The European Commission has approved €319 million in Austrian state aid for Infineon Technologies Austria AG to support the expansion of advanced semiconductor manufacturing at its facility in Villach, Austria.

The funding will contribute to the company’s Empowering Fab project, which aims to establish high-volume production of gallium nitride (GaN) power semiconductor devices using 300-millimetre wafers. The initiative is part of a broader investment plan valued at approximately €1.1 billion by 2034.

GaN semiconductors offer advantages over conventional silicon-based components, including higher energy efficiency, greater power density and faster switching capabilities. These features make them increasingly important for applications requiring compact and energy-efficient systems.

The technology is used in electric vehicles, renewable energy infrastructure, industrial equipment and data centres. Demand for advanced power semiconductors has also grown alongside the expansion of artificial intelligence infrastructure and electrification.

The project will upgrade Infineon’s existing facility in Villach and support the development of high-volume manufacturing capabilities. Production is expected to begin by the end of 2027.

The European Commission said the investment would strengthen the EU’s position in the semiconductor value chain and contribute to its technological autonomy. The project also aligns with the objectives of the European Chips Act, which seeks to expand domestic semiconductor production and improve supply-chain resilience.

The approval allows Austria to provide state aid under EU competition rules, subject to conditions. The funding is intended to support advanced manufacturing while maintaining a competitive market across the bloc.

The initiative is part of Europe’s wider effort to strengthen its semiconductor industry and reduce reliance on external suppliers for critical technologies.