The European Commission has approved a €450m ($518m) subsidy from the Czech government to support the development of a silicon carbide manufacturing facility in Rožnov pod Radhoštěm, Czechia, by US chipmaker Onsemi.

The approval comes 18 months after Onsemi announced plans to invest $1.64 billion to establish the fabrication plant in the Czech Republic.

Slated to be operational by 2027, the facility will be the first of its kind in the EU, covering all manufacturing steps from SiC crystal growth to finished devices. The subsidy was approved on condition that Onsemi ensures the project positively impacts the broader EU semiconductor value chain; contributes to the development of the next generation of the 200mm SiC technology; implements priority-rated orders in case of a supply shortage in line with the European Chips Act; and develops training programs to boost the number of skilled workers in the region.

Silicon carbide is a synthetically produced crystalline compound of silicon and carbon. The material provides several advantages over conventional silicon for power applications, including better thermal conductivity, higher switching speeds, and lower dissipation, making it particularly suitable for the manufacturing of high-voltage power devices.

The chips produced at Onsemi’s plant would be used to improve the energy efficiency of applications in electric vehicles, renewable energy, and AI data centers.

Speaking last year when the investment was first announced, Hassane El-Khoury, president and CEO of Onsemi, said: “Through a close collaboration with the Czech government… [we will] enhance our production of intelligent power semiconductors that are essential to helping ensure the European Union is able to achieve its ambitions to significantly reduce carbon emissions and environmental impact.”