Increased Risk Revealed: Reliance on Taiwanese Semiconductors Exceeds Dependence on Russian Natural Gas
In a recent interview, Jochen Hanebeck, CEO of chipmaker Infineon, warned about the potential shortage of chip supplies from Taiwan, highlighting an important business risk. This concern stems from Taiwan Semiconductor Manufacturing Company's (TSMC) central role in global semiconductor production, producing over 60% of the world's semiconductors, including 90% of the most advanced chips.
Taiwan's critical position in the global chip supply chain means that any disruptions there could create shortages affecting Infineon's production capacity. Potential impacts on the global economy include disruption in the supply of semiconductors used widely in automotive, industrial, and consumer electronics sectors. Given the increasing demand for AI and high-performance computing chips, a shortage could hinder technological advancement and slow growth across multiple industries dependent on chips from Taiwan.
For Infineon, the risks include dependence on Taiwan's fabs for cutting-edge chips like those built on 2nm, 3nm, and 5nm nodes, which are essential for next-generation AI, automotive, and power management products. Any geopolitical instability or disruptions in Taiwan or TSMC’s manufacturing capabilities could constrain Infineon's ability to scale with market demand, limiting revenue growth.
However, Taiwan is investing heavily in expanding fab capacity, with TSMC planning 11 new fabs and targeting more diversified production in Arizona and Japan to mitigate risk. Additionally, Southeast Asian countries like Vietnam and Malaysia are experiencing over 40% growth in semiconductor packaging and assembly, signaling some geographic diversification in the supply chain that might reduce sole dependency on Taiwan over time.
Despite these concerns, Infineon continues to have good prospects. The company reported record values and growth potential in its interim report, and its broad positioning remains a strength. The Infineon share, despite the recent decline, still has the potential to reach its old highs. "Börse Online" issued a buy recommendation for Infineon, but a further decline in the share price was not ruled out.
It's worth noting that China considers Taiwan a breakaway province and will act decisively against any form of separatist "Taiwanese independence" and foreign interference, according to its Ministry of Defense. This geopolitical tension adds another layer of complexity to the chip supply situation.
In summary, while Taiwan’s semiconductor leadership and TSMC’s dominance underpin Infineon's current supply chain, any risks there pose potential slowdown for Infineon’s growth and wider economic impacts due to global chip shortages. But ongoing capacity expansion in Taiwan and emerging supply alternatives in Southeast Asia could help mitigate these risks over the medium term.
- The risks for Infineon include dependence on Taiwan's fabs for advanced chips like those built on 2nm, 3nm, and 5nm nodes, which are crucial for next-generation AI, automotive, and power management products, thereby impacting its revenue growth.
- Any geopolitical instability or disruptions in Taiwan or TSMC’s manufacturing capabilities could constrain Infineon's ability to scale with market demand, potentially slowing technological advancement and growth across multiple industries reliant on chips from Taiwan.
