The lower the AI exposure, the bigger the problem for Europe's chip firms
Technology
The lower the AI exposure, the bigger the problem for Europe's chip firms
(Reuters) - Shares in European semiconductor firms less exposed to AI chips slumped on Thursday as falling demand from their key automotive and industrial clients hit business prospects, on top of a wider sector correction.
"The more high-end applications, linked to AI, those are doing much better," said ING analyst Marc Hesselink.
But even they aren't immune to a "correction" in stock valuations after strong rallies this year, coupled with worries around the impact of trade spats involving China, the US, and Europe, Hesselink added.
Shares in both ASML and ASMI were down about 3% in early afternoon trading.
Companies with less AI exposure meanwhile were hit harder by industrial clients and automakers cutting orders. Demand for electric vehicles has slowed sharply in Europe.
STMicroelectronics, which supplies Tesla, tumbled 14% after it cut 2024 sales and margin targets for a second time this year, as orders from industrial customers did not improve and automotive demand fell.
Germany's Infineon, a top automotive chip supplier, fell 6%.
Dutch company NXP Semiconductors earlier this week reported its worst decline in quarterly revenue in four years on weak demand from automotive customers, dragging down some U.S peers with auto exposure.
The sector's fundamentals remain strong, Hesselink said. Companies still hope that EV demand will be robust in the longer term.
Chip components related to EVs, particularly silicon carbide, will be a growth driver in the second half of the year, STMicro's CEO Jean-Marc Chery said in a conference call.
