Infineon given the green light for €5B Dresden chip fab

Still waiting for word on those sweet, sweet subsidies

Infineon hopes to secure €1 billion in subsidies for its upcoming chip fab from the German government, but it's not waiting around to get started.

On Thursday, the German chipmaker – best known for producing semiconductors used in automotive, industrial, and power applications – said it has secured permission from regulators to begin work on the project before the European Commission has completed an investigation into legal subsidies for the plant.

The €5 billion facility is to be located outside Dresden and produce analog and mixed-signal technologies and power semiconductors using 300mm wafers when it comes online in 2026. These components are used in a variety of applications including EV charging applications, motor control units, datacenters, and other industrial environments.

According to CEO Jochen Hanebeck, a major emphasis behind the fab was to capitalize on growing demand for decarbonization technologies. "We see structurally growing demand for semiconductors, for example for use in renewable energies, datacenters, and electro-mobility," he said.

Construction on the plant is expected to begin later this year and employ approximately 1,000 once operational. The company estimates that the facility, which it says is its largest single investment in its history, will contribute roughly €5 billion a year to its bottom line.

Infineon isn't the only major chipmaker setting up shop in Germany. In March last year, Intel announced it would build a €17 billion "mega fab" in Magdeburg and secured €6.8 billion in subsidies from the German government to build it. However, since then the company has faced repeated financial challenges, and has reportedly approached the German government requesting an additional €3.2 billion in funding to offset inflation and rising fuel costs. The company now says the site will cost closer to €20 billion.

While neither Intel nor Infineon have locked down all the subsidies they'd like, they may not have to wait much longer. The company's announcement comes just as the European Parliament moves forward two draft bills designed to bolster domestic chip manufacturing capacity for debate.

The first of these measures, dubbed the Chips Joint Undertaking, aims to establish investment tools to attract chipmakers to the region. If approved, the bill would open up €11 billion of funding. The second of these bills is the long-awaited European Chips Act, which focuses on semiconductor manufacturing, and would boost the available funding to €43 billion. ®