Germany's Infineon has got the go-ahead from customers to become the world's first chipmaker to produce power chips on large, 300 mm (12 inch) thin wafers, it said.
The larger, thinner wafers mean higher margins as two-and-a-half times as many chips can be made from a single wafer as from the 200 mm wafers currently used for power chips, and less of the raw material silicon is needed, the company said on Tuesday.
Infineon is investing about 255 million euros ($340 million)in the technology at its plants in Villach, Austria and Dresden, Germany - where it plans volume production.
The company, which said last month it believed the cyclical chip market had bottomed out, did not name the customers or give a schedule for ramping up commercial production.
Infineon last month forecast a rise in second-quarter sales and operating profit as carmakers started to restock after running down inventories, although the industry that accounts for almost half of Infineon's sales is still battling a slump.
The power chips to be made in Dresden are used to control electrical current and have a variety of applications from power generation to consumer electronics. ($1 = 0.7490 euros)
(Reporting by Georgina Prodhan; Editing by Helen Massy-Beresford)