Rethinking finance amid semiconductor supply chain uncertainties
Companies are reassessing where they build, how much flexibility they need, which suppliers they depend on and where financial decisions are made.
Ongoing geopolitical crises in the Middle East and Russia-Ukraine have put pressure on semiconductor supply chains, and most experts agree that the old ways of doing business are no longer viable. We are now in a world of export controls, tariffs, regional industrial policy, AI-driven demand and sudden logistics disruption. In other words, a perfect storm.
According to an online article by DBS (produced in partnership with the Financial Times Commercial department), companies are reassessing where they build, how much flexibility they need, which suppliers they depend on and where financial decisions are made.
“Efficiency and cost are no longer sufficient; semiconductors are now tied to national security,” says Jim Hung, Chairman and Chief Executive of Taiwan’s Innolux Corporation and its automotive technology subsidiary, CarUX. “Business decisions must factor in geopolitical risks and regulatory intervention.”
Gianluca Romano, the Chief Financial Officer at Seagate Technology, says that despite the lack of stability in this environment, the company has managed to stay flexible because it is dispersed across locations.
“You always need to try and anticipate what the next problem will be — and be vigilant,” Romano says. “You also need to collaborate with your suppliers, so they are ready to respond to sudden changes.”
Meanwhile, Singapore is emerging as an important coordination point and hub for the industry, thanks to its robust infrastructure, skilled workforce, and a pro-active economic development board, according to the DBS article.
Amit Sinha, Group Head of Telecommunications, Media and Technology, Western MNCs and Digital Economy at DBS Bank, says the move towards more resilient, “intentional” supply chains is creating new funding and advisory needs.
“[W]ith Covid and now multiple geoeconomic challenges, it’s becoming more about resiliency and building supply chains closer to your customers,” Sinha says.
For CFOs, breadth matters when operations are spread across countries and demand can change quickly.
“The strongest financial partners are those that deeply understand their client’s operations and can provide all the instruments a company needs, so they don’t have to work with many different banks,” Romano says.
