December 5, 2025 /SemiMedia/ — Volkswagen is preparing a new chapter for its Dresden site through a cooperation framework signed with the Saxony state government and the Technical University of Dresden. The initiative will convert the location into a startup and research hub dedicated to artificial intelligence, robotics and chip-design development. According to Volkswagen, more than €50 million will be invested in the facility over the next seven years, jointly funded by the company and the university.

Transition from Vehicle Assembly to Technology Development

The transformation provides a path forward for a plant that was once considered for closure. In 2024, Volkswagen had examined shutting down three domestic factories to counter rising costs and weaker demand, drawing strong objections from labor representatives. Lengthy negotiations resulted in the company retaining these sites while relying on voluntary measures to reduce headcount.

Dresden was among the underperforming factories on the review list. Opened in 2001, the facility was designed as a transparent showcase for premium vehicle assembly rather than a full-scale production plant, outputting roughly 6,000 units annually. Production activities will now wind down, and around 50 to 60 of the plant’s 225 employees are expected to take internal transfers or early retirement options. Workers willing to relocate to Volkswagen’s main Wolfsburg facility will receive a one-time €30,000 incentive. Employment contracts will remain valid due to a long-standing job-security agreement that runs through 2030.

Aligning with Europe’s Expanding Semiconductor Cluster

Volkswagen aims to leverage TU Dresden’s research capabilities and the region’s growing strategic importance within Europe’s semiconductor ecosystem. Dresden today hosts major chip investments from Bosch, Infineon and TSMC, forming one of the continent’s most active clusters for advanced manufacturing. Thomas Edig, CEO of Volkswagen Sachsen GmbH, said the partnership is structured to attract talent from frontier technology sectors and accelerate innovation at the site.

TU Dresden is expected to eventually utilize nearly half of the campus area, with joint research programs scheduled to begin in 2026.