Final 1bn funding for Infineon Dresden fab as tariffs cut in

Infineon Technologies has recently secured final approval for the funding of its smart power fab in Dresden from the German Federal Ministry for Economic Affairs. This significant milestone paves the way for the company to further expand its production capabilities in the semiconductor industry. The approval of €1bn in funds for the fab will complement the existing €5bn investment by Infineon for the manufacturing of smart power devices. This funding is part of the EU CHIPS Act and the IPCEI ME/CT innovation programme, which aims to support key projects in microelectronics and communication technologies.

Despite the positive development with the funding approval, Infineon anticipates facing challenges in the market. The company foresees a 10% reduction in sales by 2025 due to the impact of US tariffs on vehicles. The imposition of tariffs on vehicles could have a ripple effect on the automotive market, affecting demand for semiconductor products. This uncertainty underscores the importance of strategic planning and risk management for companies operating in a global market environment.

Jochen Hanebeck, CEO of Infineon, expressed gratitude for the support received from the German federal government, the Free State of Saxony, and the European Union. Hanebeck emphasized the role of the Smart Power Fab in strengthening the semiconductor ecosystem in Europe and enhancing the resilience of key industries in the region. The construction progress of the fab is on track, with the building shell nearing completion and a planned start of production in 2026.

As the company navigates the challenges posed by tariffs, it remains optimistic about the overall economic recovery. Infineon reported revenue growth in the second quarter, reflecting positive trends in the market. The automotive sector saw a 6% increase in revenue, driven by the growth in electric vehicles and the gradual reduction of excess inventory. Despite the positive performance, the company is bracing for potential revenue decline in the coming year, influenced by currency fluctuations and the impact of tariffs.

Looking ahead, Infineon is also focused on strategic acquisitions to strengthen its market position. The planned acquisition of the automotive Ethernet business of Marvell Technology represents a strategic move to expand its product portfolio. The completion of this deal is subject to regulatory approvals and closing conditions. By diversifying its offerings and investing in cutting-edge technologies, Infineon aims to navigate market challenges and drive sustainable growth in the semiconductor industry.