BERLIN - Infineon has won approval to begin work on a 5-billion-euro ($5.35 billion) semiconductor plant in the German city of Dresden due to start production in 2026, it said on Thursday.

The maker of chips used in cars and data centres said it would be the largest single investment in its history.

Infineon is seeking 1 billion euros in public funding for the plant, which it said would create around 1,000 jobs.

At full capacity, the plant, which will produce power semiconductors and analog/mixed-signal components, will generate annual revenue of about the same amount as the investment, the company said.

The Economy Ministry approved the early project launch, which allows construction to begin before the European Commission has finished inspecting the legal subsidy aspects.

Economy Minister Robert Habeck on Thursday welcomed the news as a sign of Germany's attractiveness as a business location - a growing concern as Europe fears the U.S. Inflation Reduction Act, among other factors, will draw companies away.

The European Union is seeking to bolster semiconductor production after a global chip shortage over the past two years.

Under the European Chips Act, the European Commission has earmarked a total of 15 billion euros for public and private semiconductor projects by 2030.

  - Reuters