Infineon’s €5 Billion German Chip Plant Starts in July

According to Infineon Technologies, the company is preparing to launch the largest single investment project in its history—a new semiconductor manufacturing facility in Dresden, Germany, backed by a total investment of €5 billion (approximately US$5.8 billion).

Speaking in Dresden this week, Infineon Chief Operating Officer Alexander Gorski announced that the new power semiconductor wafer fabrication plant, which forms part of the company’s Dresden campus expansion, will officially begin operations on July 2. The project is one of the flagship initiatives supported by the European Union’s Chips Act and has received approximately €1 billion in public funding.

The Dresden facility is widely regarded as one of the most significant success stories under the EU Chips Act, which was introduced in response to global semiconductor shortages during the pandemic. The legislation aims to increase Europe’s share of global semiconductor manufacturing capacity to 20% by 2030.

Despite this progress, implementation of the Chips Act has faced challenges. Several large-scale semiconductor projects across Europe, including Intel’s previously planned advanced wafer fabrication facility in Magdeburg, Germany, were ultimately canceled despite receiving substantial government support.

To further strengthen Europe’s semiconductor ecosystem, the European Union has begun developing a new Chips Act 2.0 framework. The initiative is a key component of the bloc’s broader technological sovereignty strategy, designed to reduce dependence on foreign technologies by promoting domestic semiconductor production and encouraging the adoption of European-made chips and cloud infrastructure.

Gorski highlighted the growing role of power semiconductors in the AI era, noting that AI data centers currently under construction or in planning stages worldwide are expected to double their electricity consumption by 2030. He stated that the projected energy demand would be comparable to the current annual power consumption of Germany.

Infineon expects production at the Dresden facility to scale gradually in line with market demand. The company estimates the plant could eventually generate up to €5 billion in annual revenue. However, Gorski declined to provide a timeline for reaching full production capacity. He added that approximately €2 billion has already been invested in construction, while the remaining capital will be allocated to future equipment installations and capacity expansion.

Meanwhile, analysts at Bank of America have increased their forecast for Infineon’s AI-related power semiconductor revenue in 2028 by €500 million, raising the estimate to €4.5 billion.

According to figures released by Infineon last month, revenue generated from data center-related business is expected to grow from approximately €1.5 billion in fiscal 2026, representing around 10% of total revenue, to €2.5 billion in 2027. The company sees artificial intelligence infrastructure and data center expansion as major drivers of future demand for power semiconductors.