The European Union has approved €319 million in Austrian state aid for Infineon Technologies to upgrade its semiconductor plant in Villach, Carinthia, into what the company says will be the world’s first high-volume factory for next-generation power chips.
The grant will help fund a €1.1 billion modernization of the Villach site. Infineon plans to produce gallium nitride, or GaN, power semiconductors on 300 millimetre wafers a technology it says can make electronic devices more efficient, smaller and better suited to modern energy demands, reported by Euro News.
The European Commission said the support, approved under the EU’s Chips Act, would strengthen Europe’s position in the global semiconductor supply chain. The bloc wants to reduce its dependence on chip imports and compete more strongly with the United States and China. Its goal is to raise Europe’s share of global semiconductor production from 10 percent in 2023 to 20 percent by 2030.
Austrian Chancellor Christian Stocker called the project one of the largest single investments in the country’s high tech history. “This is not only a strong commitment to Austria as a business location,” he said, “but also helps ensure that the future of the semiconductor industry will not be shaped solely in Asia or the United States, but also in Austria and Europe.”
Infineon, a German company specializing in power systems and automotive chips, said the investment would make Villach a global center for power semiconductors. Chief Executive Jochen Hanebeck described it as a commitment to Europe’s “technological sovereignty.”
GaN semiconductors are increasingly replacing silicon in power electronics because they can handle higher voltages, switch faster and withstand higher temperatures. They are used in phone and laptop chargers, electric vehicles, AI data centers, solar panels, wind turbines, telecommunications equipment and robots.
The larger 300 millimetre wafers can yield 2.3 times more chips than conventional 200 millimetre wafers, helping lower production costs. Infineon says it was the first company to successfully process GaN wafers of that size in 2024.
Analysts expect the GaN power semiconductor market to reach about $3.1 billion by 2031, growing by roughly 35 percent a year between 2025 and 2031.
The Villach upgrades are expected to be completed in 2034. For Austria, the project represents more than industrial investment; it is a bid to place the country and Europe at the center of a technology that will shape everything from electric cars to artificial intelligence.
