By Mauro Orru
Semiconductor companies in Europe pointed to growing appetite for artificial intelligence in recent months, a development that stands in stark contrast with sluggish demand for chips in electric vehicles and industrial machinery. Analysts anticipate the divergence in demand between AI and other end-markets will continue to be a theme when companies report earnings for the last quarter of 2024. Here is what you need to know:
WHAT TO WATCH:
--Taiwan Semiconductor Manufacturing Co., the world's largest contract chip maker, last week reported strong fourth-quarter results and guided for robust sales growth this year amid strong AI demand. TSMC also guided for spending between $38 billion and $42 billion this year, a closely watched range by analysts and investors in European semiconductor stocks since TSMC buys equipment from the likes of ASML Holding.
Jefferies analysts expect the Dutch semiconductor-equipment maker to post orders of 3.6 billion euros ($3.75 billion) for the fourth quarter, they wrote in a note to clients. They anticipate ASML's orders will climb to a range of 5 billion euros to 6 billion euros from the first quarter of 2025, citing an increase in bookings from TSMC as well as the prospect that Samsung Electronics might soon be able to supply its high-bandwidth memory chips to Nvidia as potential boosts for ASML.
--Newsflow in the AI supply chain continues to be positive, JPMorgan analysts pointed out in a research note, but high inventories at auto companies could continue to weigh on demand for chip makers. "The data shows that the biggest risk to semiconductor companies from high inventories is from auto parts vendors," they said.
Car makers and suppliers have cut spending on chips because they stockpiled the semiconductors they needed years back. That meant semiconductor companies with exposure to the automotive sector like Infineon Technologies and STMicroelectronics have been grappling with lackluster demand lately.
--Analysts and investors will look at what guidance semiconductor companies will set for 2025, along with any remarks from executives on how demand played out in the last quarter of 2024. JPMorgan analysts expect non-AI end markets to remain mixed into the first half of the year, with a slow recovery in the automotive and industrial sectors, before picking up in the second half.
ASML already set and recently cut its sales forecasts for 2025, saying that some areas of the semiconductor industry aside from AI were taking longer than expected to recover. The company is currently forecasting between 30 billion euros and 35 billion euros in sales this year. Barclays Capital analysts now expect ASML to guide for the lower end of its 2025 sales forecasts, they wrote in a note to investors.
Infineon also set guidance for the year to the end of September, projecting that sales will fall slightly from the 14.96 billion euros it reported for fiscal 2024. The company factored in expected declines at its automotive and green industrial power businesses this fiscal year.
WHEN COMPANIES ARE SCHEDULED TO REPORT:
--ASML: Jan. 29
--STMicroelectronics: Jan. 30
--Infineon: Feb. 4
--Siltronic: Feb. 4
--Ams-Osram: Feb. 11
--BE Semiconductor Industries: Feb. 20
--ASM International: Feb. 25
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
January 22, 2025 06:59 ET (11:59 GMT)
Copyright (c) 2025 Dow Jones & Company, Inc.
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