Infineon's new CEO has hardly been in office for a few months before he announces the largest investment in the company's history: the chip manufacturer from the south of Munich is planning another plant in Dresden for 5 billion euros.

According to Jochen Hanebeck, production should start there as early as autumn 2026.

In the future, so many semiconductors are likely to be produced in the factory that the Dax group will have an additional annual turnover of around 5 billion euros.

For comparison: In the past fiscal year, Infineon earned a good 14 billion euros.

While a new plant in Villach, Austria, was only inaugurated last autumn, it was announced at the beginning of this year that the site in Kulim, Malaysia, would be expanded.

And now also Dresden.

Infineon's billion-euro investment is the latest in a whole series of such projects in Germany.

The US company Intel alone wants to build in Magdeburg for a double-digit billion euro amount, Bosch also recently opened a plant and there have been rumors about the interest of the Taiwanese industry giant TSMC for some time.

There are also plans in Italy and France.

Only every tenth chip comes from Europe

This is good news for Germany and Europe.

After all, only about every tenth chip worldwide currently comes from Europe.

By the end of the decade, Europe's share of global chip production is expected to double to 20 percent.

This will be an enormous feat, that is clear to politics and business, especially since capacities are being massively expanded all over the world.

Samsung and TSMC are building huge factories in America.

In Japan, corporations like Sony and Toyota are forging alliances.

However, Infineon has made one thing clear: the prerequisite for the mega-investment in Dresden is financial support from the European Chips Act, a funding pot of around 43 billion euros.

It is intended to help the EU get involved in the race for production sites alongside America and Asia.

In some cases, 40 percent of the investment sum is then taken over by the state.

If Europe doesn't want to be left behind forever, it will have to open the funding pots as well - otherwise the factories will be built elsewhere.

In Germany, the energy and personnel costs, which have always been significantly higher, are also a locational disadvantage, and the infrastructure also has deficiencies.

The importance of the chip industry was shown during the pandemic, when production and logistics of the semiconductors were severely disrupted.

From cars to laptops to refrigerators - without the valuable chips, entire productions often stood still for weeks.

The expansion of our own production capacities is helping Germany and Europe, especially in geopolitically uncertain times, to reduce their dependency on the world market and take the pressure off tight supply chains.

Don't just decide on the basis of subsidies

In addition, the chip industry itself is becoming an economically more relevant player.

The planned Infineon plant alone is expected to create another 1,000 jobs, Intel is anticipating thousands of jobs - not including companies that settle in the surrounding area.

Of course, a company must not base its expansion plans solely on subsidies.

These can quickly be fleeting again in the political wrangling.

Nevertheless, chip companies have a point if they demand faster and more concrete decisions from Brussels with a view to the Chips Act in order to be able to plan safely.

The fact that, given the generous state subsidies, some factories are significantly larger than was the case in previous years should be viewed critically.

For comparison: The plant in Villach, which was announced in 2018 and opened in autumn 2021, cost Infineon 1.6 billion euros - around a third of the amount that is now due in Dresden.

Europe is thus participating in the global subsidy race and fueling a possible pig cycle from overcapacities in the market.

However, according to current forecasts, many of the capacities are likely to be needed, and not just in industrial Germany.

Infineon and others manufacture power semiconductors in larger format that are used in future industries.

They are used for e-cars and charging stations, in renewable energy systems, data centers and in mechanical engineering.

The market for car chips alone is likely to more than double by the end of the decade from its current level of around 50 billion dollars - excellent prospects for Infineon.