Chipmaker Infineon said on Thursday it was expanding its production capacity to help address global supply shortages and would be able to meet the needs of its customers in the long term.
CEO Reinhard Ploss said Infineon's new plant in Villach, Austria, due to open in late summer, would be capable of producing enough power semiconductors each year to equip the drive trains of 25 million electric vehicles.
A semiconductor supply crunch has forced automakers such as Volkswagen Group, Ford and General Motors to idle production after the chip market was swept clean by demand for higher-margin consumer electronics.
Analysts say that supply of automotive products like microcontrollers will remain tight until mid-year as chipmakers adjust to demand that has snapped back since the outbreak of the coronavirus pandemic last spring.
Infineon rode out last year's turbulence relatively well by building inventory. But it has faced challenges because - like its competitors - it outsources a share of production to Asian contract manufacturers that are running flat out.
Infineon plans to add another plant in Dresden, Germany, to complement the 1.6 billion euro ($1.95 billion) factory in Villach, in a bid to gain flexibility.
"This will enable us to control production at the two sites as if they were one factory," Ploss told shareholders at Infineon's annual general meeting, being held online for the first time due to the pandemic.