CEOs Warn of Fragmentation in Semiconductor Production

By Toby Sterling

MUNICH (Reuters) – The CEOs of Europe's three biggest computer chip makers stated that the demands from the U.S., Chinese, and European governments for regional semiconductor production are hindering their business operations.

In a rare joint appearance following Donald Trump's election for a second term, Infineon's CEO Jochen Hanebeck, along with STMicroelectronics and NXP executives, expressed concerns over the impact of nationalist industrial policies that have emerged over the past decade.

Hanebeck highlighted the risk of accelerating fragmentation, indicating that supply-side fragmentation and potential tariffs could worsen the situation. All three companies are key suppliers of chips for various industries, including automotive and electrical power control, and are thriving in China due to its booming electric vehicle market, despite weak demand in other chip markets except those for artificial intelligence.

STMicroelectronics CEO Jean-Marc Chery noted the substantial costs of creating separate supply chains for "China for China and West for West" chips.

NXP CEO Kurt Sievers emphasized that no single country could dominate the chip industry or achieve independence from global supply chains, predicting that such a scenario would lead to exorbitant prices beyond consumer reach. He expressed confidence that governments will eventually recognize this reality.