The trade war rumbles on – but US chip makers are cautiously optimistic despite lingering soft demand
- Major US chip companies have moved on from trade war worries that had weighed heavily on business last year
- Soft orders seen continuing as China works through a glut of supply stretching back to last year
US semiconductor companies have grown cautiously optimistic that demand in China for their products will strengthen amid hopes that an end to the tariff battle between the US and the Asian nation may be in sight. But immediate soft demand continues to linger.
Executives from Intel, Qualcomm, ON Semiconductor and other chip makers that reported quarterly earnings in the past week have said in calls with Wall Street analysts that they have largely moved past trade war worries that had weighed heavily on their businesses a year ago.
But challenges remain, with soft orders seen continuing in the current quarter, the executives said, as China works through a glut of supply stretching back to last year.
“We saw a very opposite sentiment this week compared to last year,” Kevin Cassidy, an analyst at Stifel Financial, said on Thursday. “The general feeling is that the worst is over. Once trade issues are solved, we will be back on track and [earnings trajectories for] lots of US companies will point up.”
The sector has shown for the last six months that it is recovering. An equity benchmark for US-listed semiconductor stocks – BlackRock’s iShares PHLX Semiconductor Sector Index Exchange-Traded Fund – has surged 30 per cent since November after dropping 14.4 per cent between May and December as the trade battle heated up.