EU backs German chip fabs with 623m State aid

The European Commission has given the green light to €623 million in German State aid to support two new semiconductor manufacturing projects in Germany, signaling a significant move in Europe’s drive for chip sovereignty. The funding is earmarked for the establishment of new semiconductor fabs by GlobalFoundries in Dresden and X-FAB in Erfurt.

This decision holds particular importance for readers of eeNews Europe as it directly impacts Europe’s future access to advanced manufacturing capacity, particularly in sectors such as automotive, industrial, aerospace, and AI. It also sheds light on where public funding is being directed under the European Chips Act and which technologies policymakers view as strategically crucial.

Two fabs, two distinct technology focuses

The lion’s share of the aid, amounting to €495 million, will be allocated to GlobalFoundries for its “SPRINT” project in Dresden. The US-based pure-play foundry intends to enhance and modify its existing site to introduce new 300mm wafer manufacturing capacity.

The technologies to be produced were initially developed under the IPCEI on Microelectronics and Communication Technologies but will now be tailored for dual-use markets, including aerospace, defense, and critical infrastructure. This entails incorporating specific security and reliability features and ensuring the entire manufacturing process remains within Europe. According to the Commission, Europe will be manufacturing these technologies at scale for the first time.

X-FAB is set to receive €128 million for its “Fab4Micro” initiative, which involves constructing a new open foundry facility at its Erfurt site. The fab will merge X-FAB’s MEMS expertise with advanced packaging and integration processes, targeting applications in automotive, AI, and medical electronics. Crucially for the European ecosystem, the facility will provide open foundry services to fabless companies, including startups and SMEs that currently rely heavily on non-European foundries. Commercial operations are slated to commence in 2029.

Conditions linked to the Chips Act

Both companies have agreed to adhere to several conditions tied to the aid. These include ongoing innovation efforts, support for next-generation technologies, giving priority to EU orders in the event of a supply crisis, and investing in skills and training to bolster the local talent pool.

GlobalFoundries and X-FAB have also pledged to seek recognition as Open EU Foundries under the European Chips Act, a designation that entails additional obligations but also underscores their strategic importance in Europe’s supply chain.

Teresa Ribera, Executive Vice-President for Clean, Just, and Competitive Transition, remarked: “Open foundries are crucial for enhancing competition and innovation in Europe’s semiconductor sector. These two initiatives will pave the way for the establishment of two new facilities that are currently lacking in Europe, helping to reduce our reliance on foundries outside the EU and fortifying the resilience of Europe’s entire industry.”

Part of a broader funding wave

The Commission sanctioned the measures under Article 107(3)(c) TFEU, determining that the aid is essential, proportionate, and aimed at bridging a verified funding gap. These approvals mark the tenth and eleventh instances under the Chips Act framework, bringing the total approved aid for semiconductor manufacturing across the EU to approximately €13.2 billion thus far.

Lastly, the national call initiated in late 2024 selected the two German projects as among its initial choices, underscoring how rapidly the Chips Act is translating into tangible fab investments across Europe.