Teresa Ribera, executive vice president for Clean, Just and Competitive Transition, said the facility would "bring flexible production capacity to the EU and thereby strengthen Europe's security of supply, resilience and technological autonomy in semiconductor technologies."

The new facility will be the first in Europe capable of rapidly switching production between two technology families while maintaining high output. Total investment in the project amounts to €3.5 billion, with the state aid covering €920 million of these costs.

Jochen Hanebeck, chief executive officer of Infineon, welcomed the approval, stating: "This government-supported investment by Infineon strengthens the position of Dresden, Germany and Europe as a semiconductor hub and promotes a state-of-the-art innovation and production ecosystem for microelectronics."

Under the agreement, Infineon has committed to ensuring wider positive effects for the EU semiconductor value chain, investing in research and development of next-generation chips in Europe, and contributing to crisis preparedness by implementing priority-rated orders during supply shortages.

The Dresden investment is expected to create up to 1,000 direct jobs, with experts projecting a positive job multiplier effect of 1:6 in the surrounding ecosystem. Construction began in March 2023, with the opening planned for 2026.

The Commission determined the aid has limited impact on competition while being necessary to attract investment that would otherwise not take place in Europe. Infineon has agreed to share any additional profits beyond current expectations with Germany.

This marks the sixth such decision by the Commission based on principles set out in the European Chips Act, which entered into force in September 2023.

---