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.
Taiwan’s technology protection rules prohibits Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) from producing 2-nanometer chips abroad, so the company must keep its most cutting-edge technology at home, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. Kuo made the remarks in response to concerns that TSMC might be forced to produce advanced 2-nanometer chips at its fabs in Arizona ahead of schedule after former US president Donald Trump was re-elected as the next US president on Tuesday. “Since Taiwan has related regulations to protect its own technologies, TSMC cannot produce 2-nanometer chips overseas currently,” Kuo said at a meeting of the legislature’s
TECH WAR CONTINUES: The suspension of TSMC AI chips and GPUs would be a heavy blow to China’s chip designers and would affect its competitive edge Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is reportedly to halt supply of artificial intelligence (AI) chips and graphics processing units (GPUs) made on 7-nanometer or more advanced process technologies from next week in order to comply with US Department of Commerce rules. TSMC has sent e-mails to its Chinese AI customers, informing them about the suspension starting on Monday, Chinese online news outlet Ijiwei.com (愛集微) reported yesterday. The US Department of Commerce has not formally unveiled further semiconductor measures against China yet. “TSMC does not comment on market rumors. TSMC is a law-abiding company and we are
FLEXIBLE: Taiwan can develop its own ground station equipment, and has highly competitive manufacturers and suppliers with diversified production, the MOEA said The Ministry of Economic Affairs (MOEA) yesterday disputed reports that suppliers to US-based Space Exploration Technologies Corp (SpaceX) had been asked to move production out of Taiwan. Reuters had reported on Tuesday last week that Elon Musk-owned SpaceX had asked their manufacturers to produce outside of Taiwan given geopolitical risks and that at least one Taiwanese supplier had been pushed to relocate production to Vietnam. SpaceX’s requests place a renewed focus on the contentious relationship Musk has had with Taiwan, especially after he said last year that Taiwan is an “integral part” of China, sparking sharp criticism from Taiwanese authorities. The ministry said
US President Joe Biden’s administration is racing to complete CHIPS and Science Act agreements with companies such as Intel Corp and Samsung Electronics Co, aiming to shore up one of its signature initiatives before US president-elect Donald Trump enters the White House. The US Department of Commerce has allocated more than 90 percent of the US$39 billion in grants under the act, a landmark law enacted in 2022 designed to rebuild the domestic chip industry. However, the agency has only announced one binding agreement so far. The next two months would prove critical for more than 20 companies still in the process