Munich Semiconductor stock prices have plummeted since peaking in the fall. But now investors are taking new courage. Business is going better than expected for many manufacturers, as the latest quarterly figures show.
“Demand is still strong,” said Jean-Marc Chery, head of STMicroelectronics, this Thursday. The works of the French-Italian chip manufacturer are busy. Nothing will change about that. The capacities are sold out for the next one and a half to two years. This is also remarkable because the group is investing more money in new equipment and additional plants than ever before.
For the current quarter, Chery promises a sales increase of one third. And for the full year, the CEO now expects sales of up to $16.2 billion.
That’s almost a billion more than he had previously forecast. The reasons for this are higher prices, larger quantities and an advantageous product mix.
Investors were relieved. The share price of STMicroelectronics in Paris climbed by three percent to 36 euros by midday. The minus compared to last autumn is still around 20 percent. Since the beginning of July, however, it has risen again by around 30 percent.
Texas Instruments exceeds expectations
In addition to STMicroelectronics, other chip manufacturers are also confident. Example Texas Instruments: In the past two boom years, the group has always warned against euphoria.
Just now, when investors fear the crash, the eighth largest semiconductor manufacturer in the world is optimistic. TI expects sales of between $4.9 and $5.3 billion in the current quarter. At the top of the forecast, that’s 400 million more than analysts had previously expected.
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According to CFO Rafael Lizardi, business with industrial customers and vehicle manufacturers is particularly encouraging. The car division grew by a fifth in the second quarter. The statements carry weight, and Texas Instruments is seen as an indicator of the state and prospects of the industry. The group probably has the broadest product portfolio. Texas Instruments serves more than 100,000 customers – from car manufacturers to washing machine brands.
The Americans spread confidence. “Eventually there will be a recession, maybe this year or next, or 2025,” Lizardi said. “But we’ll take care of that when the time comes.”
Texas Instruments’ share price climbed a good six percent on Wednesday after the quarterly figures were published. Now the papers are still almost 15 percent below the all-time high from autumn.
However, investors’ concerns are not entirely unfounded. “The market is weak,” says Gartner analyst Richard Gordon. The expert has just halved its sales forecast for the chip industry for the current year. He now expects a seven percent increase. Next year, revenues would drop by a good two percent.
However, not all chip companies are equally affected by the weaker business trend. NXP, for example, is growing rapidly and sees no end to the upswing. In the second quarter, the Dutch group’s revenues rose 28 percent to $3.31 billion. CEO Kurt Sievers thus exceeded analyst estimates.
For the current quarter, the manager promises an increase in sales of around a fifth. Despite the global economic headwind, NXP is developing well, said Sievers at the beginning of the week. “Customer demand in the automotive and industrial and IoT end markets continues to exceed our incrementally improving supply.”
The CEO is also optimistic in the long term. Sievers assumes that the car chip business will grow by an average of 13 percent annually up to 2030. In the second quarter, auto revenue shot up by more than a third. NXP generates half of its sales in this area, making it one of the fiercest rivals of the Munich-based Dax group Infineon. NXP shares have gained around five percent in value after the presentation of the latest results.
PCs and smartphones down
However, not all providers are confident. The memory chip producers are suffering from the downturn in PCs and smartphones. SK Hynix sales increased by 34 percent to the equivalent of 10.4 billion euros in the second quarter.
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In the near future, however, business will cool down because consumers are spending less on consumer electronics, the world’s second-largest memory chip manufacturer announced. “Market growth this year will be much lower than our expectations at the beginning of the year,” warned Marketing Director Kevin Noh. The group will therefore invest less next year than planned.
According to Gartner, the PC business slumped in the second quarter more than it had in nine years. The computer manufacturers have therefore delivered 13 percent fewer devices. Smartphones are also left lying around in stores more often. These are the most important markets for the leading memory chip manufacturers Samsung, SK Hynix and Micron.
The smartphone lull also affects the leading cell phone chip provider Qualcomm. “The market will probably be smaller than we originally expected,” said CEO Cristiano Amon on Wednesday evening. Sales in the current quarter will reach a maximum of 11.8 billion dollars, around 100 million less than analysts had predicted.
ASML fears no slump
Not a single customer has so far canceled an order, emphasized Peter Wennink, head of the chip machine manufacturer ASML. Memory chip producers such as SK Hynix would also take away all the equipment. “They tell us: We want the equipment.”
He is firmly assuming that ASML will deliver more systems next year than in 2021. The group has orders of over 33 billion euros on its books, which corresponds to one and a half times the sales forecast for this year.
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