EU Chips Act: the success of ELEMENT 3-5

EU Chips Act: State aid secured by ELEMENT 3-5 for a first-of-its-kind WBG epi-wafer facility

In a strategic industry such as semiconductors, the most advanced innovations need adequate financial and strategic foundations. With global supply chains under pressure and Europe seeking greater technological sovereignty, access to public funding is both a catalyst for industrial scale-up and a mark of credibility.

That is why ELEMENT 3-5 turned to european economics: to navigate the complexity of State aid rules under the European Chips Act and secure major public support for a first-of-its-kind facility manufacturing high-performance wide bandgap (WBG) epi-wafers.

A pioneer in compound semiconductor technology

Founded in 2010 as a spin-off from RWTH Aachen University, ELEMENT 3-5 develops epitaxy systems and processes for the semiconductor industry. In 2025, it was named one of the three most innovative medium-sized companies at the German Innovation Award and Innovator of the Year in its size category in the TOP 100 innovation competition.

On 14 July 2026, the European Commission approved €659 million in German State aid for four first-of-a-kind facilities in the semiconductor value chain. ELEMENT 3-5 received the largest share: a direct grant of €353 million for its facility in Baesweiler, North Rhine-Westphalia. The other three beneficiaries are Vishay (€214 million), KLA (€74.4 million) and KETEK (€17.9 million).

The project will produce next-generation WBG epi-wafers. A very thin, high-quality epitaxial layer gives them better performance than standard WBG wafers. They are intended for automotive, industrial, telecommunications and energy applications.

The challenge: meeting the requirements of a State aid assessment

The Commission assessed the measure under Article 107(3)(c) of the Treaty on the Functioning of the European Union (TFEU) and the principles of the EU Chips Act. To secure approval, the project had to demonstrate:

• that the facility is first-of-a-kind with a manufacturing process that improves energy efficiency, yield and overall efficiency compared with conventional hot-wall chemical vapour deposition (CVD),
• a clear incentive effect: without public support, the investment would not be made in the EU,
• a proven funding gap, with aid that is proportionate and limited to the minimum necessary,
• a contribution to the resilience of Europe’s semiconductor supply chain.

ELEMENT 3-5 has also committed to share with Germany any project profits that exceed current expectations. It is applying for Integrated Production Facility (IPF) status under the EU Chips Act.

The solution: expert guidance from european economics

european economics provided end-to-end support throughout the process:

• strategic framing of the project and analysis of its eligibility under the EU Chips Act,
• building and documentation of the funding gap required under State aid rules,
• tailored technical, financial and environmental modelling,
• support with the notification file and coordination with public and private stakeholders.

“
”

The rules of the game for applying for projects at EU level are completely different from those for national funding applications. Without the substantial support from european economics, we as an SME would not have been able to get the project successfully over the finish line in such a short time.

Volker Sinhoff
Managing Director, ELEMENT 3-5

Impact

✔ €353 million in State aid approved by the European Commission on 14 July 2026 (case SA.119614)

✔ Largest amount among the four semiconductor projects in the €659 million package

✔ Project recognised as a first-of-a-kind facility within the meaning of the EU Chips Act

✔ Stronger financial basis for industrial scale-up of WBG epi-wafer production in Europe

Key takeaway

Commission approval of State aid follows close scrutiny by DG Competition. It confirms that the project is economically and technologically sound and consistent with EU strategic priorities. For ELEMENT 3-5, it secures substantial public funding and strengthens its position in an industry critical to Europe.

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