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EC doesn't understand DRAM biz – Infineon chief

Leave our subsidy alone, please

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Infineon chief executive Ulrich Schumacher has slammed the European Commission for its insistence on pursuing an investigation into his company's $194 million subsidy from the German government.

The EC, Schumacher said in an interview with EBN, simply "doesn't understand the DRAM business", specifically its cyclical nature.

"When the Saxony state government agreed to provide incentives for us to build our 300mm fab, DRAMs were in short supply on the world market and the industry was very healthy," he said.

Now the memory market is going through one of its regular depressions, and the investment looks like it might contravene European Union rules on state aid to ailing industries, he added, but forecast that "the DRAM market will turn up again", rendering the subsidy justifiable once more.

Last month, the EC said it doubted the German government's aid was "compatible with the EC treaty". The EC places strict limits on the amount of assistance member governments can give to industries in decline. Building a memory plant at a time when there is massive overcapacity may well seem to EC officials to be a sign of unwarranted state aid.

The $194 million aid package was offered to Infineon to help it construct a $974.43 million DRAM plant in Dresden. The German government made the offer to help secure 1700 jobs at the plant and a further 1000 jobs with contractors and suppliers. Infineon claims it has yet to receive the money, but will use the aid to offset its own costs as and when the cash shows up.

In the meantime, the Saxony Minister for Economic Affairs, Kajo Scchommer, is to meet EC officials on 17 December to persuade them that the subsidy was in order. ®

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