Infineon to invest €1.1bn in Austria chip plant

German semiconductor maker Infineon said Tuesday it will invest 1.1 billion euros ($1.2 billion) in a next-generation chip production unit in Austria as demand rises from AI-related uses.

The Munich-area company said the project at its Villach site is intended to create the world's first high-volume manufacturing facility for a type of next-generation power semiconductor made with gallium nitride, known as GaN.

Infineon said GaN can improve efficiency in uses including AI data centres, energy infrastructure, e-mobility, robotics and consumer electronics.

The investment will expand Villach's production capacity by 2034, with the first chips expected by the end of 2027. Infineon said nearly 30 percent of the funding will come from European subsidies under the European Chips Act.

Infineon shares were up 2.3 percent on the Frankfurt Stock Exchange around noon after the announcement.