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.
The US dollar was trading at NT$29.7 at 10am today on the Taipei Foreign Exchange, as the New Taiwan dollar gained NT$1.364 from the previous close last week. The NT dollar continued to rise today, after surging 3.07 percent on Friday. After opening at NT$30.91, the NT dollar gained more than NT$1 in just 15 minutes, briefly passing the NT$30 mark. Before the US Department of the Treasury's semi-annual currency report came out, expectations that the NT dollar would keep rising were already building. The NT dollar on Friday closed at NT$31.064, up by NT$0.953 — a 3.07 percent single-day gain. Today,
‘SHORT TERM’: The local currency would likely remain strong in the near term, driven by anticipated US trade pressure, capital inflows and expectations of a US Fed rate cut The US dollar is expected to fall below NT$30 in the near term, as traders anticipate increased pressure from Washington for Taiwan to allow the New Taiwan dollar to appreciate, Cathay United Bank (國泰世華銀行) chief economist Lin Chi-chao (林啟超) said. Following a sharp drop in the greenback against the NT dollar on Friday, Lin told the Central News Agency that the local currency is likely to remain strong in the short term, driven in part by market psychology surrounding anticipated US policy pressure. On Friday, the US dollar fell NT$0.953, or 3.07 percent, closing at NT$31.064 — its lowest level since Jan.
The New Taiwan dollar and Taiwanese stocks surged on signs that trade tensions between the world’s top two economies might start easing and as US tech earnings boosted the outlook of the nation’s semiconductor exports. The NT dollar strengthened as much as 3.8 percent versus the US dollar to 30.815, the biggest intraday gain since January 2011, closing at NT$31.064. The benchmark TAIEX jumped 2.73 percent to outperform the region’s equity gauges. Outlook for global trade improved after China said it is assessing possible trade talks with the US, providing a boost for the nation’s currency and shares. As the NT dollar
PRESSURE EXPECTED: The appreciation of the NT dollar reflected expectations that Washington would press Taiwan to boost its currency against the US dollar, dealers said Taiwan’s export-oriented semiconductor and auto part manufacturers are expecting their margins to be affected by large foreign exchange losses as the New Taiwan dollar continued to appreciate sharply against the US dollar yesterday. Among major semiconductor manufacturers, ASE Technology Holding Co (日月光), the world’s largest integrated circuit (IC) packaging and testing services provider, said that whenever the NT dollar rises NT$1 against the greenback, its gross margin is cut by about 1.5 percent. The NT dollar traded as strong as NT$29.59 per US dollar before trimming gains to close NT$0.919, or 2.96 percent, higher at NT$30.145 yesterday in Taipei trading
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