Infineon to invest €1.1 billion in Villach gallium nitride chip plant in Austria

The investment and its scope

Infineon is investing €1.1 billion in its Villach site in Carinthia, Austria, to build what it describes as the first high-volume production line in the world for power chips made from gallium nitride (GaN). The Munich-based group announced the plan on Tuesday, 27 October 2026, and says the spending stretches to 2034. Rather than build a new facility, Infineon will fit the new lines into cleanrooms it already operates in Villach, a choice it says keeps the expansion cheaper than a new plant. Bloomberg reports the €1.1 billion ($1.2 billion) would be spent over eight years. Once the lines are running, the company plans to raise output in step with demand.

Why gallium nitride matters

Most power chips, which govern how electricity flows through devices from chargers to servers, are still made from silicon. Infineon says GaN switches faster and wastes less energy, which makes it useful wherever large amounts of power must be handled efficiently. The company is aiming the chips at AI data centres, energy networks, electric cars and robots. Moving from 200mm to 300mm wafers is intended to lower production costs, since each wafer yields 2.3 times as many chips. Infineon first produced 300mm GaN wafers in 2024. Estimates put the global GaN chip market at €3.5 billion by 2031, a sixfold rise.

On demand for gallium nitride, Hanebeck said:

“The world is hungry for energy.”

He linked the plant to the wider rollout of the material, saying:

“With this we are clearing the way for gallium nitride to be used widely in many key applications, such as AI, energy infrastructure, electric mobility and robotics.”

Funding and timeline

Production is scheduled to begin at the end of 2027, and the investment programme runs until 2034. The European Commission approved €319 million in state aid under the EU Chips Act, while Austria's economy ministry still has to give formal approval. Chancellor Christian Stocker explained the subsidy and pointed to the benefits for Austria's economy. The project joins other EU-backed chip plants, including TSMC's factory in Dresden.

Stocker stressed the employment effect:

“Every job at Infineon secures almost three more in Austria.”

Total investment1,100

State aid under EU Chips Act319

Total investment

1100 € million

State aid under EU Chips Act

319 € million

Data from the article text

Workforce, strategy and markets

Hanebeck credited the skills of the workforce and a dependable political environment for tipping the decision in favour of Villach. Infineon has roughly 4,800 staff in Villach and about 5,800 across Austria, but it has not given a figure for the jobs the new line would create. Three years ago Hanebeck bought the Canadian chip designer GaN Systems for $830 million, and in the summer he opened a €5 billion fab in Dresden. GaN remains considerably more expensive than comparable amounts of silicon, and larger wafers are meant to lower unit costs. Shares edged up just under 1% in early Frankfurt trading on Tuesday. Before that, the stock had lost about 40% since mid-June.