By Mauro Orru
Semiconductor companies in Europe will likely report a solid set of results for the April-through-June quarter as demand for chips in cars and industrial equipment showed signs of improvement in recent months. However, the specter of tariffs hangs on the sector as President Trump's administration conducts an investigation that could usher in specific levies for chips. Here is what you need to know:
WHAT TO WATCH:
-- DEMAND: Chip makers have been agonizing for months over weak demand from automotive and industrial clients even as orders for chips to power the data centers behind the artificial-intelligence boom continued to surge.
A slow rollout of electric vehicles and fierce competition from Chinese rivals upended the auto industry. Many car makers and producers of industrial machinery had also stockpiled chips years ago, resulting in fewer orders for semiconductor companies in recent quarters.
Now, there are signs demand might be coming back. STMicroelectronics Chief Executive Jean-Marc Chery said at an event in June that the company would deliver at least the mid-point of guidance in the second quarter and that a recovery in demand would also benefit the third quarter unless trade tensions get in the way.
Barclays Capital analysts wrote in a note to clients that STMicroelectronics and German rival Infineon Technologies are likely to beat forecasts for the April-through-June quarter as clients might have rushed to place orders ahead of potential tariffs on the sector.
Infineon is expected to raise guidance for the fiscal year to the end of September, UBS analysts wrote in a research note, saying demand for chips in vehicles and industrial equipment recovered more than expected.
-- TARIFFS: Earlier this year, the Trump administration opened a new investigation under Section 232 of the Trade Expansion Act of 1962 that could result in specific tariffs for semiconductors. Meanwhile, the president said the U.S. would charge a 30% tariff on goods from the European Union effective Aug. 1 as negotiations between Brussels and Washington continue.
The Section 232 investigation is likely to bring in unhelpful tariffs, risks of retaliation and major uncertainty for the industry, Barclays Capital analysts said. European semiconductor companies have high exposure to the U.S.
ASML Holding sells its semiconductor-making machinery to Intel. STMicroelectronics counts Apple and Elon Musk's Tesla among its largest customers, with the iPhone maker representing 14.5% of STMicroelectronics' total revenue last year, according to the company's 2024 financial report.
WHEN COMPANIES ARE SCHEDULED TO REPORT:
-- ASML: July 16
-- ASM International: July 22
-- BE Semiconductor Industries: July 24
-- STMicroelectronics: July 24
-- Siltronic: July 29
-- Ams-Osram: July 31
-- Infineon: Aug 5
Write to Mauro Orru at mauro.orru@wsj.com
(END) Dow Jones Newswires
July 14, 2025 05:17 ET (09:17 GMT)
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