EU approves 319 million euros in state aid for Infineon's gallium nitride plant in Villach

Approval of aid under the EU Chips Act

On October 28, the European Commission approved Austria's grant of state aid worth 319 million euros to Infineon Technologies to partially finance the modernization of its plant in Villach, with total investment amounting to 1.1 billion euros. This was reported by Euronews, citing a Commission statement. The measure was adopted under the EU Chips Act and, in the Commission's wording, is intended to 'strengthen the EU's position and autonomy in the semiconductor value chain': the union seeks to reduce its dependence on chip imports from third countries and to increase its share of global semiconductor production from 10% in 2023 to 20% by 2030.

What exactly will be produced

The investment will make it possible to increase output and create, according to Infineon, the world's first large-scale production site for a new generation of power semiconductors based on gallium nitride (GaN) on 300-millimeter wafers. The company's CEO, Jochen Hanebeck, said that with the launch of large-scale production on 300-millimeter wafers, Infineon 'will be the first company in the world to bring gallium nitride-based power electronics to mass production,' and that the project itself demonstrates a commitment to 'Europe's technological sovereignty.' According to the company, it was the first to successfully process 300-millimeter GaN wafers in 2024.

Why this matters technologically

GaN-based power semiconductors are increasingly displacing silicon because they withstand higher voltages, switch faster, and tolerate elevated temperatures better. They are used in chargers for smartphones and laptops, AI data centers, electric vehicles, solar panels, wind turbines, 5G and 6G base stations, and robotics. Moving from traditional 200-millimeter wafers to 300-millimeter ones yields 2.3 times more chips per wafer and lowers costs. Euronews, citing analysts notes that the market for power GaN semiconductors could reach approximately 3.1 billion dollars by 2031, with an average annual growth rate of about 35% in 2025–2031.

Reaction and timeline

Austrian Federal Chancellor Christian Stocker called the project 'one of the largest single investments in the history of Austria's high-tech industry' and added that it helps 'shape the future of the semiconductor industry not exclusively in Asia or the United States, but also in Austria and Europe.' Infineon, a German company that, according to figures cited by Euronews, holds 29% of the power systems market and 50% of the automotive chip market, expects to turn the Villach site into a 'global center of competence for power semiconductors.' The modernization is scheduled to be completed in 2034.