German semiconductor manufacturer Infineon has announced an investment of €1.1 billion, about $1.23 billion, in its Austrian site to expand production of power semiconductors used in data centres, the company said on Tuesday.
The project will be based in Villach, Austria, where Infineon plans to build what it describes as the world’s first plant for the mass production of gallium nitride semiconductors on wafers measuring 300 millimetres in diameter. Gallium nitride, often shortened to GaN, is a material increasingly used in power electronics because it can handle high voltages and operate efficiently in compact devices.
According to the company, wafers of 300 millimetres can hold 2.3 times as many chips as the 200-millimetre wafers most commonly used today. That difference matters for manufacturing economics: larger wafers allow more chips to be produced from each wafer, which can bring down the cost per chip and increase output from the same production line.
Infineon said the new capacity would support a wide range of applications, including artificial intelligence, energy infrastructure, electric mobility and robotics. Those fields share a common demand for power semiconductors that can convert and control electricity efficiently, whether in a data centre server, an electric vehicle charging system or an industrial robot.
Data centres are a particular focus of the investment. As artificial intelligence workloads grow, data centres require ever more electricity, and the efficiency of their power systems has become a central concern for operators and for energy grids. Power semiconductors sit at the heart of that system, managing the flow of electricity to processors and other equipment while limiting energy losses as heat.
Chief executive Jochen Hanebeck said in a statement that the project would pave the way for the wider use of gallium nitride across key applications. The company presents the Villach plant as a step from specialised production towards large-scale manufacturing of the material.
The announcement comes at a challenging time for Infineon’s share price, which has fallen by around 40 per cent since the middle of June, according to Reuters. The shares rose by nearly one per cent in early trading in Frankfurt on Tuesday following the announcement.
For Austria, the investment reinforces Villach’s role as an important European semiconductor location. Chip manufacturing in Europe has become a strategic priority in recent years, as governments and companies have sought to strengthen regional supply chains and reduce dependence on production elsewhere in the world.
The move also reflects a broader shift in the semiconductor industry towards materials beyond traditional silicon. While silicon remains dominant, materials such as gallium nitride are gaining ground in applications where efficiency, size and power handling are decisive factors.
If the Villach plant delivers mass production at the scale Infineon envisages, it could help bring gallium nitride components into wider use, lowering costs and supporting the expansion of data centres, electric transport and automated industry across Europe and beyond.
