In recent weeks, several prominent semiconductor manufacturers based overseas have released their quarterly financial reports, revealing a mixed landscape for the industryThe surge in demand for computing power driven by artificial intelligence has spurred some growth for specific companies, yet for others with broader product lines, overall demand in the semiconductor market remains tepidNotable players such as NXP Semiconductors, Infineon Technologies, Texas Instruments, and STMicroelectronics have all reported declines in revenue for the latest quarter.

Analyzing the performance of these manufacturers highlights a general weakness in demand within automotive and industrial semiconductor marketsHowever, when examining revenue figures from various regions, the demand emerging from China appears to be relatively stable amidst an otherwise sluggish market.

These companies—NXP, Infineon, Texas Instruments, and STMicroelectronics—are recognized as leading Integrated Device Manufacturers (IDMs), operating across various segments of semiconductor design and production

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Their diverse product offerings include automotive and industrial semiconductors, making their performance particularly indicative of trends in major subsectors of the semiconductor industryTexas Instruments, for example, has its financial performance regarded as a bellwether for the overall health of the semiconductor market.

From the latest financial disclosures, the semiconductor market's weakness is expected to continue through the fourth quarter of 2024. NXP, Texas Instruments, and STMicroelectronics all reported net profit declines of double-digit percentages year-over-year for that quarterNXP achieved revenues of $3.11 billion—a 9% drop—while its GAAP net profit fell 29% to $495 millionTexas Instruments recorded $4.01 billion in revenue, down 2%, and net profit of $1.21 billion, a 12% decreaseSTMicroelectronics reported revenue of $3.32 billion, a decrease of 22.4%, and net profit plunging 68.4% to $341 million.

In the first quarter of the fiscal year 2025, which ended on December 31, 2024, Infineon recorded revenues of €3.424 billion, a decline of 7.5% year-over-year, with segment results also diminished, reporting €573 million, a decrease of 31%.

Examining the full-year performance for 2024, the results from these IDMs reflect similar sluggishness

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Texas Instruments reported annual revenues of $15.641 billion and net profits of $4.799 billion, down 10.7% and 26%, respectivelyThis marked a noteworthy decline for Texas Instruments, mirroring similar dips in revenue and profits in 2023.

Meanwhile, STMicroelectronics faced consistent revenue declines over the initial three quarters of 2024, with NXP experiencing similar downturns in the second and third quartersFor the full year, STMicroelectronics reported total revenues of $13.27 billion and net profits of $1.56 billion, down 23.2% and 63%, while NXP’s revenues reached $12.61 billion, with GAAP net profits down 10.3% to $2.51 billion.

Despite these declines, there are mixed signals from the IDMs regarding future quartersSome of these companies appear to leave the door open for potential improvement in the semiconductor market, indicating localized recovery in certain segments

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NXP anticipates Q1 2025 GAAP revenue between $2.725 billion and $2.925 billion, a median of $2.825 billion, reflecting a drop of about 10%, slightly below analysts' expectationsSTMicroelectronics expects revenues around $2.51 billion for the same quarter, down approximately 27.6% year-over-year and 24.4% sequentially.

Texas Instruments forecasts its first quarter revenues to range between $3.74 billion and $4.06 billion, higher than the prior year’s revenue of $3.661 billion.

Looking ahead at Infineon’s projections, they anticipate revenues of approximately €3.6 billion for Q2 of 2025, depending on the exchange rate of euro to the dollar at 1:1.05, which aligns closely with the previous year’s Q2 revenues of €3.632 billionInfineon foresees stable or slightly increased overall revenue, driven mainly by growth in its automotive and connected secure systems segments, while their green industrial power segment is expected to show significant decreases.

Jochen Hanebeck, CEO of Infineon, stated that demand is anticipated to gradually improve as inventory adjustments are finalized

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The rising prominence of artificial intelligence applications has positively influenced demand for Infineon’s AI data center power solutions.

The current quarter's weaknesses in demand primarily stem from the automotive and industrial sectors, which serve as crucial revenue sources for these semiconductor manufacturersWeak performance in these categories signals that a strong recovery may not yet be underwayIn 2024, NXP's automotive business contributed over half of its total revenue, with its industrial and IoT segments following closely behindSimilarly, industrial and automotive sectors account for approximately 70% of revenues for both Texas Instruments and STMicroelectronics.

In the first quarter of fiscal 2025, automotive and green industrial power revenues made up over 60% of Infineon's total income

The persistent weakness in these business segments has resulted in poor performance across the board among several semiconductor firmsFor instance, in 2024, NXP reported a 4% decline in automotive revenues and a 3% decrease in its industrial and IoT segments, whereas its mobile device segment saw a notable rise of 13%. In the fourth quarter specifically, automotive revenues fell by 6%, and industrial and IoT revenues plunged by 22% year-over-year.

For 2024, STMicroelectronics faced a staggering 49% drop in industrial product revenues, accompanied by declines of 14% and 11% in automotive and personal electronics segments, respectivelyDuring a quarterly earnings call, Texas Instruments' CEO Haviv Ilan noted that while the industrial market seems to be nearing a bottom, subsegments like industrial automation and energy infrastructure have yet to hit their low point.

In the first quarter of fiscal 2025, Infineon's automotive segment declined by 11% quarter-over-quarter, primarily due to inventory adjustments by customers

Concurrently, revenue from Infineon's green industrial power segment saw a substantial quarter-over-quarter decline of 32%, continuing to reflect a challenging market environmentThe power and sensor systems segment also experienced a decline of 5%, where despite an uptick in revenues linked to AI products in servers and data centers, other product lines remained static or slightly decreased.

Regarding the future trajectory of automotive and industrial market demands, Jean-Marc Chery, President and CEO of STMicroelectronics, expressed that the company would continue to face headwinds linked to industrial recoveries and delayed inventory adjustments, in addition to a slowdown in automotive demand growth.

In light of these pressures, recent reports indicated that NXP is preparing for potential layoffs, possibly cutting approximately 1,600 positions globally, which accounts for less than 5% of the company's total workforce

Chery mentioned that STMicroelectronics is exploring cost-cutting measures and plans to propose early retirement schemes to certain employees, engaging in discussions with employee representatives regarding a voluntary separation plan.

Moreover, there are rumors that STMicroelectronics may consider workforce reductions at its facilities in France and Italy, with potential cuts reaching up to 6%.

Nevertheless, the earnings reports and conference calls from these semiconductor firms have also highlighted some positive developments, particularly regarding the stability of demand emerging from the Chinese market, which appears to be performing better compared to other international marketsIn the first quarter of fiscal 2025, while revenues from the Americas, Japan, and Europe, the Middle East, and Africa experienced double-digit percentage declines, the Asia-Pacific region and Greater China reported growth

Specifically, revenue from the Greater China region amounted to €1.342 billion, reflecting a year-over-year increase of 1.4%.

During earnings calls, NXP management noted that the Asian markets, particularly China, showed strong performance in the fourth quarter, contrasting with the challenges faced by European and American markets due to inventory adjustments and weak demandThese trends are expected to persist into the next quarter, with the Chinese market perceived as more stable than those in Europe and AmericaHaviv Ilan emphasized the revenue growth from the Chinese market, noting the healthy overall performance driven chiefly by automotive and consumer semiconductor sectors.

Market research firm TechInsights has reported that the automotive semiconductor industry is projected to face a revenue reduction of $6.4 billion due to inventory accumulation