The Commission is concerned that the aid, used by Infineon to build a D-Ram chip manufacturing plant in Dresden, may have exceeded the permitted maximum for state aid. “The Commission doubts that the aid is compatible with the EC Treaty” stated the authorities at Brussels earlier this week. The total cost of the Dresden plant will reach around £690m.
Under European law, state aid to industries that are considered to be in serious decline is limited, thus, the Commission is likely to consider the state of the semiconductor market which is, at present, unsteady. At the moment D-Rams are being sold below the cost of production. In addition to examining the health of the market as a whole, the Commission will consider the number of jobs created or saved by the Dresden plant.
Coincidentally, the Commission’s investigation follows complaints made by Infineon concerning a £5billion rescue package offered to Hynix, its South Korean rival. Infineon claimed that the package violated World Trade Organisation regulations on government subsidy.
If the Commission finds that Infineon’s aid did indeed violate EU regulations, the chip maker could be forced to pay it all back to the government.