The global semiconductor industry is facing significant uncertainty due to escalating trade tensions under the US President Donald Trump's tariff policies, according to CS Chua, president and managing director of Infineon Technologies Asia Pacific.
In his conversation with ET, Chua emphasised that the situation lacks stability for companies to make concrete plans. "It is difficult to assess this because the tariff situation is changing every couple of days," he said, noting that even officials remain unclear on the scope and implementation of levies on chips and raw materials. "No company can shift factories in one or two months. It is simply not possible. Until there is definite clarity, we can only wait and prepare on paper."
While semiconductor manufacturers see strong long-term growth potential, the current policy instability has created hesitation regarding structural changes. "We cannot say the impact is zero, but execution is impossible without clarity," he said.
Infineon continues to strengthen its presence in India, recognising it as a crucial growth market. As the world's fourth-largest economy, with projections to become third-largest by 2027, India presents substantial opportunities through its domestic consumer base and skilled engineering workforce.
The company has established strategic collaborations with Kaynes Semicon and Continental Device India Ltd (CDIL). The arrangement with Kaynes Semicon involves Infineon providing wafers or bare dies, whilst Kaynes manages packaging, testing and marketing under its brand, focusing on India's expanding domestic market.
The partnership between Infineon and Kaynes Semicon will produce India's first domestic micro electromechanical system (MEMS) microphone, utilising Infineon's bare-die technology and Kaynes Semicon's packaging expertise, according to Chua. The MEMS microphone has applications in wireless stereo earbuds and wearable technology.
"Microphone is a very important product for Infineon, especially towards IoT (Internet of Things). It is one of our core pillars in terms of the market. And India also has a large potential in terms of IoT market," he said.
"It is not limited to only microphone or IoT, but subsequent projects we are discussing with them will be into the rest of the other big markets. Renewable is one example (photovoltaic solar cells), power semiconductor is another example," Chua added.
The March agreement with CDIL involves Infineon supplying high-performance bare die wafers, which CDIL will package into discrete and module semiconductor products for Indian customers. This approach enables selling both in and with India, leveraging local expertise for cost-effective solutions.
"All the manufacturing will be done at Kaynes' Gujarat facility, while CDIL is already active in packaging power devices," he said. "India's market is big enough to keep them busy for years to come."
Infineon's expansion includes growing its research and development centres in Bengaluru and Ahmedabad, currently employing 2,500 Indians, primarily in R&D roles. "We plan to double the headcount to 5,000 in the next few years," Chua said.
Nevertheless, he acknowledged India's delayed entry into semiconductor manufacturing compared to Southeast Asia, South Korea and China. "It will take years to fully develop a semiconductor ecosystem," he said, while noting that government support helps reduce this gap.
Global instability remains a significant issue. "We need definite agreements between countries," Chua said. "Until then, the semiconductor industry, like many others, is in a wait-and-see mode."
Last month's quarterly results announcement included Infineon chief executive Jochen Hanebeck's confirmation of expected sales doubling to about €600 million ($692 million) this financial year from their chip business for artificial intelligence centres, driven by increasing demand for power semiconductors in data centres.
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