Infineon celebrates the start of construction of a new chip factory in Dresden. The project aims to help reduce dependence on semiconductor imports. Chancellor Scholz is full of praise.
The Munich semiconductor manufacturer Infineon is investing five billion euros in the new plant in Dresden. This is the largest single investment in the company’s history. The expansion is expected to create around 1,000 new jobs.
EU Commission President Ursula von der Leyen sees the expansion of Infineon’s Dresden chip factory as an important milestone in the development of mass production of semiconductors within the European Union. “Dresden is without a doubt a digital lighthouse in Europe,” said von der Leyen.
Reduce dependencies in supply chains
The focus of the EU Chip Act is on building up domestic production, as emphasized by von der Leyen. The EU aims to double the share of global chip production to 20 percent. Because the chip market is growing overall, this means that the current capacities have to be quadrupled.
Dependence on individual raw material suppliers represents a risk, stressed the head of the commission. In particular, silicon, the most frequently used raw material for the chip industry, is currently dominated by China with a share of 76 percent. That is why the EU wants to provide alternatives with new projects in Europe, but also partnerships with countries such as Australia, the USA and Canada, and thus secure the supply chains of European companies.
More major investments in Saxony?
Chancellor Olaf Scholz (SPD) emphasized that it is not about decoupling economic areas. That would be the wrong way. However, it is important to reduce the risk, diversify sources of supply and strategically build up your own capacities, said Scholz.
Semiconductors are “the crude oil of the 21st century,” said the Chancellor – and praised: “This is where Germany’s future is being created.” Chips are the basis of all essential transformation technologies – from wind farms to charging stations. The chips manufactured in Dresden contribute to “securing jobs and making our industry – from medium-sized companies to large corporations – more resilient.”
In addition, Scholz believes that further chip investment projects are possible: “I don’t have the impression that this major investment will be the last that we will see in Silicon Saxony.” Most recently, TSMC boss CC Wei said the Taiwanese chip company was considering building a semiconductor factory in Europe that would specialize in customers in the automotive industry.
Is the European funding volume lagging behind?
With the European Chips Act, with a total volume of 43 billion euros in public and private investments, the global share of semiconductor production in Europe is to be doubled to 20 percent within ten years. The EU wants to catch up with the USA and Asian countries, some of which have put together much larger support packages.
In the USA, 52 billion dollars are available for the chip industry, in Asia there are hundreds of billions. Nevertheless, the EU program is attracting investors: According to an EU representative, investments of more than 100 billion euros have been announced since the plans became known last year.
Infineon CEO Jochen Hanebeck said that the European promotion of the industry is an important step in positioning Europe at the top of the global semiconductor system. When it goes into operation in autumn 2026, the group is hoping for annual revenues of around five billion euros, which would correspond to an increase in sales of around a third. Infineon is aiming for funding of one billion euros.
In addition to Infineon, other chip manufacturers are also currently investing in Germany. The US group Wolfspeed is building a plant in Saarland and investing 2.75 billion euros in it. Intel builds a large factory in Magdeburg.