Germany’s Infineon to invest €1.1b in Austrian chip production as AI demand grows

German semiconductor company Infineon announced on Tuesday a €1.1 billion investment in Austria to establish a next-generation chip production facility. The group, based near Munich, aims to create the world's first high-volume manufacturing facility for specific power semiconductors made using gallium nitride (GaN). GaN enables significant efficiency gains in various applications, including AI data centers, energy infrastructure, e-mobility, robotics, and consumer electronics.

The new investment will expand the production capacity of Infineon's Villach site in Austria by 2034, with the first chips expected to be manufactured by the end of 2027. Nearly 30% of the investment is financed by European subsidies under the European Chips Act, which aims to strengthen the EU's technological sovereignty.

Infineon's share price rose by 2.3% on the Frankfurt Stock Exchange following the announcement. The company's power chips, used primarily in vehicle engines and household appliances, differ from Nvidia's graphics processing units (GPUs) that enable AI model development. Infineon has been reducing its dependence on the automotive industry, which is currently crisis-hit, to focus on the AI sector, especially by equipping data centers.

In July, Infineon invested the most in its history by inaugurating a new €5 billion chip factory in Dresden, Germany.