China GaN Ban Tests Infineon's AI Data Center Momentum as Forward P/ E Hits 34x

Infineon accelerates €5B Dresden fab to 2026, but patent dispute in China forces halt of GaN sales. AI power chip revenue forecast to grow, stock up 111% YTD.

Infineon is charging ahead with a new €5 billion wafer module in Dresden while simultaneously scrambling to contain a patent dispute in China that has forced it to halt sales of certain gallium-nitride products. The contrasting dynamics underscore the delicate balancing act facing Europe’s largest chipmaker as it tries to capitalise on AI-driven demand without tripping over geopolitical and legal landmines.

The Smart Power Fab in Dresden will begin operations on 2 July 2026, roughly ten weeks ahead of its original schedule. Once fully ramped, the facility is expected to contribute annual revenue potential of around €5 billion — equivalent to about a third of the group’s projected top line for the current fiscal year. The production launch will provide the first concrete capacity data, giving investors a tangible measure of whether the stock’s recent rally is built on more than hype.

That rally has been blistering. Since the start of the year, Infineon shares have more than doubled, gaining over 111% (the secondary article says 109%, but primary says 111%; both are close but we must preserve exact numbers — primary says "über 111 Prozent", secondary says "über 109 Prozent". We need to use one. The primary says "mehr als verdoppelt — ein Plus von über 111 Prozent". The secondary says "Nach einem Plus von über 109 Prozent seit Jahresbeginn". Since they are slightly different, we should use the more recent or more precise? The articles are likely written around same time. To avoid contradiction, we can use the primary's 111% because it's more specific. Also note: secondary says "seit Ende März 2026 legte die Aktie in der Spitze um bis zu 142 Prozent zu". That is a different period. We'll include that as well.) The stock now trades at €80.30, roughly 10% below its 52-week peak of €89.67. Yet the valuation has become a talking point: the 12-month forward price-to-earnings ratio stands at 34, far above the ten-year average of 20 and even exceeding the frothy days of the 2020/21 semiconductor cycle. The relative strength index of 60.4 suggests the stock is not technically overbought, but with annualised 30-day volatility near 72%, the ride remains bumpy.

The primary engine of that growth is the data centre business. Infineon expects its revenue from power chips for AI infrastructure to climb from around €1.5 billion in the current fiscal year to roughly €2.5 billion by 2027. That trajectory has drawn analysts to lift estimates, though some warn the premium is pricing in perfection.

But a legal setback in China has injected a note of caution. The Supreme People’s Court has upheld a ruling that certain Infineon gallium-nitride (GaN) products infringe two invention patents held by domestic rival Innoscience. The decision, which confirms an earlier order from the Suzhou Intermediate People’s Court dated 27 May 2026, prohibits Infineon from selling, offering or importing the affected products in China and requires it to pay 10 million RMB in compensation. An Infineon spokesman described the impact as “very limited”, saying only a small slice of the GaN portfolio is involved. The company rejects the ruling and intends to pursue all available legal remedies.

GaN semiconductors are regarded as third-generation materials that switch faster, generate less heat and enable more compact designs than traditional silicon. They are used in fast chargers, server power supplies and electric vehicles — markets where Chinese players like Innoscience are aggressively trying to gain ground. The patent conflict is playing out simultaneously in Germany and the United States, and the Chinese court’s decision has already lifted local semiconductor stocks on expectations that Innoscience could tighten its grip on the domestic market.

A separate supply-chain headache has also surfaced. Yangzhou Yangjie Electronic Technology, a Chinese supplier, has been placed on the EU sanctions list amid allegations that its products ended up in Russian drones and glide bombs. Yangjie denies the claim, stating it ended business with Russia in November 2023. The EU has granted transition periods, and one unnamed German customer has received an exemption valid until May 2028 — a sign of how deeply the European semiconductor industry relies on Chinese components.

How quickly Infineon can mount a legal counter-offensive and roll out alternative GaN products will determine whether the Chinese ban remains a manageable nuisance or escalates into a more serious drag. The next quarterly report, due in August, will shed light on both the financial impact of the ruling and the early output from the Dresden factory. For now, the stock is pricing in a great deal of good news — and any misstep could test the tolerance of investors who have already enjoyed a 142% climb from the late-March trough.