The European Commission on Wednesday approved Germany's plan to grant 262 million euros in aid to the U.S. microchip giant AMD for a plant in the country's less developed region.

The commission said the aid plan was compatible with EU requirements, as it can be allowed as regional aid for poor areas within the European Union.

The project is to be carried out in Saxony region of eastern Germany, a disadvantaged area eligible for regional aid.

With a total investment estimated at 2.2 billion euros, AMD is aimed at converting and extending the existing plant for the production of microprocessor wafers.

The commission found that the expansion project by AMD would not significantly increase the company's production capacity in the EU market or strengthen its market power.

However, the high-tech investment will contribute to the further regional development of Saxony, with about 565 additional jobs to be created.