Germany’s Federal Ministry for Economic Affairs has approved €920 million in subsidies for Infineon Technologies to support the expansion of its semiconductor manufacturing site in Dresden, a project aimed at strengthening Europe’s chip production capabilities and meeting growing demand from the electric mobility sector.
The funding will go toward Infineon’s Smart Power Fab, an advanced manufacturing facility currently under construction adjacent to its existing Dresden operations. The investment includes the development of Factory Module 4, designed to produce 300-millimetre wafers using a first-of-its-kind flexible production line that can handle multiple chip technologies without requiring time-intensive retooling. The facility is expected to create up to 1,000 new jobs.
See also: Infineon Launches Next-Gen Power Chips to Boost Efficiency and Performance in Electric Vehicles
The expansion is backed not only by the German federal government but also by the European Union under the European Chips Act and the IPCEI ME/CT (Important Project of Common European Interest on Microelectronics and Communication Technologies). Total public funding for the project is expected to reach approximately €1 billion. The European Commission approved Germany’s subsidy contribution in February.
“This final funding approval for our Smart Power Fab is an important milestone for us as a company and is a clear signal to the European semiconductor ecosystem,” said Infineon CEO Jochen Hanebeck. “The semiconductors we manufacture in Dresden are our contribution to making the future value chains of key European industries even more robust.”
See also: Infineon, CDIL Partner to Boost India’s EV and Renewable Energy Chip Production
Infineon, which has operated in Dresden since 1994, is investing €5 billion of its own capital into the facility. In exchange for public funding, the company is obligated to conduct research and development for next-generation chips in Europe and prioritize essential semiconductor orders during supply disruptions, as required by the European Chips Act.
Construction of the Smart Power Fab began in May 2023 and remains on schedule, with the building shell nearly complete and a topping-out ceremony held in April. Production is expected to start in 2026.
See also: Stellantis and Infineon Collaborate to Enhance Power Architecture for Next-Generation Vehicles
Infineon’s Smart Power Fab is a separate initiative from the European Semiconductor Manufacturing Company (ESMC) joint venture located in western Dresden, which includes Taiwan’s TSMC, Bosch, NXP, and Infineon. That project also received EU state aid approval in 2024.