Largest one-time investment: Infineon wants to build a new factory in Dresden

Largest single investment
Infineon wants to build a new factory in Dresden

The EU and the federal government are funding the expansion of the chip industry with billions. Infineon is now announcing a new manufacturing facility in Dresden – subject to financing being available. The company sends an optimistic long-term forecast to support it.

Chip manufacturer Infineon is building a new factory in Dresden for five billion euros. The production capacity of 300 millimeters for analog and mixed-signal chips and for power semiconductors must therefore be expanded, the company announced in Munich. It is the largest single investment in the company’s history. This can create up to 1000 jobs. The Supervisory Board approved the expansion of production. “The planned production site is Dresden, subject to appropriate government funding,” the statement said. The plant could be commissioned in the fall of 2026.

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Saxon Prime Minister Michael Kretschmer spoke of a promise for the future. “Microelectronics is the key technology. For decades, Saxony has been promoting this industry of the future by investing in science,” said the CDU politician.

In February, the EU launched the “European Chip Law”. It enables billions in grants from public and private sources in the European Union. The American chip manufacturer Intel then decided to build a chip area in Magdeburg for 17 billion euros. Almost seven billion euros in aid comes from the federal government alone. In October, “Capital” reported that Taiwanese semiconductor group TSMC is moving ahead with plans for its own production in Germany and is also considering building a factory in Dresden.

DAX group creates expectations

At the same time, the Munich-based semiconductor manufacturer raised its long-term growth targets. Going forward, sales are expected to increase by more than ten percent per year, one percentage point more than previously forecast. The automotive, industrial and renewable energy markets, which Infineon mainly serves with its chips, showed “increasing momentum and sustained strong growth drivers”, the company justified the investment and the increase in its targets. At 25 (previously: 19) percent, the operational return on sales (segment result margin) should be significantly higher than previously expected.

For the current fiscal year (until the end of September), Infineon expects a margin of 24 percent, revenue is expected to rise to 15.5 billion euros with a range of 500 million in both directions. “Fiscal year 2023, which has just begun, is off to a good start,” said Jochen Hanebeck, CEO of Infineon. Still, vigilance is called for given the economic and political uncertainties.

In 2022, annual turnover increased by 29 percent to 14.2 billion euros. The segment result improved by 63 percent to 3.4 billion euros. The company clearly exceeded analysts’ expectations. Shareholders will receive 32 cents per share last year, 5 cents more than last year. The stock rose significantly following the numbers.

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