Semiconductors: Europe’s quiet comeback

• Enguerrand Artaz
  Strategist
  La Financière de l’Échiquier (LFDE)

Investors, however, have gradually shifted their focus to different vehicles for exposure to this sector. Gone are the tech giants – the famous ‘Magnificent Seven’ – which were so popular for years; now it is their suppliers’ turn, particularly those operating in the semiconductor and memory segments. This has fuelled the wild surge in the South Korean market, led by Samsung and SK Hynix, and the resurgence of former leaders such as Intel, whose share price has soared by nearly 500% in a year. But in the shadow of the American and Asian champions, another group is breaking records: European semiconductors!

With a 127% rise since the start of the year, the Stoxx Europe Total Market Semiconductors index easily outshines the 81% gain of its American rival, the famous Philadelphia Semiconductor or SOX^[1] . Within the European index, some performances are even more impressive. Did you like the Korean firm SK Hynix and its +246% rise since the start of the year? You’ll love the French firm Soitec and its +758%! Has Samsung soared by nearly 150% this year? STMicroelectronics, the Franco-Italian group, has surged by over 167%.

These performances are, in reality, misleading and stem less from a miraculous discovery than from a sharp catch-up. Before its return to favour, which began late last year, STMicroelectronics had in fact fallen by more than 60% from its summer 2023 levels, weighed down by its heavy exposure to a struggling automotive sector. The situation is even worse for Soitec, which had plummeted by 90% from its 2021 peak, against a backdrop of falling valuations and the fallout from its customers’ overstocking. The markets have therefore not suddenly discovered overlooked gems from the Old Continent. They have revalued – sharply and perhaps excessively – stocks that had almost been wiped off the map, only to suddenly realise that part of their business is crucial for the deployment of AI.

As for STMicroelectronics, the rebound does not erase the issues of margins and exposure to the automotive cycle. However, optical connectivity, power conversion and thermal infrastructure components – all technologies enabling data centres to communicate, be powered and better manage their energy consumption – are seen as key growth drivers. The case of Soitec is even more telling. Whilst short-distance connections within data centres – between servers, boards, GPUs and memory – are still largely electrical, they could gradually shift towards optical solutions, for reasons of energy costs, throughput and the risk of overheating. In this scenario, Soitec would be a key supplier upstream in the production chain, thanks to its technological lead in photonic substrates^[2] , which are key building blocks for enabling these optical connections.

We could also mention the German company Infineon, whose power chips help make data centre power supplies more efficient and easier to manage; or BE Semiconductor, a Dutch specialist in optimising chip and memory assembly, which helps reduce energy consumption and increase data throughput. Although it is largely overshadowed by the major stock market indices, which are struggling to keep pace with their American or Asian counterparts, European technology has nothing to be ashamed of when compared to its global competitors. 

Whilst the history of AI has long been shaped in the markets by a handful of names adored by investors, the latter are now realising that the semiconductor industry, on which AI’s growth depends, is far more complex and involves numerous critical dependencies. In 2026, the market is rediscovering that many of these still pass through Europe.

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^[1] All performance figures are shown on a dividend-reinvested basis, in local currency, and are as at 28 May 2026. 

^[2] A photonic substrate can be thought of as a printed circuit board, but for optical rather than electrical signals: an ultra-pure base plate, usually made of silicon, on which components capable of guiding, modulating or detecting light are fabricated.

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Disclaimers
These data and opinions from LFDE, as well as the securities and sectors mentioned, are provided for information purposes only and, as such, do not constitute an offer to buy or sell a security, investment advice or financial analysis. Past performance is not indicative of future results and is not consistent over time.