AI Boom Powers Infineon's US$5.69bn Smart Power Fab
Infineon Technologies has launched its Smart Power Fab in Dresden, Germany, as part of a €5bn (US$5.69bn) investment. The facility represents the largest single investment in the company's history
Dresden hosts Europe's largest semiconductor manufacturing hub and is known as Silicon Saxony.
Multiple semiconductor fabs could open in the city over the coming years as the EU channels billions into securing a stable European chip supply.
Doubling capacity in Dresden
Infineon established its Dresden production site in 1994 when the company was still part of Siemens. The site manufactures more than 400 different products based on 200mm and 300mm wafers.
The new fab doubles manufacturing capacities at the location. Infineon says it creates the world's largest factory for intelligent power semiconductors and analog mixed-signal technologies.
Jochen Hanebeck, CEO of Infineon, says the facility addresses urgent capacity needs: "We're opening our new plant at just the right time. Our Smart Power Fab is creating urgently needed capacities for the key technologies of the future, for everything from energy supply for AI data centres to software-defined vehicles and renewable energies.
"Infineon is thus giving an important impulse in making the global AI revolution possible and securing supply chains in critical industries. By taking this step, we are strengthening our global vanguard position as a leading manufacturer of power semiconductors and analog / mixed-signal technologies."
The project creates 1,000 direct jobs and is one of the largest investment projects in Germany.
European investment in semiconductor sovereignty
According to data from the European Commission, the global semiconductor market reached US$796bn in 2025 following record growth. Demand for data centres, artificial intelligence systems and advanced logic and memory chips drove the market's expansion.
"Our Smart Power Fab is creating urgently needed capacities for the key technologies of the future, for everything from energy supply for AI data centers to software-defined vehicles and renewable energies."
The EU is investing heavily in the sector to secure future technological sovereignty through the European Chips Act.
Semi, a market intelligence group for semiconductors, says the European Chips Act has catalysed a total of €69bn (US$80bn) in public and private investments powering research and manufacturing in semiconductors across Europe.
Dr Karsten Wildberger, German Federal Minister for Digital Transformation and Government Modernisation, says the Dresden facility creates significant value in Germany.
"What is being produced here in Dresden secures jobs and creates value in Germany, because these cutting-edge chips are at the heart of key technologies such as electric vehicles, wind turbines and the power infrastructure for AI data centres," says Karsten.
"The Smart Power Fab marks another milestone on Germany's path toward digital sovereignty and demonstrates that Germany can move fast, Germany can deliver high-tech innovation and Germany can shape the future."
Bloomberg reports that Infineon's project in Dresden received about €1bn (US$1.145bn) in subsidies from EU Chips Act funds.
Powering AI data centres
Infineon says the interaction between power semiconductors and analogue mixed-signal components enables energy-efficient and intelligent system solutions. The chips made in Dresden will contribute to the efficient supply of power to AI data centres.
- Dresden is a critical location to Europe’s plans for a stable semiconductor supply chain.
- Last month, GlobalFoundries and Qualinx announced the successful completion of an end-to-end semiconductor manufacturing flow at GlobalFoundries’ fab there.
The chips are also used in other industrial and automotive applications. Wind and solar power systems use the components, as do software-defined vehicles.
According to Moody's, the average car now carries more than 1,700 chips, which support everything from powertrain control, battery management, safety systems, connectivity and infotainment.
