In Dresden, Infineon is building a state-of-the-art semiconductor plant. It aims to reduce Europe’s dependence on vulnerable global supply chains. But there is also criticism.
The chip group Infineon is starting today with the expansion of its semiconductor plant in Dresden. The so-called Smart Power Fab is scheduled for completion in 2026 and will be more than four soccer fields in size. In autumn 2026, the first chips should finally leave the plant. Infineon wants to invest five billion euros in the expansion of semiconductor production and create around 1,000 new jobs.
According to the company, it is the largest single investment in the company’s history and is intended to make Dresden one of the leading semiconductor locations in Europe. At full capacity, the factory will enable additional annual sales in the magnitude of the investment volume to be achieved, according to a statement. That would correspond to the cost of five billion euros.
Dresden is already one of Infineon’s largest manufacturing and development locations. Around 3,250 people currently work there. The company employs a total of 56,200 people worldwide.
“Structurally growing semiconductor requirements”
Jochen Hanebeck, CEO of Infineon, sees a structurally growing demand for semiconductors, for example for renewable energies, data centers and electromobility. “With the construction of the 300 mm Smart Power Fab in Dresden, we are creating the necessary conditions to be able to serve the increasing demand for semiconductor solutions,” Hanebeck had already explained in February.
According to Infineon, the components manufactured there are intended to promote decarbonization and digitization and be used in systems for energy-efficient power supply, such as in chargers, in small engine controls for cars, in data centers and in applications in the Internet of Things.
In line with the European Chips Act
The state-sponsored investment has a geostrategic background and is primarily intended to help make Europe less dependent on semiconductors from the USA and in particular from Asia. Therefore, Infineon’s commitment is in line with the European Chips Act. With a total volume of 43 billion euros in public and private investments, the global production share of semiconductors in Europe is to be doubled to 20 percent by 2030.
According to the EU Commission’s website, microchips are of strategic importance for central industrial value chains. In the past, for example, there was a shortage of chips during the corona pandemic, which made politics and industry aware of the vulnerability of supply chains.
The car industry, for example, struggled with massive production losses, not least because of a lack of chips, and despite high demand, car sales in Europe fell to their lowest level in almost 30 years.
Funding met with criticism
The companies are now trying to secure state subsidies for their projects and factories. The new plant in Dresden is also supported with public funds. According to Infineon, it is aiming for a government subsidy of around one billion euros. However, this promotion has also met with criticism. The Leibniz Institute for Economic Research Halle (IWH) had criticized the billions in funding for chip factories in East Germany: “We’re throwing the money out the window,” said IWH President Reint Gropp of the “Süddeutsche Zeitung” in an interview published on Sunday. “We should better put the money somewhere else.”
The US chip manufacturer Intel, on the other hand, is planning a chip factory in Magdeburg and also wants to benefit from government subsidies. According to media reports, he pushed for significantly higher government funding. Instead of the promised 6.8 billion euros, Intel now needs ten billion euros, it said.
The Financial Times recently reported that the federal government is demanding that the US company expand its investment plans by 17 billion euros in exchange for higher subsidies.
Ceremony planned
In addition to EU Commission President Ursula von der Leyen, Chancellor Olaf Scholz (SPD) will also take part in the symbolic groundbreaking ceremony at 2 p.m. in Dresden. The construction work has long since begun, because the Federal Ministry for Economic Affairs and Climate Protection (BMWK) had already given approval for an early start to the project.
It’s an eventful week for Infineon: This Thursday, the group will also present the figures for the second quarter. In the first quarter of the financial year, the chip manufacturer reported a drop in sales from EUR 4.14 billion to EUR 3.95 billion. The bottom line was 728 million euros. In the fiscal year that ended in September 2022, Infineon generated sales of around EUR 14.2 billion.