Infineon opens €5 billion chip plant in Dresden as Europe chases chip sovereignty

The investment

Infineon has opened its new "Smart Power Fab" in Dresden, a €5 billion facility that marks the largest single investment in the company's history. Construction began in May 2023 and took three years, with the plant finished three months earlier than originally planned. The site will produce power semiconductors on 300‑millimeter wafers for electric vehicles, renewable energy systems, AI data centres, and industrial applications. Output at the Dresden location is set to double, and the facility will operate 24 hours a day, seven days a week in a highly automated clean‑room environment.

Strategic pivot

CEO Jochen Hanebeck said the plant creates urgently needed capacity for key future technologies and sends an important signal for Germany and Europe.

“We all want to further strengthen Europe's position as a semiconductor hub. And technological sovereignty does not begin with words, but with factories like this one.”

The investment comes as Infineon shifts from being primarily an automotive supplier toward capitalising on booming AI‑related demand, even as AI‑linked stocks face volatility over profitability concerns.

Political backing

The project is supported by €920 million in public funding under the EU Chips Act, part of a broader goal to raise the EU's share of global semiconductor production from under 10 percent to 20 percent by 2030. Chancellor Friedrich Merz, who joined the ceremony by video link, called the plant’s opening "a strong signal for the industrial location Germany and Europe."

“It shows that a state‑of‑the‑art and competitive semiconductor manufacturing is possible in this country.”

Digital Minister Karsten Wildberger described the investment as a milestone for digital sovereignty.

“Germany can deliver speed, Germany can deliver high‑tech, Germany can deliver the future.”

Silicon Saxony

The Dresden region, known as "Silicon Saxony," is already the heart of European chipmaking, supplying one in three chips made in Europe. Hanebeck noted that the area employs over 80,000 people in the semiconductor industry; with expansions by TSMC, Globalfoundries, and Infineon itself, that number is expected to rise to 100,000 by 2040. Saxony’s Minister‑President Michael Kretschmer urged Europe to move faster in the global race, warning that other regions are growing more quickly.

Next steps

Infineon invests 30 to 40 percent of its revenue in factories and R&D every year, with nearly half of that spent in its home market of Germany. Hanebeck called for more speed and less bureaucracy in the next iteration of the European Chips Act and in Important Projects of Common European Interest. The plant, located at the heart of Europe’s most dynamic microchip cluster, strengthens Dresden’s position as the anchor of EU semiconductor ambitions.