Tech

Apple supplier predicts strong consumer demand – and European chip stocks climb higher

Key Points
  • Apple supplier AMS reported an upbeat outlook for the third quarter citing  "supportive demand trends in the consumer market."
  • AMS shares rose as much as 9% on Tuesday.
  • European chipmakers STMicro, BE Semiconductor, ASML and Infineon Technologies traded between 2% and 3% higher on the back of the report.
Customers check the new iPhone X in London.
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European chip stocks traded higher Tuesday after Apple supplier AMS reported strong second-quarter sales and an upbeat outlook in its consumer business.

Shares of AMS, which provides 3D sensors for Apple's FaceID technology as well as for Android devices, surged as much as 9% after the company said it expects revenue to reach $600-$640 million in the third quarter from its second quarter current revenue of $415 million. The Austrian chipmaker said it expects growth will be driven by "high volume ramps for smartphone sensing solutions."

"The results reflect the strength of AMS' portfolio and more supportive demand trends in the consumer market," the company said in its earning release.

European chipmakers STMicro, BE Semiconductor, ASML and Infineon Technologies traded between 2% and 3% higher on the back of the report.

The PHLX Semiconductor Index ETF gained 2% on Monday after Goldman Sachs analysts upgraded three memory chip companies citing signs that demand will pick up. Chip stocks have been volatile in recent months amid ongoing trade tensions between the U.S. and China.

On Tuesday, the Wall Street Journal reported Apple is in advanced talks to buy assets from Intel's modem chip business, which is valued at $1 billion or more. The deal would mark a big step for Apple toward developing its own 5G devices.

Reuters contributed to this report

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Apple supplier AMS forecasts strong third quarter