Texas Instruments Inc on Tuesday provided a sales outlook that signals an inventory glut is coming to an end, reassuring investors that a revival is underway in key markets for the company’s chips.
The company’s forecast stoked optimism that orders may now be on the rise and helped counter fresh concern caused by peer NXP Semiconductors NV, which on Monday gave projections that fell well short of estimates.
Texas Instruments chief executive officer Haviv Ilan said that China, which is the largest market for semiconductors, has returned to growth after its electronics makers finished drawing down their stockpiles of unused components. Europe and Japan are still in the early phase of that process, Ilan said.
Photo: Mike Blake, Reuters
Within the company’s industrial segment, about half of the markets are still working through inventory while others have returned to increasing orders, he said.
“It was a good quarter for our China business,” Ilan said on a conference call. There were “very distinct signals that customers have worked down their inventory.”
The company projected sales in the period ending in September will be US$3.94 billion to US$4.26 billion. Analysts, on average, estimated US$4.14 billion, according to data compiled by Bloomberg.
Profit will be US$1.24 to US$1.48 a share, Texas Instruments said in a statement, compared with an average projection of US$1.38.
Still, the Dallas-based company is sticking to its policy of not predicting when the market for chips will pick up overall. The current cycle is unusual in that different areas and geographies are behaving differently, chief financial officer Rafael Lizardi said.
The projected sequential improvement in revenue during the current quarter is being driven by electronics makers preparing for the end-of-year holiday shopping season, he said.
Texas Instruments’ factories are running at closer to full capacity and inventory remains roughly flat, Lizardi said. Executives added that the company is able to fill most orders as soon as it receives them — an indication that supply and demand are roughly in balance.
Separately, Elliott Investment Management LP, which in May took a US$2.5 billion position in Texas Instruments and expressed concern about the company’s increased spending on new plants, reversed course and praised Ilan’s comments on the call.
“We appreciate the constructive dialogue that we have established with Texas Instruments, and we believe the steps announced today will support long-term value creation for all of its shareholders,” Elliott said in a statement.
In the second quarter, the company’s revenue declined 16 percent to US$3.82 billion, marking the seventh consecutive contraction. Analysts projected US$3.82 billion. Profit was US$1.22 a share, compare with an estimate of US$1.16.
Texas Instruments has the widest customer base and biggest product range among chipmakers, so the company’s results and forecasts act as an indicator of demand across a variety of industries. The majority of its chips go into industrial and automotive applications.
It is the biggest maker of analog semiconductors and embedded processors. Its products perform simple but vital functions, such as converting power to different voltages within electronics.
The company is spending heavily on new plants, an effort to bring most production back in house, but weighing down its profit in the meantime. Texas Instruments has said that effort, when complete, will give it a cost advantage over rivals. The company will continue with that plan, it said on Tuesday.
Restaurant chain Din Tai Fung (鼎泰豐) today announced it is to close 14 stores in northern China, completely exiting the market by the end of October. Beijing Hengtaifeng Catering Co (北京恆泰豐餐飲), which operates Din Tai Fung restaurants in northern China, said its 20-year operating license expires this year. As the board was unable to reach a consensus on continuing operations, its 14 restaurants in the region are to close by Oct. 31, it said. The company apologized for the inconvenience and disappointment the news would cause among its customers, and said it would provide compensation for its workers. “We continue to be optimistic about
EXPANDING: The European Commission has contributed 5 billion euros in state aid to TSMC’s 12-inch wafer fab in Dresden, Germany, which broke ground on Tuesday Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) on Saturday said that it has received a total of NT$62.5 billion (US$1.95 billion) in subsidies from China and Japan since 2022. In the first half of this year, TSMC received NT$7.96 billion in subsidies from China and Japan after receiving about NT$47.55 billion last year and obtaining NT$7.05 billion in 2022, financial data compiled by the world’s largest contract chipmaker showed. The company, which makes about 90 percent of the world’s high-end semiconductors, said the subsidies were used to finance its investments in Kumamoto, Japan, and Nanjing, China. TSMC owns a 12-inch wafer fab in
STRATEGIC SHIFT: Diversifying away from the volatile flat-panel industry, AUO aims to boost sales contribution from non-panel business to half of total revenue by 2027 AUO Corp (友達) yesterday said it has agreed to sell its idled manufacturing facility and land in Tainan to Micron Technology Inc for NT$7.4 billion (US$231.8 million) as the company shifts strategy to reduce the impact from the boom-and-bust flat-panel display industry. The company expects to book NT$4.17 billion in disposal gains from the sale, it said in a Taiwan Stock Exchange filing. The Tainan factory produced color filters used in monitors, notebook computers and flat-panel TVs before being shut down last year, as AUO sought to optimize its asset utilization. The company has been striving to diversify and broaden its business
Micron Technology Inc has reportedly set its sights on two facilities owned by flat-panel maker AUO Corp (友達) after Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) recently clinched a deal to buy a facility and equipment from Innolux Corp (群創), another major flat-panel maker. Micron, the world’s third-largest memorychip maker, is expected to purchase two AUO plants in Tainan to expand its advanced chip packaging and testing services and high-bandwidth memory production, local media reports said. The two plants were shut down in August last year and AUO is seeking to dispose of the facilities, the reports said. They are expected to cost Micron