German Chip Business Infineon to Open Two New Semiconductor Factories

By Avi Ben Ezra Thursday, February 25, 2021

International Rectifier HiRel sign outside Silicon Valley headquarters.

Infineon, a major German company that manufactures semiconductors, LED drivers, and sensors, announced it is increasing its production capacity as a result of global chip shortages. This way, the company hopes to be able to address customers’ needs in the long run.

New Production Plant in Austria

Reinhard Ploss, CEO of the chip business, said the company would invest €1.6 billion ($1.95 billion) in a new chip factory in Villach, Austria. The German chip business will also build a plant in Dresden, Germany, in an effort to gain flexibility.

“This will enable us to control production at the two sites as if they were one factory,” Ploss said at the annual general meeting with shareholders.

The company’s new factory is set to start operating later this summer and would have the capacity to produce enough chips every year to equip the drive trains of 25 million electric vehicles (EVs).

The shortage of semiconductor chips has forced popular carmakers, including GM, Volkswagen, Ford, and Tesla, to pause business production and slash full-year output targets. Supply of semiconductors for the auto industry is likely to remain low until mid-2021 until chip-making businesses adjust to a high demand which has recovered since the coronavirus outbreak a year ago.

The German chip business has managed to cushion the pandemic’s blow last year thanks to building inventory but has certainly faced issues because it outsourced a part of the production to Asia-based contract manufacturers, just like many other chipmakers.

The company has recently confirmed its guidance for the €10.8 billion in the fiscal year ended September 30, as well as a profit margin of 17.5%. In separate news, Infineon said it has appointed Constanze Hufenbecher as a new Chief Digital Transformation Officer to help integrate its $10.1 billion acquisition of US Cypress Technologies.

Infineon said on Thursday the current chip shortage makes it very difficult to satisfy the high number of orders and that it expects the circumstances to become easier in the second half of 2021.

“The current order situation is very tense,” said Helmut Gassel, the company’s Chief Marketing Officer, at the meeting with shareholders.

He added that international contract manufacturers were also running flat and that it will take time for Infineon to increase its own production capacity.

“We hope to see a certain easing in the second half of this calendar year,” he added.

Summary

German semiconductor business Infineon said it will enhance its chip production capacities to meet higher demand as global shortage continues to weigh on carmakers.

About the Author


Headshot of Avi Ben Ezra

Avi Ben Ezra is the CTO and Co-founder of SnatchBot and SnatchApp (Snatch Group Limited). He leads the Group’s long-term technology vision and is responsible for running all facets of the tech business which includes being the architect of the platforms and UI interfaces.

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