Executives at European semiconductor manufacturers have warned that investment priorities linked to artificial intelligence are tightening supplies of mainstream electronic components used in vehicles and industrial machinery. The executives described pressure on foundry, assembly and packaging resources needed to deliver widely used diodes, transistors and other devices into high-volume industrial supply chains.
Stefan Tilger, interim chief executive of Dutch manufacturer Nexperia, described the company as heavily oversubscribed during an interview at the electronica trade fair in Munich on 10 November. He said some competitors were shifting capacity away from commodity semiconductor production as AI data centres and robotics absorbed resources and investment. His comments were reported alongside concerns raised the previous day by Jean-Marc Chery, chief executive of STMicroelectronics, about foundry and semiconductor packaging suppliers withdrawing from mainstream technologies.
A modern vehicle or industrial control cabinet can contain comparatively simple silicon devices alongside advanced computing hardware. Discrete transistors, protection devices, power switches, interface components and established microcontrollers manage current, protect circuits and exchange signals with sensors. When one part is unavailable, assembly of an entire electronic module may be delayed if the design has no qualified alternative. Replacements must satisfy electrical, thermal and reliability requirements as well as physical package compatibility.
Nexperia specialises in high-volume discrete semiconductors, with manufacturing activities covering wafer fabrication, assembly and testing. Its European front-end facilities include Hamburg in Germany and a power MOSFET wafer fab at Stockport, near Manchester. The company describes its production footprint as designed for large volumes and long-term continuity of supply. Such a portfolio differs from an AI accelerator processor, but both depend on capital-intensive production ecosystems and a network of equipment, materials and outsourced manufacturing services.
A foundry choosing future capital expenditure may favour faster-growing products, while an assembly and testing supplier may prioritise qualified lines and new equipment for orders with stronger anticipated returns. Materials and equipment suppliers can make similar investment decisions. These changes affect how capacity grows over time; an advanced AI processor fabrication line cannot simply be converted into production of a mature diode because processes, tooling, yields and packaging requirements differ.
Capacity changes take time to reach customers. New manufacturing tools require installation, process development and product qualification before they can deliver stable yields, while established lines may have little spare room for additional demand. Investment directed elsewhere can therefore leave mature components exposed even if vehicle, factory and infrastructure manufacturers maintain steady requirements. A part can be inexpensive in isolation yet indispensable to completing a much more valuable electronic assembly.
Chery warned that some foundry and packaging businesses were withdrawing resources from traditional automotive and industrial products. He also pointed to STMicroelectronics’ own manufacturing investment and production capacity as a measure of protection. Greater control over internal production can support capacity allocation, although suppliers still rely on external materials, specialist packaging and equipment, along with credible forecasts from automotive and industrial customers.
The automotive sector makes the risks visible because a model can require a large number of qualified electronic parts across powertrain, braking, body control and sensing systems. An engineering change designed to replace a scarce semiconductor may require electrical validation, software adjustments, thermal checks and supplier or vehicle-level qualification. Industrial machinery faces similar constraints where a component is embedded in a safety-rated controller or a product intended to remain serviceable for many years.
Procurement teams can mitigate some risks through approved alternatives, supply agreements and better visibility of long-lead components, although these measures cannot create production capacity where none exists. Holding additional inventory may protect near-term builds but ties up capital and can introduce obsolescence risk. Changes to electronic designs require the involvement of engineering and quality functions; substituting parts on the basis of package shape or nominal electrical ratings alone is not a robust solution.
Neither executive supplied a market-wide shortage percentage, a quantified estimate of lost vehicle production or a timetable for recovery. Their remarks described supplier demand, the availability of particular semiconductor categories and choices about future investment. Constraints will differ by device family, manufacturing process and packaging arrangement, so disruption affecting one component does not establish the same lead time or shortage across all mature technologies.
The next changes in supply will depend on how manufacturers allocate investment to mature product families, whether assembly and packaging firms preserve qualified capacity and how accurately customers communicate future demand. Additional production lines require time to commission and qualify, and automotive or industrial users may need further validation before switching components. Those lead times will determine how quickly the bottlenecks described in Munich can be relieved.
