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EC approves Infineon state aid package

But cuts funding total by almost 50%

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The European Commission is expected to allow the Portuguese government to grant chip maker Infineon €41m ($50.3m) in order to expand a local DRAM plant.

However, the EC's ruling will mark a step back from the original plan to provide €76.8m ($94.3m).

The EC launched an investigation of the Portuguese government's planned state aid last July. The money will go to Infineon's Technologies-Fabrico de Semiconductores SA subsidiary for a plant located in Vila do Conde.

At the time, Commission officials said that its decision as to whether the state aid will be permitted would be based on whether "the proposed project would take place in a sector suffering from structural over-capacity". And they note: "The new Infineon plant is scheduled to produce DRAMs - a market where careful scrutiny of the development of sales proves necessary."

According to a Dow Jones report, the decision has gone the Portuguese government's way. The EC had been due to rule on the case earlier this month, but a final decision could not be made until the extent of the funding had been agreed. ®

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