The semiconductor sector is struggling, following poor signals from Samsung Electronics and Microchip. These announcements come at a time when research consultancies were generally of the opinion that the bottom of the cycle had been, or was about to be, passed.
STMicroelectronics and Infineon at -2%, Aixtron and Elmos at -2.5%, Nordic Semiconductor -5.4%. European semiconductor players are struggling to cope with bad sector news. Overnight, Korea's Samsung Electronics reported poor quarterly results. Last night, US group Microchip warned that its sales would fall short of expectations. It's been a difficult start to the year for European groups, with double-digit declines in 2024 for STMicroelectronics and Infineon.
The semiconductor sector is not, or is no longer, a homogeneous beast. Just take a look at the following graph to see for yourself: over two years, there's Nvidia and the rest of the world. In the previous sequence, manufacturers of industrial machines such as ASML stood out. But it's always the star Nvidia that leads the way, because it truly embodies AI, after having embodied the development of cryptocurrency mining.
STM under pressure from Microchip
Turning more specifically to STMicroelectronics at the start of the year, it's Microchip that weighs most heavily. "Microchip's business is in direct competition with STM's MDG division, which is a major contributor to the company's profits", points out Jefferies analyst William Beavington. The American company has warned that its customers and distributors have reduced deliveries due to the weakening economic environment and the need to reduce inventories. Revenues for the final quarter of 2023 are therefore expected to fall by 22%, against a contraction range previously estimated at "15 to 20%". Beavington fears that STM's MDG division will suffer in the first quarter of 2024, which explains why his expectations are 18% below consensus. In addition, he remains cautious about the automotive division, which doesn't help matters.
With over 48,000 creators and makers of semiconductor technologies mastering the semiconductor supply chain in state-of-the-art manufacturing facilities, STMicroelectronics N.V. is an integrated device manufacturer, working with more than 200,000 customers and thousands of partners to design and build products, solutions, and ecosystems that address their challenges and opportunities, and the need to support a more sustainable world. The Group's technologies enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of cloud-connected autonomous things.
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