The European Commission has approved €319 million in Austrian state aid to support Infineon Technologies (XETRA: IFX) in upgrading its semiconductor manufacturing facility in Villach, Austria. The investment will help establish high-volume production of power gallium nitride (GaN) devices on 300-millimeter wafers, a manufacturing capability not currently available in the European Union.
The grant will support Infineon Technologies Austria AG’s Empowering Fab project, which builds on the company’s existing 200 mm power GaN manufacturing operations in Villach. Moving to 300 mm wafers is expected to expand production capabilities for power semiconductors used in applications ranging from artificial intelligence infrastructure to electric vehicles and robotics.
The European Commission said the project would strengthen the region’s semiconductor supply chain and contribute to the objectives of the European Chips Act, which seeks to increase Europe’s semiconductor manufacturing capacity and reduce vulnerabilities in strategic technology supply chains.
Scaling Power GaN Manufacturing
GaN is a wide-bandgap semiconductor material that can deliver higher energy efficiency, greater power density and faster switching than conventional silicon-based devices in suitable applications. These properties make it relevant to power conversion and management systems that must handle increasing energy demands while limiting losses and equipment size.
Potential applications include AI data centers, energy infrastructure, electric mobility and robotics. As computing infrastructure expands, power electronics play an important role in converting and distributing electricity efficiently across systems.
Infineon’s project will transition its existing GaN manufacturing capabilities from 200 mm to 300 mm wafers. Larger wafers can accommodate more semiconductor devices per production cycle, potentially improving manufacturing economics as output scales.
According to the Commission, power GaN devices are currently manufactured on wafers no larger than 200 mm, and comparable 300 mm power GaN manufacturing capacity is not available in the EU. The planned facility would therefore introduce a new manufacturing capability to the European semiconductor ecosystem.
Conditions Attached to the Aid
Austria notified the Commission of its plan to provide the €319 million grant. The Commission assessed the measure under EU state aid rules, including Article 107(3)(c) of the Treaty on the Functioning of the European Union, alongside the principles of the European Chips Act.
The Commission concluded that the funding was necessary to enable the investment in Europe, finding that Infineon would not undertake the project without public support. It also determined that the grant was proportionate, limited to the minimum required to address the project’s demonstrated funding gap, and unlikely to have a significant adverse effect on competition and trade within the EU.
The approval comes with commitments intended to extend the project’s benefits beyond Infineon’s own manufacturing operations.
The company agreed to expand collaboration with startups, small and medium-sized enterprises, universities and research institutions. Planned activities include providing access to hardware and software kits and laboratory facilities, alongside education and skills-training initiatives to develop a qualified workforce.
Infineon also agreed to share with Austria potential project-related profits exceeding current expectations.
Strengthening Europe’s Semiconductor Supply Chain
The funding aligns with the EU’s broader effort to build resilience in semiconductor manufacturing and strengthen its position across the value chain. The Commission’s European Chips Act strategy seeks to support production capacity and reduce exposure to supply disruptions in critical technologies.
Power semiconductors are an important part of that effort because they support electricity conversion and control across industrial, automotive, computing and energy systems.
The Commission said the project would improve security of supply while creating manufacturing capacity that is not currently available elsewhere in the EU.
The non-confidential version of the decision will be published under state aid case number SA.113427 in the Commission’s state aid register once confidentiality issues have been resolved. The approval clears the state aid measure, while the facility’s development and production ramp-up remain subject to project execution.
