Texas Instruments Inc on Wednesday gave a revenue forecast for the current period that disappointed some investors, raising concerns that a jump in chip demand caused by the COVID-19 pandemic would be short-lived. The stock fell in extended trading.
The company projected sales of US$4.4 billion to US$4.76 billion for the period ending in September, and profit of US$1.87 to US$2.13 a share, it said in a statement.
On average, analysts predicted sales of US$4.59 billion and profit of US$1.97 a share, data compiled by Bloomberg showed.
Like other chipmakers, Texas Instruments has posted multiple quarters of double-digit percentage sales growth, boosted by demand for a wide variety of devices that contain its tiny components.
The rapid run-up has caused speculation among analysts and investors that some of the orders reflect panic buying by customers who have grown anxious they would not be able get enough supply. Such behavior in the past has caused crashes.
The Dallas, Texas-based company has tens of thousands of products and more than 100,000 customers that make everything from phones to military hardware. That reach as the largest manufacturer of analogue and embedded processing chips makes the company a bellwether for electronics demand. A large chunk of its products go into industrial machinery.
Texas Instruments’ management said the amount of in-house inventory fell to 111 days in the quarter, well short of the 130 to 190 days the company likes to have on hand. Lead times have stretched for an increasing number of products.
Despite numerous questions on a conference call with analysts, management declined to say whether it thought demand is peaking or whether growth at the current levels is sustainable.
“Our job isn’t to predict the future, it’s to prepare the company so we can handle anything and we’ve done that,” chief financial officer Rafael Lizardi said in an interview. “Some would argue that this time it’s different, but that’s a dangerous argument.”
Lizardi added that Texas Instruments’ high level of in-house manufacturing made the company more nimble in responding to the increase in demand.
When competitors cut production last year, the company increased output and built inventory. Many chipmakers outsource large amounts of their manufacturing, and some have never owned a plant of their own. Texas Instruments has factories that provide about 80 percent of its own needs.
In the second quarter, net income rose to US$1.93 billion, or US$2.05 per share, from US$1.38 billion, or US$1.48 a share, a year earlier. Revenue increased 41 percent to US$4.58 billion.
Analysts, on average, estimated US$4.36 billion.
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