Chipmakers say Trump’s tariff threats cloud their outlooks

In a semiconductor industry that has been struggling with an oversupply of chips and weak demand, Infineon Technologies navigated its way through the turbulence and offered some hope for the future. At least for now.

The German company’s cautious guidance on Tuesday – that a favourable exchange rate and market share growth in China might lead to a slight uptick in revenue this year rather than a decline – sent shares surging the most in nine months.

Expectations were low after a series of disappointing results from competitors. Dutch chipmaker NXP Semiconductors, Franco-Italian rival STMicroelectronics and US-based Texas Instruments all missed analysts’ estimates as the industry slump drags on into its second year.

Infineon’s forecast, however, does not include any impact from a potential trade war. US President Donald Trump has threatened Mexico, Canada and China with tariffs that could impact automotive and electronics, the primary revenue sources for Infineon’s part of the chips industry.

Extra charges on goods moving between the trading partners may make electric vehicles more expensive and depress sales. They could also encourage electronics manufacturers in China to reduce inventory levels, according to Bloomberg Intelligence analyst Ken Hui.

Infineon Chief Financial Officer Sven Schneider said he is going into 2025 an optimist. “To be very clear, a major escalation of tariffs is not included in our guidance,” Schneider told Bloomberg Television on Tuesday. “Because we are still not giving up and advocating for free trade. An escalation of tariffs and counter-tariffs would be a negative.”