The textile contains a weave of conductive fiber studded with sensor chips and LEDs (light-emitting diodes).
After being fitted to a floor and hooked up to a power source and a computer, the electronic carpet becomes "aware" of the position of each sensor chip, said the chipmaker.
"Each chip communicates via a self-learning and self-organizing network with its immediate neighbor and uses a software algorithm to ascertain its own position," according to Infineon.
Among its potential uses: Visitors can be guided by following a breadcrumb trail of LEDs; pressure sensors can detect intruders; and temperature sensors can detect a fire while the LEDs mark out an escape route.
A few dead chips are not a problem, said the company. "If an element within the network is faulty, the chips automatically search for new ways in order to maintain the communication."
As with its, the smart carpet--the term used by Infineon--is just a demonstration product for now, with commercial possibilities still years in the future.
Werner Weber, senior director of the emerging technologies division at Infineon, said it will take "two years to produce a fully functional and intelligent woven material that could be used to cover a wide area."
Other uses for a smart textile include embedding it into concrete walls and columns to monitor stress, giving inspectors an inside view of a building's health.
Finally, the fabric can be stretched over a blimp, with the LEDs blinking out advertising messages, according to Infineon.
CNETAsia's John Lui reported from Singapore.