China Pauses Investments in the Chip Sector and is Looking for an Alternative

The global chip shortage that is disrupting the production of several companies could continue for years to come. Reinhard Ploss, CEO of the German chip group Infineon, thinks so.


According to him, the scarcity could last until 2023, he says in the newspaper Frankfurter Allgemeine Zeitung, because the capacity in several regions is insufficient to keep up with the growing demand.

According to the Infineon CEO, building new factories, clean rooms, and other chip-related facilities takes two to a half years. Modernizing existing facilities takes three quarters of a year to a year.

The chip shortage affects the production of various car manufacturers. In addition, tech companies such as Apple and Microsoft are also suffering from a shortage of chips. According to Ploss, the increased need for working from home and the catching-up effect in the auto industry after the corona crisis have become important growth drivers for the chip industry. He also cited the faster adoption of electric vehicles and the growing demand for renewable energy as contributing factors to the shortage.

One of the European companies affected is car manufacturer Volvo Cars. The company’s factory in Ghent, Belgium, will be shut down for three days next week due to the chip shortage. As a result, about 5000 employees are temporarily unemployed at home. Earlier this year, the factory also closed for a few days for the same reason.

According to Ploss, Europe needs to reduce dependence on foreign exporters in the semiconductor industry. However, he is open to working with other companies as long as it fits Infineon’s business strategy, he said.

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