How AI-driven semiconductor demand and geopolitical volatility combined significantly impact the payment card industry: an SPA position paper

Payment cards are essential for consumers worldwide. Securing an uninterrupted supply chain for payment cards is therefore essential to daily life and commerce [1], [2]. Current geopolitical instability and growing demand, notably from AI industries, are increasing pressure on global supply chains. This payment smart card industry position paper outlines current observations on semiconductors, raw materials, precious metals, transport, and logistics, and assesses their potential impact on the payment smart card supply chain.

This paper is provided for informational purposes only to highlight general market trends. Each member of the SPA acts in an independent manner with respect to all matters relating to their respective supply chains. As such, this paper is intended to ensure business continuity and competitiveness for payment card manufacturers and issuers, as well as reliability and flexibility across the supply chain.

Important Disclaimer

The annex to this communication contains documented links for reference purposes only, enabling readers to review Smart Payment Association’s (SPA) observations and related sources independently. Readers are solely responsible for assessing the relevance, accuracy, completeness, and applicability of the information provided and for forming their own conclusions.

Executive summary

• Artificial Intelligence (AI) growth is reshaping global supply chains. For the payment card industry, the resulting impact is putting constraints on chip availability.
• In addition, geopolitical uncertainties are putting pressure on the supply of critical materials, components, and logistics networks as well as the delivery of finished payment cards.
• To safeguard business continuity and competitiveness, the SPA recommends issuers provide their respective payment card manufacturers with information relating to their requirements as soon as possible to support timely and adequate card supply.

Market dynamics and geopolitical considerations

The semiconductor industry is undergoing major changes in capacity allocation and demand. Foundries are increasingly prioritizing fast-growing segments such as AI-enabled consumer applications, data centers, and other high-value markets, putting pressure on traditional semiconductor supply chains, including those supporting the payment card sector.

In addition to market-driven capacity constraints, geopolitical instability and trade tensions – including protectionism, disruption to traditional trade routes, and energy volatility – are creating further uncertainty across the supply environment. These factors remain beyond the control of the payment card industry.

SPA observations

Several research papers highlight the increasing role of AI in the structural transformation of the global semiconductor industry.

• AI is the primary growth engine behind the semiconductor industry’s trajectory toward a 1 trillion units’ market, while demand in most traditional semiconductor segments remains comparatively stable [3].
• The surge in AI computing requirements is driving a structural shift in the industry, with foundries reallocating capacity toward high-value AI chips [3], [4], accelerating investment in advanced manufacturing nodes and 12-inch wafer production while reducing focus on older 8-inch capacity [5], [6], [7].
• Beyond AI processors themselves, the AI ecosystem is boosting demand for memory and power semiconductors [4], driven by advanced AI packaging, data center infrastructure expansion, and the broader increase in computing density required to support AI workloads.
• The European Commission’s Impact Assessment for the proposed Chips Act 2.0 [8] similarly concludes that AI is reshaping semiconductor market dynamics, with supply chain vulnerabilities emerging in mature technologies below approximately 40nm as manufacturing capacity increasingly shifts toward advanced nodes.

Since 2023, geopolitical tensions, including the wars in Ukraine and Middle East, along with trade disruptions and monetary easing policies, have increased demand for precious metals. This is putting pressure on the availability of such precious metals for other purposes, including the manufacture of payment cards chips. The key reasons for the constraints are as follows:

• In times of geopolitical instability and economic uncertainty, gold typically emerges as a preferred defensive investment. Ongoing conflicts and trade disruptions have reinforced its appeal, prompting investors to increase allocations to the precious metal as a hedge against market volatility and inflation risks [10], [11].
• Central banks have continued to increase gold reserves as part of their diversification strategies [11].
• Expectations of lower interest rates and monetary easing have boosted investment demand for gold and silver by reducing the opportunity cost of holding non-yielding assets and enhancing their attractiveness as portfolio diversifiers and stores of value.

More recently, tensions involving Iran and the broader Middle East have disrupted key global trade routes for key components used in payment cards.

• Ocean freight has been highly disrupted by the volatile, geopolitical issues, notably the closure of the Strait of Hormuz with many carriers being rerouted around the Cape of Good Hope. There is strong demand on key East–West trade lanes with the risk of delays due to the constraints. Moreover, the rerouting of carriers is also affecting the timing for delivery of products [15]
• Air freight is being affected as suppliers seek alternative routes in particular for time-sensitive cargo. This has resulted in constrained capacity on key routes [12], [13].
• Global PVC markets are expected to remain supply-constrained in the short term. Logistics disruptions, including disruptions to oil and petrochemical flows through the Strait of Hormuz, are likely to be affected [14], [16].

Impacts on the payment card industry

Although different in nature, geopolitical tensions, trade frictions, and AI-driven semiconductor growth are cumulatively having an impact across the overall payment card supply chain.

Given the interconnected nature of global supply chains and the potential for rapid shifts in availability, payment card manufacturers are taking individual measures to avoid chip shortages similar to that experienced post- Covid crisis. However, chip availability may become increasingly constrained as semiconductor foundries begin to report capacity limitations. As a result, card manufacturers are increasingly required to qualify and transition to alternative foundries, a process that demands significant time, resources, and technical effort.

The chips used in payment cards are based on mature manufacturing nodes (28 nm and above). Although AI is unlikely to change the technology roadmap for payment card chips, the AI boom is not just a temporary disruption. It will increase supply-chain demand for the mature-node capacity on which the chips for payment cards depend.

Market pressures also extend to precious metals used by payment card manufacturers. Gold and other precious metals play a critical role in payment card manufacturing, particularly within EMV chip components and electrical contacts, where their exceptional conductivity, durability, and corrosion resistance ensure secure, reliable, and long-lasting transaction performance. Increased pressures impacting the supply of precious metals have a knock-on effect upon the manufacture of key payment card components, including chip module packaging and antenna assemblies.

In addition, PVC remains the predominant material used in payment card manufacturing but disruptions due to the global tensions are having an impact upon supply.

Finally, geopolitical tensions are contributing to longer shipping routes and increased transit times. Both air and ocean freight networks are being affected, prompting companies across the payment card value chain to explore more localized manufacturing strategies and alternative transportation routes to strengthen supply chain resilience.

For the payment card industry, the resulting impact is constraints on chip availability and materials for the manufacture of payment cards across the entire supply chain.

Recommended actions for supply chain resilience

To help card manufacturers plan proactively and better mitigate potential risks, the SPA strongly recommends issuer partners consider the following actions:

1. Provide accurate demand requirements to payment card suppliers so orders can be planned in advance
2. Communicate anticipated changes in volume, product mix, or deployment timelines as early as possible
3. Engage in regular dialogue with respective payment card manufacturers to align on supply expectations and contingency planning, including qualifying multiple card platforms based on latest chip technologies

These recommended actions will enable payment card manufacturers to secure capacity, optimize inventory, and work closely with semiconductor suppliers to protect the interests of the payment card ecosystem as well as its competitiveness.

• Align early on forecasting of current frame orders in place
• long term planning
• Timely placement of orders and new frame contracts

The Smart Payment Association (SPA) will continue to monitor market dynamics, engage with industry stakeholders, provide timely updates as conditions evolve and remain committed to fostering a resilient, transparent, and competitive payment card ecosystem.

References

[1] Industry Warns of Impact of Chip Shortages On Payment Card Supply, Smart Payment Association, https://www.smartpaymentassociation.com/news-and-events/industry-warns-of-impact-of-chip-shortages-on-payment-card-supply-public-statement-21st-june-2021/

[2] SPA warns on ongoing chip shortages throughout 2023, Smart Payment Association, https://www.smartpaymentassociation.com/news-and-events/spa-warns-on-ongoing-chip-shortages-throughout-2023/

[3] J. Kusters, D. Stewart, K. Ramachandran, J. Bish, D. Bhattacharjee, 2026 Global Semiconductor Industry Outlook, Deloitte Center for Technology, Media & Telecommunications, https://www.deloitte.com/us/en/insights/industry/technology/technology-media-telecom-outlooks/semiconductor-industry-outlook.html

[4] J. Janukowicz,  N. Turner, Semiconductor Market to Surge Past the Trillion-Dollar Threshold: AI Infrastructure Drives Market Growth, IDC, https://www.idc.com/resource-center/blog/semiconductor-market-to-surge-past-the-trillion-dollar-threshold-ai-infrastructure-drives-market-growth/

[5] [News] Global 8-Inch Wafer Market Tightens: Samsung Giheung S7, TSMC Closures Put China Fabs in Spotlight, TrendForce, https://www.trendforce.com/news/2026/01/15/news-global-8-inch-wafer-market-tightens-samsung-giheung-s7-tsmc-closures-put-china-fabs-in-spotlight/

[6] H. JY, Samsung to close down one of its 8-inch foundry fabs within the year – Tech giant to focus on lucrative 12-inch foundry, The Elec, https://www.thelec.net/news/articleView.html?idxno=5549

[7] [News] TSMC Reportedly Cuts 28nm Output by Over 25% Since Early 2026 as Advanced Node Push Accelerates, TrendForce, https://www.trendforce.com/news/2026/06/22/news-tsmc-reportedly-cuts-28nm-output-by-over-25-since-early-2026-as-advanced-node-push-accelerates/

[8] COMMISSION STAFF WORKING DOCUMENT, IMPACT ASSESSMENT REPORT, Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on a framework of measures for strengthening Europe’s semiconductor ecosystem repealing Regulation (EU) 2023/1782 (Chips Act 2.0), https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52026SC0504&qid=1784645389120

[9] Global Semiconductor Industry Service, Semiconductor Market by Application Part 1, February 2025, IBS.

[10] Sustaining stability amid uncertainty and fragmentation, Bank for International Settlements (BIS),  https://www.bis.org/publ/arpdf/ar2025e1.htm

[11] J. Khadan, K. Temaj, Gold shines amid uncertainty, The World Bank, https://blogs.worldbank.org/en/opendata/gold-shines-amid-uncertainty

[12] Air Cargo Market Analysis – Trans-Pacific Strength Anchors Global Cargo Expansion,  IATA, https://www.iata.org/en/iata-repository/publications/economic-reports/air-cargo-market-analysis-may-2026/

[13] Air Freight Market Update April 2026, The Bertling Group, https://www.bertling.com/news-pool/market/air-freight-market-outlook-april-2026/

[14] P. Menon, P. Mathur, Iran war chokes petrochemical supply, Reuters, https://www.reuters.com/business/energy/iran-war-chokes-petrochemical-supply-sends-plastic-prices-soaring-2026-03-26/

[15] BIMCO, Shipping Market Overview & Outlook reports, https://www.bimco.org/news-insights/market-analysis/shipping-market-overview-and-outlook/2026/20260923-smoo-container/

[16] A.Tullo, Iran war will debilitate petrochemicals for the rest of 2026, https://cen.acs.org/business/Iran-war-debilitate-petrochemicals-rest/104/web/2026/04