The European Commission has approved €623 million in German State aid to support the set-up of two new semiconductor manufacturing facilities in Dresden and Erfurt. The aid consists of a €495 million measure for GlobalFoundries and a €128 million measure for X-FAB. The measures will contribute to increasing the EUs autonomy and technological leadership in semiconductor technologies by supporting the construction of first-of-a-kind semiconductor facilities, in line with the objectives set out in the European Chips Act Communication and the Commissions 2024-2029 Political Guidelines.
The German measures
Aid to GlobalFoundries
Germany notified the Commission of its plan to support the project ‘SPRINT of GlobalFoundries, a pure-play semiconductor foundry specialised in the manufacturing of semiconductor devices exclusively for other companies. The project involves the creation of new 300 mm wafer manufacturing capacity by adjusting and expanding the companys existing site in Dresden.
The technologies that will be produced at the facility are developed under the IPCEI Microelectronics & Communication Technologies, but will now be adapted for dual-use purposes, specifically targeting aerospace, defence and critical infrastructure markets. This requires the addition of specific security and reliability features to the technologies and a manufacturing process which takes place entirely in Europe, to meet the needs of customers in these markets. It will be the first time these technologies are produced at scale in Europe and the manufacturing process will be first-of-a-kind in the EU.
The aid will take the form of a direct grant of €495 million.
Aid to X-FAB
Germany also notified the plan to support the project ‘Fab4Micro of X-FAB for the construction of a new open foundry facility at its existing site in Erfurt. The new facility will focus on combining existing capabilities (so-called micro-electromechanical systems, or MEMS) with innovative packaging and integration processes. These chip technologies are crucial for applications in the automotive, AI and medical sectors. The open foundry will provide manufacturing services to fabless chip companies, including start-ups and small and medium-sized enterprises (SMEs), which currently rely primarily on open foundries located outside Europe. The new facility, which is expected to start commercial operations by 2029, will be first-of-a-kind in the EU because it will offer manufacturing services currently not present in Europe.
The aid will take the form of a direct grant of €128 million.
Under the measures, GlobalFoundries and X-FAB agreed to:
- ensure that the projects will have a broader impact with positive effects on the EU semiconductor value chain;
- continue their innovation efforts for achieving concrete advances in semiconductor technology and preparing for next-generation technologies;
- implement priority-rated orders in case of a supply shortage in line with the European Chips Act; and
- develop and deploy educational and skills training to increase the pool of qualified and skilled workers.
Both GlobalFoundries and X-FAB committed to apply for the recognition of their facilities in Dresden and in Erfurt as Open EU Foundries under the European Chips Act. This process is independent from the State aid assessment.
The Commissions assessment
The Commission assessed the German measures under EU State aid rules, in particular Article 107(3)(c) of the Treaty on the Functioning of the EU (‘TFEU), which enables Member States to grant aid to facilitate the development of certain economic activities subject to certain conditions, and based on the principles set out in the European Chips Act Communication.
The Commission found that:
- the measures facilitate the development of economic activities, by enabling the establishment of new open foundry capacity in Europe;
- the facilities are first-of-a-kind in Europe;
- the aid has an ‘incentive effect, as the beneficiaries would not carry out these investments in Europe without public support;
- the measures have a limited impact on competition and trade within the EU. They are necessary and appropriate to ensure the resilience of Europes semiconductor supply chain. In addition, the aid is proportionate and limited to the minimum necessary based on a proven funding gap (i.e. the aid amount necessary to attract the investment that otherwise would not take place). Finally, GlobalFoundries and X-FAB have agreed to share with Germany potential project-related profits beyond current expectations;
- the measures have wider positive effects for the European semiconductor ecosystem and contribute to strengthening Europes security of supply, in particular by setting up open foundries enabling European customers, including SMEs and start-ups, to access semiconductor manufacturing capacity. The beneficiaries will also establish cross-border cooperations, including with research organisations and SMEs located in assisted areas. The beneficiaries commit to comply with priority-rated orders to produce in Europe in case of a supply crisis, as defined in the EU Chips Act Regulation. The Commission also took note that GlobalFoundries and X-FAB applied for the facilities to be recognised as Open EU Foundries under the EU Chips Act Regulation and will comply with all obligations linked to this status.
On this basis, the Commission approved the German measures under EU State aid rules.
Background
In November 2024, Germany published a call for proposals for innovative investment projects in the European semiconductor value chain, including semiconductor manufacturing, advanced packaging and assembly, manufacturing equipment and input materials. Todays decisions concern the two first projects pre-selected under this call.
On 8 February 2022, the Commission adopted the European Chips Act Communication. It is part of a comprehensive Chips Act package, which also included the European Chips Act that entered into force on 21 September 2023.
In the European Chips Act Communication, the Commission recalled that investments in new advanced production facilities in the semiconductor sector are important to safeguard the EUs security of supply and supply chain resilience, while generating significant positive impacts to the wider economy. The Commission recognised several factors relevant for a case-by-case assessment directly under Article 107(3)(c) TFEU.
Todays approvals are the tenth and eleventh decisions by the Commission based on these principles. Past approved measures account for cumulative aid of around €13.2 billion, provided by different Member States, and supporting the manufacturing of different semiconductor technologies and applications.
For More Information
The non-confidential versions of the decisions will be made available under the case numbers SA.118843 (GlobalFoundries) and SA.119086 (X-FAB) in the State aid register on the Commissions competition website once any confidentiality issues have been resolved. New publications of State aid decisions on the internet and in the Official Journal are listed in the Competition Weekly e-News.
