Texas Instruments Forecasts Disappointing Earnings, Weighing on Chip Industry
Texas Instruments (TXN) issued a below-estimate earnings forecast for the first quarter, indicating ongoing challenges in the semiconductor industry due to weak demand and increased production costs.
Key Earnings Data:
* Q1 Revenue: $3.74B - $4.06B (est. $3.86B)
* Q1 EPS: $0.94 - $1.16 (est. $1.17)
* Q4 Revenue: $4.01B (est. $3.86B)
* Q4 EPS: $1.30 (est. $1.21)
Factors Impacting Earnings:
* Sluggish chip demand in industrial and auto markets, accounting for 70% of TI's revenue
* Higher costs associated with factory expansion
Industry Outlook:
* Texas Instruments' results reflect a broader industry slump, marked by nine consecutive quarters of sales declines
* Mixed demand outlook from other chipmakers, with strength in data center products offset by weakness in smartphones and PCs
Company Strategy:
* Aggressive expansion and upgrade of US facilities to reduce long-term costs and compete with Chinese rivals
* Focus on producing analog and embedded processors, which require less advanced production technology than AI-specific chips
Market Reaction:
* TI shares fell 3% in after-hours trading
* Shares had gained 7% year-to-date prior to the earnings announcement