The EU has thrown 262 million Euros (£177 million) at AMD as a subsidy to improve its factory in Dresden, Germany. The amount was asked for by the German government as part of a package to create jobs in Saxony - an area the EU terms a "disadvantaged region" and so eligible for the aid.
The approval for aid also had to be rubber-stamped by the Competition arm of the EU to ensure the silicon giant wasn't getting preferential treatment.
Competition Commissioner Neelie Kroes said: "I am pleased to approve aid for an important investment project in a high tech sector which will contribute to regional development and job creation in a disadvantaged region of Germany."
AMD says its full plans for expanding the processor fab will cost 2.2 billion Euros (£1.5 billion) overall. The expansion will provide 300-millimeter wafer production facilities and a new clean-room facility. Over 500 new jobs will be created.
The Dresden plant was opened in 2005.