European chipmakers play down reliance on iPhone production

FE Team | Published: November 19, 2018 23:25:26

BARCELONA, Nov 19 (Reuters): European chipmakers tried to play down market concerns about a potential slowdown in global demand at an investor conference in Barcelona this week, striking an upbeat tone on orders from car and smartphone makers.
Recent price falls due to weaker demand for memory chips and a build-up of inventory levels have led some analysts to note the risk of a potential downturn in the global semiconductor industry.
U.S.-based Nvidia became the latest semiconductor maker to warn on sales, blaming unsold chips piling up with distributors and retailers after the evaporation of a cryptocurrency mining boom, which had fuelled demand for processing power.
Chip gear maker Applied Materials also gave a disappointing forecast, adding to a drag on semiconductor shares. Fears of a possible heightening of the trade war between China and the United States, which could hit the sector, has weighed on the shares of STMicroelectronics, Infineon and Dialog Semiconductor, whose executives attended Morgan Stanley's TMT conference in Barcelona.
While industry executives acknowledged that business was under pressure, they also saw new sources of demand in areas such as electric cars and smartphones.
"The visibility is not really great," STMicro's new boss Jean-Marc Chery told the conference, with reference to microcontrollers.
"We have seen an inventory correction in the third quarter and we confirm that the fourth quarter will still see this correction," he added. "The only thing I can tell you is that I don't see the economy collapsing."
Franco-Italian STMicro supplies 3D sensors for iPhone models. Its shares rose at the start of 2018 on upbeat investor expectations about demand from Apple, but they have now fallen by a third this year. STMicro's shares were down 1.5 per cent on Friday as its peers also fell after Nvidia's disappointing forecast.
Still, Chery said STMicro was working on expanding its customer base to Android smartphone makers, which could potentially boost sales for its sensors.
The chief executive of Anglo-German rival Dialog, which supplies power management products found in many Apple products, said the outlook for the chip market, including for the smartphone business and its implications for 3D sensors, was constantly changing.