Texas Instruments Inc’s shares declined the most in nearly five years on Friday after the chipmaker gave a disappointing earnings forecast for the current period, hurt by still-sluggish demand and higher manufacturing costs.
Profit will be US$0.94 to US$1.16 a share in the first quarter, the company said in a statement on Thursday. The midpoint of that range, US$1.05 a share, was well below the US$1.17 that analysts projected on average.
Much of the electronics industry remains mired in a slump — contributing to nine consecutive quarters of sales declines at the company.
Photo: Bloomberg
Manufacturing expenses also have affected profit, Texas Instruments executives said.
Texas Instruments gets the biggest portion of its sales from manufacturers of industrial equipment and vehicles, making its projections a bellwether for much of the global economy.
Three months ago, executives said some of the company’s end markets were showing signs of emerging from an inventory glut, but the rebound has not come as quickly as some investors anticipated.
The company’s shares fell 7.5 percent to US$185.52 in New York on Friday. That wiped out the stock’s entire gain this year and marked the worst single-day rout since the early days of the COVID-19 pandemic in March 2020.
Texas Instruments CEO Haviv Ilan on a conference call with analysts on Thursday said that industrial demand remains slow.
“Industrial automation and energy infrastructure still haven’t found the bottom,” he said.
In the automotive segment, growth in China was not as strong as it has been, meaning it cannot offset the expected weakness in other parts of the world.
“We haven’t seen the bottom yet — let me be clear,” Ilan said, although the company is seeing “points of strength.”
Sales would be US$3.74 billion to US$4.06 billion in the first quarter, Texas Instruments said, compared with an estimate of US$3.86 billion.
In contrast with the disappointing forecast, December quarter results handily beat analysts’ estimates. Although sales fell 1.7 percent to US$4.01 billion, analysts had projected US$3.86 billion. Profit was US$1.30 a share, compared with a prediction of US$1.21 per share.
Texas Instruments is the biggest maker of chips that perform simple but vital functions in a broad range of electronic devices. It is also the first large US chipmaker to report numbers in the current earnings season.
Chipmakers in other parts of the world have offered a mixed picture of demand for their products. Taiwan Semiconductor Manufacturing Co (台積電), Samsung Electronics Co and SK Hynix Inc have pointed to continuing strength in data center products — helped by the artificial intelligence boom. However, overall growth is still hampered by downturns in other markets, such as smartphones and personal computers.
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