Fix #7512: Normalize type arguments before instantiation

compiler/src/dotty/tools/dotc/core/Types.scala

@@ -4171,7 +4171,7 @@ object Types {
           case MatchAlias(alias) =>
             trace(i"normalize $this", typr, show = true) {
               MatchTypeTrace.recurseWith(this) {
-                alias.applyIfParameterized(args).tryNormalize
+                alias.applyIfParameterized(args.map(_.normalized)).tryNormalize
               }
             }
           case _ =>

compiler/test/dotc/pos-test-pickling.blacklist

@@ -39,6 +39,7 @@ i9999.scala
 9757.scala
 9890.scala
 13491.scala
+7512.scala
 
 # Opaque type
 i5720.scala

tests/pos/7512.scala

@@ -0,0 +1,24 @@
+import scala.compiletime.ops.int.S
+
+object InfiniteLoopMatchType {
+    def main(args: Array[String]): Unit = {
+        testProd(2, 10)
+    }
+
+    def testProd(a: Int, b: Int)(using ev: (a.type * b.type) =:= (b.type * a.type)) = true
+
+    type *[A <: Int, B <: Int] <: Int = A match {
+        case 0 => 0
+        case _ => MultiplyLoop[A, B, 0]
+    }
+
+    type MultiplyLoop[A <: Int, B <: Int, Acc <: Int] <: Int = A match {
+        case 0 => Acc
+        case S[aMinusOne] => MultiplyLoop[aMinusOne, B, B + Acc]
+    }
+
+    type +[A <: Int, B <: Int] <: Int = A match {
+        case 0 => B
+        case S[aMinusOne] => aMinusOne + S[B]
+    }
+}