Infineon Technologies said on Tuesday, October 27, that it will invest around 1.1 billion euros at its site in Villach, Austria, to build what it calls the world's first high-volume production line for gallium nitride power semiconductors on 300-millimetre wafers. Production is scheduled to start by the end of 2027, with the investment programme running through 2034 and the ramp-up adjusted to market demand.
The project is a power-chip story, not a logic-chip story, and that is why it matters for data centres. Gallium nitride, or GaN, is a wide-bandgap material that switches and converts power more efficiently than conventional silicon, with lower losses and less heat. In an AI data centre, where power delivery and conversion sit between the grid and every rack of accelerators, more efficient conversion means less electricity wasted before it ever reaches a processor, and smaller, denser power supplies inside the equipment itself.
Wafer size is the other half of the economics. Infineon processed its first 300-millimetre GaN wafers two years ago, in 2024, and is now moving that work into volume production. A 300-millimetre wafer yields about 2.3 times as many chips as the 200-millimetre wafers most commonly used for GaN today, which lowers the cost per chip and makes the material economical for a much wider range of products.
Infineon is not building a new fab from scratch. The company said the investment will go into its existing cleanroom facilities in Villach, allowing it to expand capacity more efficiently and cost-effectively than a greenfield plant would allow. Villach is already Infineon's centre for power semiconductors in Austria, and the company presents the site as its global competence centre for GaN and silicon carbide power devices.
"This substantial investment shows our clear commitment to strengthening the European semiconductor ecosystem and Europe's technological sovereignty," said chief executive Jochen Hanebeck. "By establishing high-volume manufacturing on 300-millimetre wafers, we will be the first company in the world to bring gallium nitride power electronics into volume production." Reuters reported a shorter version of the same statement, in which Hanebeck said the move paves the way for widespread use of GaN in artificial intelligence, energy infrastructure, electric mobility and robotics.
Public money is part of the package. The European Commission has approved 319 million euros in state aid for the project under the European Chips Act, with the formal funding commitment from Austria's economy ministry still to come. Infineon did not say how many additional jobs the expansion will create.
Beyond data centres, the company is targeting energy infrastructure, electric mobility, robotics and consumer electronics. Citing estimates from Yole Group, Infineon said the market for GaN power semiconductors is expected to grow by around 35 percent a year to roughly 3.5 billion dollars in 2031. That growth rate explains the timing: if GaN is to move from a premium option in chargers and power supplies into mainstream data centre and vehicle platforms, it needs the scale and pricing that only a larger-wafer, high-volume line can provide.
Investors gave the announcement a muted welcome. Infineon shares were up nearly 1 percent in early Frankfurt trading on Tuesday, according to Reuters, after falling around 40 percent since the middle of June. For enterprise IT buyers, the near-term takeaway is not a product they can order today, but a supply signal: the power components that determine how efficiently AI infrastructure converts electricity are getting a dedicated, larger-scale European source, with first volume production a little over a year away.