The European Commission has allowed the Portuguese government to provide Infineon with a €71.96m ($88.71m) grant to fund the foundation of a memory chip fab.

The grant amounts to 32 per cent of the cost of a project to expand production at its Vila do Conde (Grande Porto) facility.

EC investigators had to examine the deal because it exceeds €50m ($61.64m). State aid packages above that figure have to reported to the EC and checked for potential anti-competitive aspects.

This time round, the EC approved the full amount, which exactly matches the 32 per cent limit on such aid.

In March, however, the EC approved just €41.5m ($51.16m) of a proposed €76.8m ($94.67m) grant to be offered by the Portuguese government to fund a separate project at Infineon's facility at Vila do Conde. The EC began its investigation into the first grant in July 2003. ®

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