Germany's Infineon invests up to $5.46B to build largest 200

May 18, 2023

Germany’s semiconductor manufacturer Infineon Technologies AG will build the world’s largest 200-millimeter SiC (silicon carbide) Power Fab in Kulim, Malaysia.

Infineon said in a statement on Thursday that over the next five years, the firm will additionally invest up to EURO 5 billion ($5.46 billion) in Kulim during a second construction phase for Module Three.

According to the statement, the investment will lead to an annual SiC revenue potential of about EURO 7 billion ($7.65 billion) by the end of the decade, together with the planned 200-millimeter SiC conversion of Villach and Kulim.

This highly competitive manufacturing base will support Infineon’s SiC market share target of 30 percent towards the end of the decade.

Infineon is also confident that the company’s SiC revenue in the fiscal year 2025 will come in ahead of the target of EURO 1 billion ($1.09 billion).

According to the firm, the decarbonization trend will result in strong market growth for power semiconductors, in particular those based on wide bandgap materials.

As a leader in power systems, it said the firm is now taking a further, decisive step to shape this market by significantly expanding its Kulim fab – over and above the original investment announced in February 2022.

“The market for silicon carbide shows accelerating growth, not only in automotive but also in a broad range of industrial applications such as solar, energy storage and high-power electric vehicle (EV) charging,

“With the Kulim expansion, we will secure our leadership position in this market,” said Jochen Hanebeck, Chief Executive Officer of Infineon.

With the industry’s leading scale and a unique cost position, he said the firm is leveraging its competitive position of best-in-class SiC trench technology, the broadest package portfolio and unrivaled application understanding.

He noted that these factors are the areas of differentiation and success in the industry.

According to the statement, the planned expansion is backed by customer commitments covering about EURO $5 billion ($5.46 billion) of new design-wins in automotive and industrial applications as well as about EURO 1 billion ($1.09 billion) in pre-payments from existing and new customers.

In the automotive sector, this includes six original equipment manufacturer (OEMs), three of them from China. Among the customers are Ford, SAIC and Chery.

In the area of renewable energies, customers include SolarEdge and three leading Chinese photovoltaic and energy storage systems companies.

In addition, Infineon and Schneider Electric have agreed on a capacity reservation including prepayments for power products based on silicon and silicon carbide.

Infineon and the respective customers will provide more details in separate announcements in the near future.

According to the statement, the prepayments will contribute positively to Infineon’s cash flow in the coming years and shall be fully repaid in connection with the agreed sales volumes by 2030 at the latest.

“Malaysia is putting in maximum efforts to meet its national target to decarbonize its economy and achieve net zero by 2050,

“Malaysia’s continued appeal as a preferred investment destination comes with a well-established landscape for developing innovative and sustainable technologies,” said Anwar Ibrahim, Prime Minister of Malaysia.

In this vein, he said Infineon’s vision on green technology and sustainability puts it right at home in Malaysia.

He also said Infineon and other well-established German corporations’ continued faith in Malaysia is a vote of confidence in Malaysia’s new economic growth agenda premised on inclusivity and sustainability, enabled by strong policies on knowledge transfer, quality investments, business enablement and socio-economic well-being based on equitable sharing of the nation’s wealth.

The Minister of Investment, Trade and Industry (MITI) Tengku Zafrul Aziz also said that Infineon’s expansion of their world-class silicon carbide facility in Kulim marks a significant milestone in Malaysia’s pursuit of developing advanced manufacturing capabilities.

He said this investment will create high-skilled employment opportunities and positioning the country at the forefront of enabling green technologies, which are crucial to achieving its global sustainable development goals.

“The innovative power semiconductor technologies manufactured in the SiC Power Fab will also bolster Malaysia’s position as a key player in the world’s semiconductor ecosystem, with a growing role specifically in the sustainable technology supply chain,” he said.

It is noted that sustainability is a key element in the planning, construction and operation of the fab.

The building is designed in a way that allows Infineon to make responsible use of resources such as electricity and water.

Listed in Germany and United States, Infineon is a global semiconductor leader in power systems and internet of things (IoT).

The firm drives decarbonization and digitalization with its products and solutions.

It has around 56,200 employees worldwide and generated revenue of about EURO 14.2 billion ($15.51 billion) in the 2022 fiscal year ended September 30.

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