The €545 million worth of allowances and grants AMD will receive from the Federal German government and the local administration in Saxony to help it build its 300mm wafer fab in Dresden have been given the green light by the European Union.

The chip maker announced its decision to site the plant - called Fab 36 - in Dresden last November. At the time, AMD CFO Bob Rivet said that the national and local grants amounted to "the most substantial government-backed financial incentives package" the company has seen.

The grants had first to be approved by the EU to ensure they met the terms of European competition regulations on state aid.

The plant is projected to cost $2.4 billion, with more than half of that total coming from "external financing and government support". The facility is expected to reach volume production some time in 2006.

It will employ some 1000 workers - a key reason why it was awarded such generous grants. The Dresden area suffers a particularly high unemployment rate. Some 13 per cent of the total workforce is currently without a job.

Dresden is believed to have beaten IBM's East Fishkill facility, which given the close ties between AMD and IBM - particularly on the R&D front - would have seemed the most logical choice.

"With [the EU's] approval, our new project has passed a key financial milestone as we begin the process of building, equipping and ramping the new fab," Rivet said today. ®

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