EUROPEAN chipmakers tried to play down market concerns about a potential slowdown in global demand at an investor conference in Barcelona last week, striking an upbeat tone on orders from car and smartphone makers.

Recent price falls due to weaker demand for memory chips and a build-up of inventory levels have led some analysts to note the risk of a potential downturn in the global semiconductor industry.

U.S.-based Nvidia became the latest semiconductor maker to warn on sales, blaming unsold chips piling up with distributors and retailers after the evaporation of a cryptocurrency mining boom, which had fueled demand for processing power.

Chip gear maker Applied Materials also gave a disappointing forecast.

Fears of a possible heightening of the trade war between China and the United States, which could hit the sector, has weighed on the shares of STMicroelectronics, Infineon and Dialog Semiconductor, whose executives attended Morgan Stanley’s TMT conference in Barcelona.

While industry executives acknowledged that business was under pressure, they also saw new sources of demand in areas such as electric cars and smartphones.

“The visibility is not really great,” STMicro’s new boss Jean-Marc Chery told the conference.

“We have seen an inventory correction in the third quarter and we confirm that the fourth quarter will still see this correction,” he added. “The only thing I can tell you is that I don’t see the economy collapsing.”

Franco-Italian STMicro supplies 3D sensors for iPhone models. Its shares rose at the start of 2018 on upbeat investor expectations about demand from Apple, but they have now fallen by a third this year.

Still, Chery said STMicro was working on expanding its customer base to Android smartphone makers, which could potentially boost sales for its sensors.

The chief executive of Anglo-German rival Dialog, which supplies power management products found in many Apple products, said the outlook for the chip market, including for the smartphone business and its implications for 3D sensors, was constantly changing.

“It is a volatile market, so there will be change almost weekly in terms of the forecast for the rest of the quarter or into the following quarter,” Jalal Bagherli said. “For us, because of the broader base with this customer, it’s less of an issue.”

The automotive industry has also been a key driver of demand for semiconductors over the last few quarters. Industry executives said that trend would continue as carmakers use more and more electric components in a new generation of electric and autonomous vehicles.(SD-Agencies)