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

An image of an electronic wafer is displayed at the Taiwan Semiconductor Manufacturing Company (TSMC) Museum of Innovation in Hsinchu in this file picture dated November 21, 2024. German semiconductor maker Infineon said Tuesday it would invest €1.1 billion in a next-generation chip production unit in Austria to meet rising demand driven by the AI boom. — AFP pic

First Published: Wednesday, 28 Oct 2026 11:12 AM MYT

BERLIN, Oct 28 — German semiconductor maker Infineon said Tuesday it would invest €1.1 billion (RM4.99 billion) in a next-generation chip production unit in Austria to meet rising demand driven by the AI boom.

The group, based near Munich, said it intends to create the “world’s first high-volume manufacturing facility” for a specific kind of “next-generation” power semiconductor made using gallium nitride (GaN).

“Gallium nitride enables significant efficiency gains in numerous applications, such as AI data centres, energy infrastructure, e-mobility, robotics and consumer electronics,” the group said.

The new investment will expand the production capacity of Infineon’s Villach site in Austria by 2034, but the first chips are expected to be manufactured well before then, by the end of 2027.

Nearly 30 per cent of the investment is financed by European subsidies under the European Chips Act, which aims to strengthen the EU’s technological sovereignty.

The announcement gave Infineon a boost on the Frankfurt Stock Exchange, with its share price up 2.3 per cent around noon.

Power chips, used in particular in vehicle engines and household appliances, are Infineon’s speciality.

They differ from the graphics processing units (GPUs) of US company Nvidia, which enable the development of AI models thanks to their high computing power.

But for some time now, Infineon has been reducing its dependence on the crisis-hit automotive industry to move into supplying the AI sector, notably by equipping data centres.

In July, Infineon made the largest investment in its history with the inauguration of a new chip factory in the eastern German city of Dresden worth €5 billion. — AFP