Texas Instruments Forecasts Q1 Earnings Below Estimates Amid Inventory Woes
Key Points:
* Texas Instruments (TI) projects first-quarter profits under analysts' predictions.
* Excess inventory in automotive and industrial markets hinders semiconductor sales.
* Shares decline in extended trading as investors anticipate a rebound in the analog chip market.
Inventory Challenges
* Prolonged chip inventory buildup during the pandemic continues to impact orders and revenue.
* Automotive and industrial markets have not fully depleted existing chip stockpiles.
* CEO Haviv Ilan acknowledges that these sectors have yet to "see the bottom."
Financial Performance
* Q4 revenue from automotive and industrial markets declines sequentially.
* Revenue in the analog segment grows 2%, ending a streak of consecutive quarterly declines.
* CEO Ilan projects Q1 earnings between $0.94 and $1.16 per share, below analysts' estimates of $1.17.
Elevated Inventory and Profitability
* High inventory levels lead to reduced factory loadings, affecting gross margins.
* Analyst Kinngai Chan predicts underutilized factories and near-term margin impact.
* Inventory at the end of Q4 stands at $4.5 billion, an increase of $231 million.
Regulatory Environment
* TI has not received any notifications of investigations by China's commerce ministry.
* Beijing has launched an investigation into U.S. government subsidies for the semiconductor sector.