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.
