German chipmaker Infineon prepared to handle increased competition from China, CEO says

SINGAPORE — Geopolitical tensions between Washington and Beijing remain a concern for German chipmaker Infineon and it is preparing for increased competition in the semiconductor space out of China, CEO Reinhard Ploss said. 

Infineon is one of the largest semiconductor companies in the world and is a top player in automotive, power and security chips. In April, the firm completed its 9 billion euro (about $10.6 billion) takeover of U.S. semiconductor company Cypress and last month reported a net loss of 128 million euros for its fiscal third quarter. 

"The geopolitical tension between the two superpowers (is) a big concern because we think we should not focus on countries, we should focus on the needs of our global society," Ploss told CNBC during the Singapore Summit, which was held virtually this year due to the coroanvirus pandemic. 

"This needs cooperation — so the tech dispute we have is definitely a concern of different reasons but we are able to cope with it," he added. 

U.S. and China's bilateral relationship deteriorated in recent years due to a trade war and a race to establish dominance in crucial areas of technology including 5G and semiconductors. Washington has targeted Chinese tech companies like Huawei, ZTE and ByteDance on national security grounds. 

In Huawei's case, the U.S. put the company on a so-called entity list that essentially limits the Chinese telecommunication equipment maker's ability to receive specific goods made in the U.S. Officials have been pushing other governments around the world to place restrictions on Huawei, arguing that the company will give data to the Chinese government for spying. Huawei has denied that it spies for China. 

China's semiconductor ambitions

Semiconductors play an important role in technologies like 5G, artificial intelligence and the internet of things. Most of the chips that China uses today are imported, which makes it reliant on foreign suppliers for advanced semiconductors. To reduce that reliance, China has stepped up efforts to develop its home-grown semiconductor industry by investing in local companies and some experts have said that Beijing's willingness to outspend the U.S. may give it an advantage. 

"Semiconductor always has been a key element for China, a major import element, and the strategy to become autonomous on this sector always had been present and (is) being followed very strictly," Ploss said, adding that the current U.S.-China dispute has accelerated Beijing's plans to develop the home-grown sector "very significantly." 

"We believe at this point, especially all the strength with the acquisition of Cypress will help us to make our business in China grow successfully but we always have expected an increased competition out of China and prepare ourselves for this. So this is nothing new," he added. 

Infineon has offices in Shanghai, Shenzhen, Beijing and Wuxi. 

Ploss added that Infineon's investments, manufacturing footprint and research and development centers are located in places where the company sees high levels of trust toward the treatment of intellectual property, availability of talent and a stable social environment. 

The company's "core IP is in countries like Germany, Austria and others where we can 100% trust that IP is treated as we expect it," Ploss said. 

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