Infineon Plans €1.1 Billion 300 mm GaN Line in Villach

Infineon said on Oct. 27 it will invest about €1.1 billion through 2034 to start high-volume 300 mm GaN production at Villach by the end of 2027. The plan bets that AI data-center power supplies will pull this material out of pilot work, and that Europe will help pay to keep the capacity in a cleanroom the company already runs.

What Happened in Villach

The spending stays inside Villach, Infineon's power-chip site in Austria. The company said the money refits cleanroom space it already has, rather than paying for a new building, and that the tools will turn out the latest gallium nitride power semiconductors on 300 mm wafers. It named AI data centers, energy infrastructure, electric vehicles, robotics and consumer electronics as the uses. Output is aimed at the end of 2027, and Infineon said the pace of the ramp will follow orders instead of a volume it has not published.

Chief executive Jochen Hanebeck said the outlay is a commitment to Europe's chip industry and that Infineon expects to be the first to take this class of power chip into volume production on 300 mm wafers. Reuters reported the shares rose nearly 1 percent in early Frankfurt trading, and that the stock was down about 40 percent since the middle of June.

Brussels has approved €319 million of state aid under the European Chips Act, the company said. Austria's formal grant is still outstanding. Economy minister Wolfgang Hattmannsdorfer said Europe now accounts for around 10 percent of global chip production, and that Vienna is prepared to support the line with up to €319 million if site conditions are met. That share is the minister's statement, not a figure Infineon measured.

Why the Wafer Size Matters for AI Power

Gallium nitride is the switch material in a power supply. Infineon says it moves current with lower loss and less waste heat than silicon, which is the reason the firm has been designing it into the converters that feed AI racks. Voltgrid reported on Oct. 22 that Infineon is putting these chips in the converter stage of NVIDIA's 800-volt rack design, and that the company claims switching as fast as 1 MHz. Tuesday's plan names no customer, no NVIDIA program and no watts per rack. It is the factory decision behind that product work.

The new number is about the wafer, not the transistor. Infineon says one 300 mm wafer carries 2.3 times as many chips as the 200 mm wafer still usual for this material. In July 2025 the company told customers that samples from the larger wafer would be ready in the fourth quarter of that year. Johannes Schoiswohl, who runs the gallium nitride business, said then that a fully scaled 300 mm line would push comparable parts toward the same cost as silicon. Cost parity remains a company target. Infineon has not published a price.

A wider wafer raises how many chips each batch can hold only when the line is actually running. Infineon has not said how many wafers a month Villach will start, or what share of its power sales the new tools are meant to cover.

The Case Against a Fast Ramp

The calendar is long, and several steps are still conditional. The €1.1 billion runs through 2034. The start of production is a target for the end of 2027, not a ship date with a customer attached. Because the company said the ramp follows demand, a quieter market for AI power supplies can slow the tools without breaking the announcement.

The aid is not cash yet. Infineon said the European Commission has cleared €319 million and that Austria's ministry still has to make the formal promise. Until that letter exists, the public share of the project can shrink or slip.

The market the company cites is a forecast, and a modest one beside silicon power. Tuesday's release points to a 2026 Yole report that puts gallium nitride power chips at about $3.5 billion in 2031, with growth of about 35 percent a year from 2025. In July 2025 Infineon cited an earlier Yole monitor that put the same market at about $2.5 billion by 2030, growing about 36 percent a year. Both numbers are analyst estimates the company chose to repeat. Neither is an order for Villach.

The share reaction matches that caution. Reuters recorded a rise of nearly 1 percent after a fall of about 40 percent since mid-June. A move of that size does not show that buyers have booked the line.

What It Means for Power-Chip Supply

Buyers of power stages for AI racks get a dated European source of these switches, not a part they can place on a board this year. Infineon said it employs about 4,800 people at Villach and about 5,800 in Austria, and it is adding the new flow inside that site. Vendors that still print this material on 200 mm wafers now face a rival that says it can fit 2.3 times as many devices on each wafer once Villach is up. That multiple is Infineon's claim about chips per wafer. It is not a measured cost, and it is not a contract.

The near constraints are the ministry letter and the missing capacity figure. Without them, €1.1 billion is a spending cap, not a delivery plan. Infineon also said in July 2025 that it sells silicon, silicon carbide and gallium nitride, so the Villach line does not retire the silicon parts already drawn into rack converters.

What to Watch

The next proof is a signature and a capacity number. Austria's economy ministry still has to grant the aid Infineon says Brussels has cleared, and the company gave no deadline beyond the ministry's own timetable. Production is targeted for the end of 2027. A customer name, a price, or a wafers-per-month figure would show the ramp is more than a cleanroom budget. Until one of those appears, the chips aimed at high-voltage AI racks stay ahead of the factory that is supposed to build them.