Infineon Technologies AG, which has sharply criticized rival chipmaker Hynix Semiconductor Inc. for securing a loan package with ties to the Korean government, has itself come under scrutiny for its intended use of German government funds to help it build a new 300mm-wafer fab in Dresden.
A spokesman for Infineon confirmed that the European Commission notified the company Wednesday that it has begun an investigation into a proposed $195 million aid package that the German government has prepared to help finance the project. The EC probe comes just two weeks before Infineon plans to formally dedicate the 300mm DRAM production fab.
In a released statement,the EC said that it "doubts the [government] aid is compatible with the European Community treaty" on government subsidies to private business.
Word of the investigation is something of an embarassment for Infineon, whose senior executives have lashed out at the Korean government for funneling money through domestic banks it owns or controls to as part of a $6 billion financial bailout of Hynix.
Jan DuPreez, president of Infineon Semiconductor, the company's San Jose-based U.S. subsidiary, charged that as a result of the bailout "the Republic of Korea will end up as the largest producer of 64Mbit DRAMs in the world."
Infineon is also pressing the EC to file a case with the World Trade Organization (WTO) charging the Korean government with violating global trade rules through its connection to the Hynix rescue package.
The EC did not state when it would conclude its probe of Infineon, but all accounts indicate that the process will be lengthy. Observers say the German government is expected to mount an aggressive defense of its actions.
Editor's note: An earlier version of this story incorrectly stated that Infineon has received a $195 million subsidy from the German government. The subsidy is pending.