Infineon to Invest €1.1 Billion in Villach to Mass-Produce Gallium Nitride Chips
Key Facts
Infineon announced on October 27, 2026, a €1.1 billion investment at its site in the Austrian city of Villach to expand power semiconductor production, in a project the company describes as the world’s first large-scale production of gallium nitride wafers on 300 mm substrates. The European Commission approved €319 million in government aid for the project under the European Chips Act, according to Tagesschau. The announcement places advanced manufacturing of these chips at the center of a government-backed European expansion, while the company links its products to a range of industrial and consumer applications. Chief Executive Joachim Hanebeck said the investment "paves the way for the widespread use of gallium nitride" in key areas. Those areas include artificial intelligence, energy infrastructure, electric mobility and robotics.
The project is based on 300 mm wafers, larger than the 200 mm wafers used for comparison in Reuters’ report. According to Reuters, the larger wafer can carry 2.3 times as many electronic chips as the 200 mm version. This technical difference provides the expansion with its production rationale, allowing more electronic chips to be made on a single wafer. Infineon is targeting latest-generation gallium nitride power semiconductors, according to its description of the project. The move to a 300 mm diameter adds a production dimension to the investment, alongside expanding the company’s ability to serve sectors that depend on efficient power conversion.
Infineon will direct the investment to existing cleanroom space in Villach rather than build new space, according to coverage published by Evertec. The company said production will increase in line with market demand, while the available information does not specify a numerical figure for the new production capacity. GaN production targets AI data centers and also covers energy infrastructure, electric mobility, robotics and consumer electronics, according to Tagesschau. The range of applications reflects the breadth of the intended user base for the chips, from data centers to systems linked to electricity and mobility. Mass production at the new facility is scheduled to begin by the end of 2027, while the investment plan runs through 2034, according to the initial draft; the available evidence does not independently confirm either date.
The announcement follows Infineon’s disclosure on October 21, 2026, of a collaboration with Nvidia to develop GaN-based power conversion systems for AI data centers operating at 800 volts DC. The agreement provides direct context for the connection between gallium nitride technology and the power needs of AI facilities, alongside the other uses identified by the company. Infineon had forecast in February 2026 revenue of about €1.5 billion from power supply solutions for AI data centers in fiscal 2026, rising to about €2.5 billion in fiscal 2027. These forecasts relate to the company’s solutions for those centers; the evidence does not attribute this revenue specifically to the Villach plant. In Austria, Infineon employs about 5,800 people, according to a Tagesschau report published on October 27, 2026, placing the expansion within the company’s existing operating presence in the country.
In the market, Infineon shares rose about 1% in early Frankfurt trading on the day of the announcement, after falling about 40% since mid-June, according to Reuters. The daily move places the news in the context of the share’s performance over the previous months, without by itself changing the course of that decline. The plan combines a long-term investment, the use of existing facilities and expanded production of a technology the company says is the world’s first on 300 mm wafers. The €319 million in aid was approved by the European Commission under the European Chips Act. Coverage reported that the formal funding commitment from Austria’s Ministry of Economy is still expected, leaving completion of the financing arrangements as a subsequent milestone after the announcement.