Infineon Technologies has received final approval from Germany's Federal Ministry for Economic Affairs for a €1 billion subsidy to support the construction of its Smart Power Fab in Dresden. The funding, which had been greenlit by the European Commission in February under the EU Chips Act and the IPCEI ME/CT innovation program, will help accelerate Infineon's €5 billion investment in the site dedicated to producing smart power devices.

"The final funding approval is an important milestone for us and a clear signal to the European semiconductor ecosystem," said Infineon CEO Jochen Hanebeck. "The semiconductors we manufacture in Dresden will contribute to strengthening future value chains in key European industries." He also expressed gratitude to the German federal government, the Free State of Saxony, and the EU for their support.

The Smart Power Fab is one of Germany's largest construction projects and is set to begin production in 2026. The building shell is nearing completion, with a topping-out ceremony held last month. Infineon expects the plant to create up to 1,000 direct jobs, with broader ecosystem growth potentially multiplying that figure by six. The fab will serve rising demand from sectors including renewable energy, energy-efficient data centers, and electromobility.

Infineon is also increasing its presence in Dresden through its role in the joint venture European Semiconductor Manufacturing Company (ESMC), further boosting the region's position as Europe's leading semiconductor hub.

However, despite strong momentum in Europe, Infineon warned of headwinds in the second half of fiscal 2025 due to escalating trade tensions. While U.S. tariffs have not yet targeted semiconductors, the newly imposed 25% tariff on automobiles is pressuring the recovering automotive market—a key segment for Infineon.

"Given that order intake remains strong, we can only estimate the potential impact of the tariff dispute," said Hanebeck. "As a precaution, we've reduced our Q4 revenue outlook by 10%. We now expect full-year revenue to slightly decline compared to 2024."

In Q2 FY2025, Infineon reported €3.591 billion in revenue, up 5% from Q1, with a Q3 forecast of €3.7 billion. Automotive chip sales rose 6% as electric vehicle demand grew and inventory levels normalized. However, currency fluctuations and tariff-related uncertainty could dampen next year's performance.

The outlook excludes the planned $2.5 billion acquisition of Marvell Technology's automotive Ethernet business, which is still subject to regulatory approval.