European Chip CEOs Warn of the Risks of Nationalist Policies

MUNICH - Senior executives from Europe's leading semiconductor companies expressed their concerns on Monday regarding the impact of nationalist industrial policies on businesses. The CEOs of Germany's Infineon, French-Italian STMicro, and Dutch NXP Semiconductors voiced their discomfort during a panel at the Electronica & SEMICON Europa conference held in Munich.

The executives highlighted the challenges created by increasing demands from the governments of the US, China, and Europe for localized semiconductor production. This trend towards regional self-sufficiency is generating barriers for the industry by creating a fragmented market, potentially leading to higher costs and tariffs.

Infineon's CEO Jochen Hanebeck warned of the worsening conditions due to accelerating fragmentation and impending tariffs, emphasizing the negative impact on supply chains and the semiconductor business as a whole.

The CEOs noted their companies' strong performance in the Chinese market, particularly due to the rise of the electric vehicle sector. However, they pointed out that other global semiconductor markets were not experiencing the same level of demand, except for chips for artificial intelligence applications.

Jean-Marc Chery from STMicro indicated that the restructuring necessary to align supply and production chains with a "China for China and West for West" approach entails significant costs. He indirectly referenced the impact of the political climate on the sector, alluding to the recent US presidential election.

Kurt Sievers from NXP Semiconductors argued that it is impossible for any country to dominate or be independent in the chip industry, stating that this would lead to prohibitively high costs that would make consumer devices unaffordable. He expressed confidence that governments would eventually realize the impracticality of such an approach.