European Chip Production Grows: €659 Million Allocated to Four German Semiconductor Companies
European Chip Production Grows: €659 Million Allocated to Four German Semiconductor Companies
The European Commission has approved a state aid package of €659 million aimed at Germany to support the establishment of four innovative plants along the semiconductor supply chain. This initiative is part of the European Chips Act and aims to increase internal production capacity on the continent and strengthen the European Union's autonomy in a sector deemed essential for industry and supply security.
The funding will be distributed among four companies engaged in different segments of semiconductor production. The largest share, amounting to €353 million, will support Element 3-5 GmbH, which will build a facility in Baesweiler dedicated to the production of silicon carbide (SiC) epitaxial wafers. These wafers incorporate a high-performance surface layer that improves characteristics compared to conventional silicon carbide wafers and are used in the automotive, industrial, telecommunications, and energy sectors. The project also introduces a more efficient production process with reduced energy consumption, higher yields, and optimized production compared to traditional hot-wall chemical vapor deposition systems.
€214 million will finance Vishay Siliconix Itzehoe GmbH, which will expand the production capacity of its Itzehoe facility for the manufacturing of the new generation of Power MOSFETs, transistors designed to manage high voltages and currents in power electronics circuits. These components are fundamental technology, especially for the automotive sector, while also finding application in industrial and commercial contexts.
A contribution of €74.4 million will be allocated to KLA-Tencor MIE GmbH, which will focus on expanding the production capacity dedicated to advanced optical metrology and overlay equipment. These tools allow process and quality control during semiconductor manufacturing, both in the front-end and back-end phases, thus increasing productivity and yield and supporting the development of more advanced manufacturing processes.
The fourth and final project concerns KETEK GmbH, which will receive €17.9 million to establish two lines dedicated to the production of Silicon Drift Detector (SDD) chips and Graphene Radiation Entry Window (GREW). Both represent essential components of SDD detectors already developed by the company and used in industrial material sorting and recycling systems. The integration of the two production lines within a single cleanroom will enable greater technological integration and increased production efficiency.
The funding will be jointly supported by the German federal government and the authorities of the involved Länder. In exchange for public support, the beneficiary companies have made various commitments, including collaboration with universities, research institutes, startups, and SMEs, the development of specialized training programs for qualified personnel, and priority in order management in case of shortages in the European supply chain.
The companies will also share any profits exceeding initial expectations generated from their respective projects with the German state.
According to the Commission's assessment, the investments are necessary to create new European production capacities, have first-of-a-kind characteristics on the continent, and would have scarcely been realized without public support. Brussels also believes that the aids have a limited impact on competition, are proportionate to the objectives pursued, and contribute to increasing the resilience of the semiconductor supply chain.
The approval comes after the call published by Germany in November 2024 to select innovative projects in the European chip supply chain and represents the fifteenth, sixteenth, seventeenth, and eighteenth authorizations granted by the Commission under these criteria. Overall, the measures already approved under the European initiative have reached approximately €14.2 billion in public aid aimed at establishing facilities dedicated to various technologies and applications in the semiconductor sector. Meanwhile, the Chips Act 2.0, presented on June 3, 2026, aims to further expand support for advanced chip production and reduce the European Union's strategic dependencies.