Despite the uncertainties, the energy crisis and the lack of raw materials, Infineon plans a chip factory in Dresden. It will be the largest single investment in the company’s history. Why and why Dresden?
The message from Brussels is clear: Europe wants to shorten supply chains in the chip market, be more independent from Asia and be more competitive overall.
About 1,000 billion microchips were produced worldwide in 2020. Only about ten percent of these come from Europe. The EU wants to double this share and allocate around 43 billion euros by 2030. Money that Infineon now wants to have some of for its major investment in Dresden.
Why is Infineon investing in Dresden?
At the tech location in Dresden, 3,000 people already work for the chip giant, and the group is rooted in the city. Additionally, the new factory is practically planned as an extension of the existing factory, making it much easier to commission than if it was built from scratch in a green area.
But another question arises: Chip manufacturers are currently investing in new manufacturing facilities around the world. What if, after the 2026 factory is complete, the world sees an oversupply of chips that meet a cyclical low demand?
Infineon is relatively comfortable when it comes to this question. In fact, there is already a reluctance to buy smartphones or consumer electronics.
The group doesn’t just rely on cell phones
But the group is focusing on other trends: digitalisation, decarbonisation and e-mobility. In short, the future will always be about processing more information faster and faster, and then more efficient power management, which the so-called high-performance chips will shoulder.
The air conditioning of the future, for example, not only supplies rooms with heat or cold, but also constantly collects data such as humidity, temperature or how many people are in how many rooms and when, and adjusts the room climate accordingly.
Infineon’s eye on the car market
Infineon also has radar systems for cars in mind – a huge market, especially when it comes to the more distant future of autonomous driving. The faster the cars travel, the more information the chips have to collect, process and report to the vehicle controller. Here, too, with minimal power consumption, because an all-electric car of the not-too-distant future will have to save electricity.
Dresdner Fabrik is expected to contribute five billion euros to group sales from annual sales at full capacity. So the target here is about millions of chips that can generate 1,000 new employees.
“Surges” make production cheaper but more demanding
Infineon relies on the largest “ripples” currently used in production. These are mostly very thin discs coated with silicon on which circuits are applied.
The larger these discs are, the more chips can be produced on them at the same time in each production step – making the chips cheaper, but technically more laborious to manufacture – not surprisingly, the disc thickness being only one-fifth of a millimeter.
Infineon thinks it has the equipment to meet the growing demand from 2026. In case of a serious decrease in demand, thanks to its proximity to the existing building, the factory can be gradually equipped with high-tech machinery and production can be increased gradually.
Expansion plans are subject to change
It looks like the diggers will enter Dresden tomorrow, but it’s not that far yet. One aspect of the Infineon press release on the subject draws attention. The supervisory board approved the five billion dollar project in Dresden “subject to appropriate public funding”.
This means that if the subsidy isn’t in the amount Infineon wants, then it will reconsider. It’s not about the project, it’s about the location.
I am Ben Stock, a highly experienced professional with over 7 years of experience in the news industry. I specialize in market section writing and have published numerous high-quality articles on various topics under my name. My passion for journalism has helped me to develop an in-depth understanding of the industry, enabling me to stay up-to-date on all the latest trends and developments.