Infineon Bets 1.1B Euros on Austria GaN Chip Plant
Infineon will invest 1.1 billion euros in Austria to build the first high-volume gallium nitride chip plant on 300mm wafers, starting production in late 2027.
German chipmaker Infineon Technologies will invest about 1.1 billion euros, around 1.23 billion dollars, in its site in Villach, Austria, to build the world's first high-volume factory for gallium nitride (GaN) power chips made on 300-millimetre wafers. Production is set to start by the end of 2027, with the investment running through 2034. The project is aimed squarely at the AI era. GaN power chips help data centres, electric vehicles and energy systems use electricity more efficiently, and demand for them is rising fast as AI computing grows.
What Infineon announced
Infineon said on Tuesday, October 27, that it will set up high-volume production of GaN power semiconductors on 300mm wafers at Villach. The company says it will be the first company in the world to bring GaN power electronics into volume production at this scale. Rather than building a completely new factory, Infineon will invest in its existing cleanroom facilities at Villach, which it says makes the expansion more efficient and cost-effective. The ramp-up of production will be adjusted to match market demand. The investment will run through 2034. Infineon processed its first 300mm GaN wafers two years ago, in 2024, and is now moving the technology into full production.
Why gallium nitride matters
Gallium nitride is a material used to make power chips that switch and convert electricity. Compared with traditional silicon chips, GaN chips can switch power faster and lose less energy as heat, which allows for smaller and more energy-efficient systems. That efficiency matters most where power use is huge. Infineon is targeting AI data centres, energy infrastructure, electric mobility, robotics and consumer electronics. The wafer size is a big part of the story. A 300mm wafer can hold about 2.3 times as many chips as the more commonly used 200mm wafer, which improves manufacturing efficiency and lowers costs per chip. Citing market research firm Yole Group, Infineon says the market for GaN power semiconductors is expected to grow by around 35 percent a year, reaching roughly 3.5 billion dollars in 2031.
Europe's chip bet, with state aid
The project is backed by the European Union. The European Commission has approved 319 million euros in state aid under the European Chips Act, although the formal funding commitment from the Austrian Ministry for Economic Affairs is still expected. Infineon chief executive Jochen Hanebeck said the investment shows a clear commitment to strengthening Europe's semiconductor industry and its technological independence. In the company's announcement, he said: "This paves the way for the widespread use of gallium nitride in a wide range of key applications in fields such as artificial intelligence, energy infrastructure, electric mobility and robotics." The news gave Infineon's shares a small lift in early trading in Frankfurt, rising nearly 1 percent, after a fall of around 40 percent since the middle of June.
What happens next
Production is scheduled to begin by the end of 2027. After that, Infineon will scale output up or down based on demand from data centres, carmakers and energy customers. The company has not said how many new jobs the GaN production line will create. If the plant delivers on time, Europe will gain a home-grown source of one of the key chips behind efficient AI infrastructure, instead of relying only on suppliers elsewhere. For Infineon, it is a bet that energy efficiency, not just raw computing power, will decide the next phase of the AI build-out.
Sources
Reuters - https://www.reuters.com/business/infineon-invest-11-billion-austria-chip-site-2026-10-27/ Evertiq - https://evertiq.com/design/2026-10-27-infineon-to-invest-11-billion-in-300mm-gan-production-in-villach Morningstar - https://www.morningstar.com/news/dow-jones/202610271341/infineon-to-invest-around-11-billion-euros-in-villach-site