The German government wants to help Infineon establish the plant, to build 512Mbit and larger RAM chips, in eastern Germany because they see it creating jobs for the area, the Commission said.
The Commission, the executive body of the European Union which overseas competition matters, was initially concerned about the aid because it saw overcapacity in the RAM market. However, Commission spokesman Michael Tscherny said the picture has changed.
"We had three concerns with this aid," Tscherny said. "The overall market situation with overcapacity and declining demand, the questionable creation of jobs by Infineon, and the indirect creation of jobs, with suppliers and locally."
He said that the first objection was the main one and that the situation had now changed. "We see the market improving now," he said.
The €219 million state aid package, which accounts for around 20% of the cost of building the plant, was notified to the European Commission in November. The Commission will take its final decision at the end of April or the beginning of May, Tscherny said.