(Bloomberg) -- Infineon Technologies AG announced a breakthrough in the production of compound semiconductors that it said will help bring down manufacturing costs and speed their adoption for artificial intelligence applications.

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The German chipmaker said Wednesday it has successfully developed 300 millimeter (12 inch) gallium nitride wafers, which can produce 2.3 times more chips than 200 millimeter wafers, in a move that will make the emerging technology cheaper.

Gallium nitride is a compound semiconductor, meaning it is made from multiple elements, and is particularly energy-efficient, leading to more compact and powerful electronic devices. It is often used in industrial and automotive applications such as power supplies for AI systems, solar panel systems and motor-control systems.

The company is planning to start sending samples to customers in late 2025 and will eventually mass produce the wafers at its plant in Villach, Austria, according to Infineon division president Adam White.

As the cost of production comes down, such chips are becoming more popular, although silicon remains the most common material to use. The market for gallium nitride, or GaN, chips will reach at least $2.3 billion dollars by the end of the decade, according to White.

“Infineon innovation in GaN manufacturing could help it lead that market,” JPMorgan analysts Sandeep Deshpande and Anchal Sahu said in a note. “However given that samples will only be available in late 2025, high volume production will likely be only in 2027.”

The new tech can improve device performance, reduce overall costs and ensure steady supplies for customers, according to the Neubiberg-based company. There is a growing need for advanced power chips as countries around the world race to build more AI data centers and carmakers upgrade designs for their smart vehicles.

The production breakthrough came after Infineon bought Ottawa-based GaN Systems for $830 million last year.

Automotive Chips

European chipmakers are leaders in the global automotive chip market, which McKinsey forecasts will be worth about $150 billion by 2030, rising from $52 billion in 2021. Infineon competes with European peers NXP Semiconductors NV and STMicroelectronics NV in the automotive chip space.