The European Commission has approved €659 million in German public aid to build four semiconductor manufacturing facilities in Baesweiler, Itzehoe, Weilburg, and Munich. The projects cover everything from silicon carbide wafers to power transistors, metrology equipment, and specialized detectors—four less visible areas compared to advanced processors but essential for chip manufacturing and their use in automotive, industrial, energy, or material analysis applications.
The key points of the new chip plants in Germany in 30 seconds
- Germany will distribute grants among Element 3-5, Vishay, KLA, and KETEK.
- Element 3-5 will receive €353 million, more than half of the approved package.
- The factories will produce silicon carbide wafers, MOSFETs, measurement equipment, and detectors.
- Brussels considers these the first facilities of their kind in Europe.
- The companies must collaborate with research centers, address supply crisis, and return extraordinary profits.
The aid will come jointly from the German federal budget and the regional states where each project is located. Brussels has not published the total cost of the four investments, so the €659 million should not be interpreted as their full budget. It only reflects the portion that Germany can contribute through direct grants after European approval.
This decision also indicates a shift in European industrial policy. The four projects do not compete to produce the most advanced CPUs or GPUs on the market. Instead, they cover different parts of a supply chain starting with materials, continuing with power components, and ending with control equipment and detectors for specialized applications.
Element 3-5 accounts for more than half of the aid
Element 3-5 will receive €353 million to establish a silicon carbide epi-wafer factory in Baesweiler, North Rhine-Westphalia. This funding represents approximately 53.6% of the total authorized amount.
Epi-wafers have a high-quality crystalline layer on top of the wafer where electronic devices are subsequently fabricated. In the case of silicon carbide (SiC), this material enables the development of power semiconductors capable of withstanding high voltages and temperatures, with lower energy losses than many conventional silicon solutions.
The Commission expects wafers produced in Baesweiler to be used in automotive, telecommunications, industrial facilities, and energy systems. The project also introduces process modifications aimed at improving energy efficiency, production performance, and wafer utilization compared to conventional chemical vapor deposition systems with heated walls.
Formerly operating as AIXaTECH, Element 3-5 is a small to medium enterprise developing epitaxy systems for broadband semiconductors. It has received initial approval but acknowledges that it still needs to build the plant, develop suppliers, and scale up its processes to industrial production levels.
| Company | Approved Assistance | Location | Expected Production |
|---|---|---|---|
| Element 3-5 | €353 million | Baesweiler | Silicon carbide epi-wafers |
| Vishay Siliconix | €214 million | Itzehoe | Silicon power MOSFETs |
| KLA-Tencor MIE | €74.4 million | Weilburg | Optical metrology equipment |
| KETEK | €17.9 million | Munich | SDD detectors and GREW windows |
The detailed amounts total approximately €659.3 million. The Commission rounds this to €659 million in its overall announcement.
Vishay to expand European power chip manufacturing
Vishay Siliconix will receive €214 million to establish new production capabilities in Itzehoe, Schleswig-Holstein. The plant will produce a new generation of silicon power MOSFET transistors with N and P channels.
A MOSFET is a transistor used to switch or control current and voltage in electronic circuits. They appear in power supplies, converters, chargers, vehicles, industrial machinery, and many other electronic products. While not headline celebrities like AI GPUs, they significantly influence efficiency, energy consumption, and electrical control in many devices.
The Itzehoe factory will use 300-millimeter wafers, compared to the 200-millimeter wafers of the company’s previous facilities. Larger diameters allow placing more chips per wafer and, when production efficiency is optimized, reduce cost per component.
Vishay has indicated that the expansion includes a cleanroom of approximately 4,000 square meters and will add around 150 jobs to an existing center with about 550 employees. The company expects this new plant to help increase internal wafer capacity by about 70% by 2028, although the pace of investment will depend on market demand and order flow.
The public aid accounts for a significant part of the company’s current investments. Vishay plans to allocate between $400 million and $440 million in capital investments in 2026, with roughly half dedicated to the German 12-inch facility.
Europe also funds the manufacturing control equipment
The third grant, amounting to €74.4 million, is directed at KLA-Tencor MIE. It will expand optical systems in Weilburg, Hesse, used to measure layer alignment and thickness of deposited films during chip fabrication.
Each integrated circuit involves stacking numerous tiny layers and patterns. Even slight misalignments can render a device defective. Metrology systems detect these deviations, adjust processes, and improve manufacturing performance.
The Commission states that KLA’s equipment can be used during both wafer front-end processes and subsequent assembly and packaging steps. These systems will also include relevant subassemblies manufactured in Germany. KLA has maintained R&D and manufacturing activities in Weilburg since acquiring Vistec’s Microelectronic Inspection Equipment division in 2008.
This project is strategic because semiconductor independence depends not only on manufacturing capacity but also on materials, machinery, inspection systems, chemicals, intellectual property, and skilled personnel capable of operating complex processes.
KETEK will receive €17.9 million to build two production lines inside a cleanroom in Munich. One will produce silicon drift detectors (SDD), and the other will manufacture radiation windows based on graphene, called GREW.
SDDs detect and measure radiation, especially X-rays, used in electron microscopes, spectrometers, classification equipment, and recycling systems. KETEK develops everything from wafers to chips and complete modules for material analysis in Munich.
The new project will unify these two production lines within the same cleanroom, which Brussels considers will enable manufacturing the next-generation detectors more efficiently than previous solutions.
Conditions attached to the aid to prevent non-returnable subsidies
The Commission approved these measures because the four facilities are the first of their kind in Europe. This does not mean the technologies don’t exist elsewhere, but they are not currently produced within the EU with the characteristics and processes stipulated in these projects.
Brussels also concluded that Element 3-5, Vishay, and KLA would not make these investments in the EU without public support. In the case of KETEK, the Commission considers the project would not proceed directly without the subsidy.
All four companies have committed to several obligations:
- Collaborate with universities, research centers, startups, and small firms.
- Develop training programs to increase the number of skilled workers.
- Prioritize certain European orders if a supply crisis occurs.
- Extend technological benefits of the projects to other parts of the European supply chain.
- Share with Germany any extraordinary profits exceeding the forecasts provided during aid requests.
This last mechanism aims to limit the risk of state capital participation while the beneficiary retains a much higher-than-expected return. The Commission states that subsidies have been minimized after assessing each project’s funding gaps.
The companies also requested that their facilities be recognized as integrated manufacturing sites under the European Chips Regulation. This designation imposes obligations related to supply security and crisis management.
The approval comes shortly after the Commission proposed the European Chips 2.0 Regulation, aimed at expanding support for materials, equipment, conventional chips, and advanced technologies. Since the initial framework was established, Brussels has approved 18 direct aid decisions, enabling member states to contribute around €14.2 billion to various semiconductor projects.
The four German projects will not alone eliminate Europe’s dependence on Asia and the US. Their significance lies in their diversity: covering power electronic materials, component manufacturing, process control machinery, and specialized sensors. European policy is thus starting to look beyond giant processor fabs, investing in the supply chain links that keep those plants operational.
Frequently Asked Questions
Which companies will receive the €659 million?
Element 3-5 will get €353 million, Vishay Siliconix €214 million, KLA-Tencor MIE €74.4 million, and KETEK €17.9 million.
What will the four German plants produce?
They will manufacture silicon carbide epi-wafers, power MOSFET transistors, optical measurement equipment for chip factories, and specialized radiation detectors.
Does the money come directly from the European Union?
No. The aid is funded by the German federal government and the respective regional states. The European Commission has evaluated and authorized its granting under EU rules.
Why does Brussels consider these plants special?
The Commission classifies them as first-of-their-kind facilities in Europe and argues that these investments would not be made, or would not proceed, in the EU without public support.
