Europe’s chipmakers suffer through prolonged downturn

The downturn in the industrial and automotive semiconductor market is proving more resilient than expected. It started in Q2 2023 and was thought to run on its last legs a year later, when customers had burned through most of the stockpiles they had built up after the pandemic shortages. There was even talk about another bout of chip supply constraints as demand rebounded. And then the wheels came off. A sales slump of electric vehicles in the US and Europe hit especially hard.

After surveying the financial reports of Europe’s major semiconductor firms, which specialize in these markets, it’s clear that the end is not in sight. The Q1 9-percent sequential sales drop guided by NXP is actually “kind of okay” considering seasonality, CEO Kurt Sievers said, but he declined to look further ahead. “There are so many unknowns that we could only get it wrong,” he told analysts. The announced 5-percent reduction of NXP’s workforce speaks volumes, however.