Commission approves €659 million German State aid for four new semiconductor facilities

The European Commission has approved €659 million in German State aid to support the establishment of four first-of-a-kind facilities in the semiconductor value chain. The measures will contribute to strengthening the EU's position and autonomy in the semiconductor value chain by supporting the construction of first-of-a-kind facilities, in line with the objectives set out in the Commission's Communication 'A Chips Act for Europe' and the Commission's 2024-2029 Political Guidelines.

Germany will provide the following direct grants for the construction of semiconductor facilities:

• €353 million for the SME Element 3-5 GmbH for a facility in Baesweiler, North Rhine-Westphalia for the manufacturing of silicon carbide ('SiC') epi-wafers;
• €214 million for Vishay Siliconix Itzehoe GmbH ('Vishay') for a facility in Itzehoe, Schleswig-Holstein, for the manufacturing of N- and P-channel Silicon Power MOSFETs;
• €74.4 million for KLA-Tencor MIE GmbH ('KLA') for a facility in Weilburg, Hesse, for the manufacturing of advanced optical overlay and film metrology equipment;
• €17.9 million for KETEK GmbH for a facility in Munich, Bavaria, for the manufacturing of two highly-specialised chips: Silicon Drift Detectors ('SDDs') and Graphene Radiation Entry Windows ('GREW').

All four measures are jointly financed by the federal budget and the respective Länder authorities.

Aid to Element 3-5

Element 3-5's SiCnature will establish a first-of-a-kind factory for SiC epi-wafers. These are silicon carbide wafers with a very thin, high-quality layer added on top to improve their performance compared to standard SiC-wafers. The new type of wafers is expected to be used in end applications across various sectors including automotive, industrial, telecommunications and energy. This project involves major improvements, notably in the manufacturing process. It will improve energy efficiency, yield and manufacturing efficiency compared to conventional hot-wall chemical vapour deposition.

Aid to Vishay

Vishay will establish a new semiconductor manufacturing capacity at its existing Itzehoe site, where it will produce the next generation of Power MOSFETs. These are metal-oxide-semiconductor field-effect transistors designed to switch or control high voltages and currents efficiently in power electronic circuits. They are mainly used in the automotive sector, but also have industrial and commercial uses.

Aid to KLA

KLA will establish a new manufacturing capacity at its existing Weilburg site for advanced optical overlay and film metrology equipment (including key sub-assemblies). This equipment is used for process and quality control in the mass production of semiconductor devices, enabling front-end and back-end manufacturers to achieve higher yield and productivity. The tools KLA will produce in Weilburg enable the creation of leading-edge and near-leading edge semiconductor manufacturing processes.

Aid to KETEK

KETEK will construct two production lines for highly specialised chips: SDD chips and GREW chips, which are key components of the SDD detectors KETEK already builds. SDD detectors are used for industrial sorting and recycling systems. The project will enable the assembly of the next generation of detectors by integrating two production lines into one cleanroom, thereby allowing greater integration and efficiency than current solutions.

Under the measures, all beneficiaries agreed to:

• ensure broader impact of the projects with positive effects on the EU semiconductor value chain;
• strengthen collaborations with universities and research institutions;
• fulfil orders on a priority basis in case of a supply shortage;
• develop specialised training 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 measure 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 in Europe;
• the facilities are first-of-a-kind in Europe;
• the aid has an 'incentive effect', as without public support, Element 3-5, Vishay and KLA would not carry out the investments in the EU, and KETEK would not carry out the investment at all;
• 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 proven funding gaps. Finally, Element 3- 5, Vishay, KLA and KETEK 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 Europe's security of supply. The beneficiaries will collaborate with start-ups, SMEs and research institutions. Element 3-5, Vishay, KLA and KETEK are also applying for their facilities to be recognised as a so-called Integrated Production Facility 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 eighth and ninth project pre-selected under this call.

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 for the wider economy. The Commission recognised several factors relevant for a case-by-case assessment directly under Article 107(3)(c) TFEU.

On 3 June 2026, the Commission adopted a new proposal for the Chips Act 2.0, which introduces new measures to further boost the chips industry, reduce strategic dependencies and support advanced chip production in the EU. The Chips Act 2.0 builds on the progress made by the original Chips Act and aims to reinforce current European strengths (including mainstream chips) and build capacity in cutting-edge semiconductor technologies. This will allow the EU to maintain its position as an indispensable player in the value chain, while strengthening its resilience, and reducing strategic dependencies and supply chain vulnerabilities.

Today's approvals are the 15th to 18th decisions by the Commission based on these principles. Past approved measures account for cumulative aid of around €14.2 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.119614 (Element 3-5), SA.120818 (Vishay), SA.121240 (KLA) and SA.120179 (KETEK) 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.