Commission approves €288 million German State aid for first-of-a-kind facilities in semiconductor value chain

The European Commission has approved €288 million in German State aid to support the setting up two new facilities in the semiconductor supply chain. The aid consists of a €222 million measure for Carl Zeiss to build a facility for the manufacturing of semiconductor production equipment in Oberkochen, Baden-Württemberg and a €66 million measure for Zadient Materials Europe GmbH to set up a facility for the manufacturing of semiconductor source materials in Bitterfeld, Saxony-Anhalt. The measures will contribute to strengthening the EU's position and autonomy in the semiconductor value chain, in line with the objectives set out in the European Chips Act and the Commission's 2024-2029 Political Guidelines.

Aid to Carl Zeiss

Germany notified the plan to support Zeiss's ‘HNA@SCALE' project, which will introduce and industrialise the next generation of extreme ultraviolet ('EUV') optical columns. These columns are required for the next generation of EUV lithography machines produced by the Dutch company ASML. EUV lithography is crucial to produce leading-edge chips, needed in key fields such as high-performance computing and autonomous driving systems. The aid will take the form of a direct grant of €222 million.

Aid to Zadient

Germany also notified the plan to support Zadient's 'Sic-Pro' investment project for the construction of a first-of-a-kind factory for ultra-pure silicon carbide (SiC) to be used as semiconductor source material.

This project involves a circular system in which process gases are recovered and reintroduced in the production cycle. This is a novel process in the EU and is expected to support high material quality, energy efficiency and long-term cost-effectiveness. The aid will be provided in the form of a direct grant of €66 million.

Under the measures, Zeiss and Zadient agreed to:

• ensure broader impact of the projects with positive effects on the EU semiconductor value chain by ensuring the security of supply and increasing qualified workforce;
• strengthen collaborations with universities and research institutions;
• fulfil orders on a priority basis in case of a supply shortage;
• develop specialised trainings to increase the pool of qualified and skilled workers;
• share with Germany potential project-related profits beyond current expectations.

The Commission's 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.

The Commission found that:

• the measures facilitate the development of economic activities by creating manufacturing capacity for key components of semiconductor manufacturing equipment and source materials for semiconductor production in Europe;
• the facilities are first-of-a-kind in Europe;
• the aid has an ‘incentive effect', as without public support, the companies would downsize, postpone or not carry out these investments in Europe;
• the measures have a limited impact on competition and trade within the EU. They are necessary and appropriate to ensure the resilience of Europe's semiconductor supply chain. In addition, the aid is proportionate and limited to the minimum necessary based on a proven funding gap;
• the measures have wider positive effects for the European semiconductor ecosystem and contribute to strengthening Europe's security of supply. The beneficiaries will collaborate with start-ups, SMEs and research institutions. Zeiss and Zadient are also applying for their facilities to be recognised as so-called Integrated Production Facilities under the EU Chips Act Regulation and therefore commit to 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. Today's decisions concern the third and fourth projects pre-selected under this call.

On 8 February 2022, the Commission adopted the Commission's Communication 'A Chips Act for Europe'. 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 Commission's Communication 'A Chips Act for Europe', the Commission recalled that investments in new advanced production facilities in the semiconductor sector are important to safeguard the EU's 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.

Today's approvals are the twelfth and thirteenth decisions by the Commission based on these principles. Past approved measures account for cumulative aid of around €13.9 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.119615 (Carl Zeiss) and SA.119616 (Zadient) in the State aid register on the Commission's 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.