Infineon Invests Over €2 Billion in New Frontend Fab

Ally Winning


The new fab would significantly add to Infineon’s manufacturing capacities for SiC and GaN semiconductors.

There was a time where the trend in the semiconductor industry was to move to a fabless strategy. Why bother with the expense of a fab and gaining the expertise in-house to take care of complex manufacturing, when you could easily subcontract to a specialist who’d make your chips cheaply and with higher yields than you could produce in-house? Of course, there might be advantages to building your own chips. Instead of a general process developed by the contractor, you could tune the process to your own designs and maybe get a small performance benefit, which may or may not outweigh the cost of being in charge of the whole manufacturing cycle. The majority of companies have decided that those benefits were not worth the alternative. But then, along came COVID-19, which created a global chip shortage, leaving fabless manufacturers scrambling for product to sell to customers. The companies who still had their own production suffered, but not to the same extent and even prospered by winning new customers. Now, things have changed and guarantee of supply is regarded as being more important to semiconductor companies.


This change has seen a raft of new fab announcements in the US and Europe. These include plans from the biggest companies in the industry, such as Intel and TSMC, who have both made plans for new fabs in the US. Intel has also announced that it will change its own strategy to set up Intel Foundry Services, which will contract out capacity for other companies.


Infineon seems to be one company that does value having its own manufacturing capabilities. The German company has no sooner opened its own fab in Villach Austria, than it has announced another new fab, this time in Malaysia. The new fab would significantly add to Infineon’s manufacturing capacities for SiC and GaN semiconductors. The new fab will cost over €2 billion to build, and be a third module at the company’s current location in Kulim, Malaysia. When equipped, Infineon estimates that the new fab will generate €2 billion in additional annual revenue with SiC and GaN products. The expansion will benefit from the excellent economies of scale already achieved for 200-millimeter manufacturing in Kulim.


“Innovative technologies and the use of green electrical energy are key in reducing carbon emissions. Renewable energies and electro-mobility are major drivers for a strong and sustainable rise in power semiconductor demand,” said Jochen Hanebeck, Chief Operations Officer at Infineon. “The expansion of our SiC and GaN capacity is readying Infineon for the acceleration of wide bandgap markets. We are creating a winning combination of our development competence center in Villach and cost-effective production in Kulim for wide bandgap power semiconductors.”


Infineon is targeting revenues of $1 billion with SiC-based power semiconductors by the middle of the decade. The GaN market is also predicted to undergo massive growth – from $47 million in 2020 to $801 million in 2025 (CAGR: 76%; source: Yole – Compound Semiconductor Quarterly Market Monitor Q3 2021).


Once fully loaded, Kulim 3 will create 900 high-value jobs. Construction will begin in June and the fab will be ready for equipment in summer 2024. The first wafers will leave the fab in the second half of 2024. The investment in Kulim will comprise significant value-added steps, in particular epitaxial processes and wafer singulation.


The new Villach site will continue to serve as the innovation base and global competence center for wide bandgap technology by converting existing silicon facilities over the next years. 6” and 8” silicon lines will be converted to SiC and GaN manufacturing by repurposing non-specific silicon equipment.