Global trade group SEMI sees robust demand for chips despite geopolitical risks

By Danial Azhar

KUALA LUMPUR, May 5 (Reuters) – Global chip industry group SEMI said on Tuesday that it expects a recent surge in demand for semiconductors to be sustained despite supply ​chain disruptions stemming from the Middle East crisis and other ‌trade uncertainties.

Worldwide semiconductor sales are forecast to hit $1 trillion this year, doubling to $2 trillion by 2035, fueled by booming growth in data centres used to power artificial intelligence technologies.

SEMI chief executive Ajit Manocha told Reuters that risks arising from geopolitical tensions ‌were ​unlikely to curtail the boom this year, ⁠though persistent shortages of raw ⁠materials may affect the longer-term outlook.

“I think this year is probably in the bag…. And if we run into some more material shortages, if those problems are not resolved, yes, there can be ​some impact on that,” he said in an interview on the sidelines of a regional industry forum.

Manocha declined to comment on which ⁠subsectors could be affected, but said governments ⁠were working to address shortages of critical minerals as ​well as bromine and helium, key gases used in chip manufacturing.

Prices of ​helium, a by-product of natural gas processing, rose sharply in ‌March after the U.S.-Israel war on Iran disrupted such operations in Qatar, the world’s largest supplier of liquefied natural gas (LNG).

South Korean chipmakers have also warned of potential shortages of bromine, much of which is produced ⁠in the Middle East.

Manocha earlier told the forum that Southeast Asian countries should aim to build more semiconductor fabrication plants in the coming decade to ⁠help the sector diversify ‌and reduce supply risks.

Just six of the 64 ⁠new fabs expected to become operational in Asia ​by 2029 ‌were in the continent’s southeast, with the rest ​concentrated mostly ⁠in China and Taiwan, he said.

“We want to see more hubs to come in the like-minded countries, more hubs to come in place, so that we de-risk the vulnerabilities,” he said, adding that it was “really important that Southeast Asia steps up.”

(Reporting by Danial Azhar; Writing by Rozanna Latiff; Editing ​by David Stanway)