Dresden (Germany) (AFP) – German semiconductor giant Infineon opened a five-billion-euro ($5.7 billion) microchip plant Thursday, as Europe seeks to bolster its high-tech autonomy. The “Smart Power Fab” in the eastern city of Dresden, completed three months ahead of schedule, has been hailed as a symbol of an EU push to reduce dependency for crucial parts on Asia and the United States.
“We all want to further strengthen Europe’s position as a semiconductor hub,” Infineon CEO Jochen Hanebeck said at the opening ceremony. “And technological sovereignty does not begin with words, but with factories like this one.” The plant will produce chips for intelligent power management that are used in everything from electric vehicles, wind turbines and solar plants to data centres crucial for artificial intelligence. The plant will operate 24 hours a day, seven days a week with employees working in three shifts.
In the highly automated “clean rooms” where chips are manufactured, the air is continuously filtered to eliminate virtually all dust, and employees wear a polyester-carbon fibre blend suit, a hood, mask, latex gloves and boots to prevent any contamination. The facility was backed by the EU’s Chips Act with one billion euros in subsidies, part of a broader policy aimed at doubling the EU’s share of global semiconductor production from 10 to 20 percent by 2030.
Chancellor Friedrich Merz, who addressed the event via live video link from Berlin, said the plant opening “has direct strategic significance for our digital sovereignty, our economic resilience and our independence.” “Investment in data centres is breaking new records year on year,” Merz said, referring to the AI-driven boom in demand. “Because the foundations for the industries of the future are being laid today.”
– ‘Silicon Saxony’ – Work on the new plant began in May 2023, and represents both the largest single investment in Infineon’s history and a major strategic pivot for the technology firm based outside of Munich. The company has moved away from being primarily a supplier to the automotive industry and instead sought to capitalise on the massive AI investment boom.
However, the plant opening comes amid significant volatility affecting AI-related stocks, driven by growing concerns over the difficulty of making these massive investments profitable. The plant is located in the heart of Germany’s “Silicon Saxony,” which has boasted one of Europe’s most dynamic clusters for the microchip industry with a regional specialisation in the sector that dates to investments by communist East Germany.
Dresden, home to nine universities, has a large number of trained engineers who are sought after by the roughly 2,500 companies in the sector operating in the area. “One in three chips produced in Europe is made in Saxony,” Germany’s digital minister, Karsten Wildberger, noted at the event. While constructing the “Smart Power Fab” came at a high cost, the subsequent unit production cost of the microchips will be minimal, say experts.
“The chip industry is a business driven by extreme economies of scale,” Wolfgang Weber, head of the German electronics association ZVEI, told AFP. “The first chip is incredibly expensive because you have to build a factory first -— an investment that can run into the billions of euros. Once production is up and running, unit costs drop sharply.”
© 2024 AFP
