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The CEO of German chip manufacturing equipment supplier Suss MicroTec stated that tariffs could disrupt the supply chain supporting the semiconductor industry, increase costs, and even trigger an economic recession.
For decades, predictable trade rules have allowed chip manufacturers to easily design products in the United States and Europe, then ship them to Taiwan or South Korea for manufacturing, and finally assemble them in mainland China or other parts of Asia.
Today, the semiconductor industry is facing the challenges posed by President Donald Trump’s tariff policies. While smartphones, computers, memory chips, and several other product categories are currently unaffected by tariffs, some exemptions may be revoked in the coming weeks due to investigations targeting semiconductors.
Burkhardt Frick, CEO of Suss MicroTec, stated in an interview: “Imposing tariffs and blockades, I think this is a step backward.”
In April of this year, President Trump imposed tariffs on dozens of countries, and after market turmoil, he implemented a 90-day tariff suspension for most countries, allowing national leaders to negotiate trade agreements. However, Washington excluded Beijing from the 90-day tariff suspension and imposed tariffs as high as 145%, prompting China to retaliate with tariffs of 125% on U.S. imports.
“Even this 90-day tariff suspension is just delaying the inevitable, while the two elephants in the room continue to provoke each other,” Frick said. “I believe no one will benefit from this. It is a zero-sum game.”
Frick is a seasoned industry veteran with over 30 years of experience, having worked for about 20 years in Philips’ mobile display and semiconductor business units, and later joined Dutch semiconductor equipment manufacturer ASML Holding in 2014 as Vice President of Strategic Procurement and Supply Chain. He took the helm of Suss MicroTec in 2023.
Suss MicroTec’s product portfolio includes products required by chip manufacturers for backend lithography, wafer bonding, and photomask processing to produce increasingly complex semiconductors, including those behind the AI boom.
The group reported a nearly 47% increase in sales last year, reaching €446.1 million ($504.1 million), thanks to large orders for equipment used to produce high-bandwidth memory and AI chip modules. The group expects this year’s sales to be between €470 million and €510 million.
Frick stated that despite uncertainties in global trade, demand for AI remains strong. The company is still processing orders received in 2024, which has a significant volume of pure AI orders.
Now, the company is expanding its broader product portfolio, which Frick describes as a beneficial development, as even if one area loses some growth momentum, the company has other product categories to maintain growth.
“Of course, a global economic recession is not good for anyone, and that is what everyone is worried about,” he said.
Despite the strong demand for semiconductors from data centers and servers behind the AI boom, the industry has been struggling for over a year with weak demand for traditional chips in automotive and industrial machinery.
Frick noted that some chip manufacturers, such as Tesla supplier STMicroelectronics, are signaling a recovery, but tariffs or export controls could jeopardize the complex supply chains that the industry has relied on for decades and may lead to increased consumer prices.
“Would you spend $3,000 or more on an iPhone? Because that is the result; it is just a small gadget, yet it affects the entire industry,” Frick said. “This will truly trigger a global economic recession, and I believe no one wants to see that happen.”
Original link
https://www.wsj.com/tech/tariffs-threaten-semiconductor-supply-chains-chip-equipment-maker-warns-727792cc
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