On Tuesday, Infineon will break ground on a new semiconductor factory in Dresden with much fanfare. The company intends to expand its production capacity by a third.
High-ranking visitors expected at groundbreaking: In addition to German Chancellor Olaf Schulz, European Commission President Ursula von der Leyen plans to fly in for the groundbreaking of the new semiconductor factory in Dresden . The presence of senior politicians underscored the importance of the fabrication facility to the European semiconductor industry: it will be the first facility of its kind to receive funding under the European Chip Act. The package of measures aims to boost Europe’s share of global semiconductor production to 20 percent from less than 10 percent currently.
To this end, Infineon is expected to receive funding of approximately 1 billion euros. This is to be expected, as grants have been applied for but not officially approved. If the EU and German governments agree to the application, Infineon will receive 20 percent of the investment in the new building in Dresden – the current total cost of the plant is 5 billion euros.
Dresden, Villach fabs to be merged into one “virtual fab”
Technically, the new building represents an expansion of Infineon’s existing production facility in Dresden. The additional cleanroom space provided by the new “Smart Power Fab” is expected to account for 40% to 50% of the company’s existing 40,000 square meters of cleanroom space. Infineon expects that the expansion of its highly automated production will create around 1,000 additional jobs. The new 300mm fab will manufacture analog/mixed-signal products and power electronics. Target applications for the product are small motor controllers for power supplies, automotive, data centers, and IoT. In order to increase manufacturing efficiency and flexibility, Infineon intends to merge the smart power plant in Dresden with its power plant in Villach (Austria) to form a “virtual factory”.
The expansion of Infineon’s manufacturing base also strengthens the “Silicon Saxony” high-tech ecosystem. Around 2,500 companies in the semiconductor industry chain are currently present; the industry employs around 70,000 people in total in the Dresden area. In addition, nine universities and research institutes are also active in this field. According to Infineon, one-third of the chips produced in Europe come from Dresden. In addition to Infineon, GlobalFoundries, Bosch and X-Fab also have large production facilities.
But Infineon’s new building is far from enough to achieve von der Leyen’s ambitious goal of a European share of 20 percent of global semiconductor production capacity. Ondrej Burkacky, a semiconductor expert at consultancy McKinsey & Company, estimates that 30 additional chip factories are needed. And the competition hasn’t stopped: TSMC, the world’s largest chip foundry, plans to build a new fab in Arizona soon. The investment exceeds 40 billion US dollars, far exceeding that of Infineon’s new plant.
Von der Leyen hails Infineon plant as milestone in European chip production
European Commission President Ursula von der Leyen on Tuesday hailed Germany’s Infineon’s construction of a new factory as a milestone for mass chip production, as Europe seeks to capture a larger share of the strategic industry.
Speaking at the groundbreaking ceremony for the Infineon plant in Dresden, Germany, von der Leyen said it was a step towards Europe’s goal of increasing its share of global chip production by 2030 by quadrupling its current capacity. The share doubled to 20%.
But she warned that Europe remains too reliant on individual suppliers for raw materials, noting in particular that China produces 76 percent of the silicon metal needed for chip production.
The EU hopes to catch up with Asia and the United States and reduce its dependence on Asia. The European Union last month agreed a 43 billion euro ($47 billion) chip subsidy program to ensure supplies of key components after COVID-19 lockdowns caused shortages that affected production of everything from mobile phones to cars and refrigerators.
In a speech, von der Leyen said: “We are all experiencing a sharp increase in geopolitical risk. That is why it is vital that we strengthen our supply chains in Europe for our most important goods and technologies.”
“It also means expanding our position in chips and having more of our own capacity available. For critical semiconductors, we need more mass production in Europe.”
Infineon expects to start production in 2026 at a semiconductor factory costing 5 billion euros, the largest investment in the company’s history.
Other chipmakers are also currently investing in Germany. The American group Wolfspeed is building a factory in Saarland with an investment of 2.75 billion euros. Intel is building a massive factory in Magdeburg.
Post time: May-05-2023