Texas Instruments Inc, the second-biggest US chipmaker, said sales and profit would be at the upper end of earlier targets, buoyed by demand for industrial machinery.
Second-quarter profit will be US$0.60 to US$0.64 per share on sales of at least US$3.45 billion, the Dallas-based company said on Tuesday in a statement. That compares with April predictions of US$0.56 to US$0.64 a share on revenue of at least US$3.31 billion.
Texas Instruments is the biggest producer of analog chips, which go into everything from automobiles to digital cameras, making its earnings an indicator of demand for electronics. The company has struggled to keep up with orders, limiting its ability to increase earnings.
It’s now better able to boost output, said Tristan Gerra, an analyst for Robert W Baird & Co.
SUPPLY ISSUES
“For the first time in several quarters, they’ve been able to address their supply issues,” said the Milwaukee-based analyst, who has an outperform rating on the stock and doesn’t own it. “There is a catch-up effect from the first quarter.”
Analysts had estimated second-quarter earnings of US$0.61 a share and revenue of US$3.47 billion on average, according to a Bloomberg survey.
“We are seeing some pretty broad-based strength,” vice president Ron Slaymaker said in a conference call.
He downplayed concerns that European demand was slowing, saying orders there were keeping pace with other regions.
Sales from industrial companies grew faster than those from other sectors, he said.
While lead times — the time between receiving orders and fulfilling them — are shortening, that’s due to an increase in output, not weakening demand, Slaymaker said.
Under CEO Rich Templeton, the company is exiting the market for digital signal processors that manage the radio functions in mobile phones — an area it once dominated. Qualcomm Inc now leads in that field.
Sales in that market will be little changed from the first quarter, Slaymaker said.
WIRELESS CHIPS
Total sales of wireless chips will rise, lifted by demand for applications processors — the chips that power operating systems in phones.
Texas Instruments is focusing more on analog chips, where it expects to win more orders and grow faster. The company ranked second to Intel Corp among US chipmakers in total sales last year.
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