Final €1bn funding for Infineon Dresden fab as tariffs cut in
Infineon Technologies has received final approval for the funding of its smart power fab in Dresden from the German Federal Ministry for Economic Affairs.
At the same time the company expects to see a 10% reduction in sale sin 2025 as a result of US tariffs on vehicles.
The €1bn funds for the fab will boost the €5bn investment by the company for the production of smart power devices. This comes as part of the EU CHIPS Act and the IPCEI ME/CT innovation programme (Important Project of Common European Interest on Microelectronics and Communication Technologies) funding approved in February via the German government.
“The final funding approval for our Smart Power Fab is an important milestone for us as a company and is a clear signal to the European semiconductor ecosystem,” said Jochen Hanebeck, CEO of Infineon. “We are grateful to the German federal government, the Free State of Saxony and to the European Union for their support. The semiconductors we manufacture in Dresden are our contribution to making the future value chains of key European industries even more robust.”
The shell of the building shell is nearing completion, with a topping-out ceremony last month. Production is to begin in 2026.
This comes as the company is warning of the impact of tariffs on the second half of the year. Even though there are not yet tariffs on semiconductors, the 25% rate on vehicles hits the recovering automotive market.
“Given that order intake still shows no signs at all of slowing down, we can only guesstimate the effects of tariff disputes. We have therefore applied a haircut of 10 percent of expected revenue in the fourth quarter of the 2025 fiscal year. We are now anticipating a slight decline in revenue compared with the prior year,” said Hanebeck.
Revenue growth in the second quarter confirms expected economic recovery, with €3.591bn, up 5% from €3.424bn in Q1 and €3.7bn expected for Q3. Revenue in automotive was up 6% in the quarter with the growth in electric vehicles and excess inventory being used up.
However currency effects and the 10% tariff hit will see revenue to slightly decline compared with 2024. This also does not include $2.5bn for the planned acquisition of the automotive Ethernet business of Marvell Technology as the deal is still subject to the customary closing conditions and regulatory approvals.
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