Siemens AG’s CEO Roland Busch said Monday that the ongoing U.S.-Israeli war with Iran is causing customers to delay or cancel new industrial projects as prices for raw materials and energy climb sharply.
The conflict, now in its fourth week, has severely restricted shipping through the Strait of Hormuz, the critical chokepoint handling roughly 20% of global seaborne oil and a similar share of liquefied natural gas, and damaged major energy facilities across the Gulf.
“Growth is throttled because of price increases,” Busch told reporters on the sidelines of Siemens’ annual Tech Summit in Beijing. “You see customers holding back their investments. For example, oil and gas customers or petroleum customers who were planning maybe a new plant… so it means investments are slowing down.”
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Brent crude futures have risen 56% since the conflict began, pushing energy and feedstock costs higher across manufacturing sectors. Busch’s comments reflect a broader concern among industrial companies that prolonged supply disruptions and elevated prices could dampen capital spending well into 2026 and beyond.
The remarks came during an event where Siemens announced an expansion of its industrial AI partnership with Alibaba Cloud. The two companies will roll out 26 new services covering industrial infrastructure, automation, and AI-powered applications for Alibaba’s cloud customers.
Despite the deepening collaboration, Busch acknowledged persistent challenges in obtaining real-world factory data from Chinese partners due to intellectual property concerns.
“Most of our foundational models, they are so far trained on publicly available data, they haven’t seen industrial data yet,” he said. “This is a big step up to tune models.”
He added that Chinese regulations now permit industrial and machine data to cross borders under certain conditions, creating a pathway for more effective model training.
Busch also revealed that Siemens developers increasingly prefer Chinese open-source large language models, particularly those from Alibaba’s Qwen family and DeepSeek, over closed-source U.S. rivals for certain industrial AI tasks. The primary reasons are lower token costs and greater flexibility in customizing parameters.
OpenRouter’s public token-usage leaderboard shows that six of the top ten most widely used large language models worldwide are now Chinese. Industry estimates suggest around 80% of U.S. AI startups currently rely on Chinese open-source models for development work. Some Western think tanks have raised concerns about security risks and potential political bias embedded in these models, given their training data and origins.
The Siemens-Alibaba announcement underlines Europe’s deepening reliance on Chinese AI infrastructure as U.S. export controls limit access to advanced semiconductors and high-end compute. At the same time, Busch’s caution about investment slowdowns highlights how the Middle East conflict is rippling through global supply chains, raising input costs and clouding the outlook for industrial spending in 2026.
Siemens, like many European manufacturers, has been navigating higher energy prices and supply-chain disruptions since the Russia-Ukraine war began in 2022. The Iran conflict adds a fresh challenge, particularly for energy-intensive sectors such as chemicals, metals, and heavy machinery — all core to Siemens’ industrial automation and digitalization business.
The company’s assertion implies that while partnerships with Chinese tech giants offer access to low-cost AI tools and massive market potential, geopolitical risks and data-sharing restrictions continue to complicate the picture.
This means the path forward for Siemens involves balancing these relationships with efforts to secure reliable energy supplies and protect intellectual property in an increasingly fragmented global technology industry.
Like several other business leaders, Busch is warning that the conflict in the Middle East is no longer a distant headline: it is actively reshaping investment decisions across industrial Europe.