Texas Instruments (TI) outlook suggests chip downturn continues

2025-01-24 02:53:00 :

(Bloomberg) — Texas Instruments Inc. gave a bleak profit forecast for the current period, a sign that demand for electronic components remains sluggish.

The company said in a statement Thursday that first-quarter sales would be between $3.74 billion and $4.06 billion. Analysts on average estimated $3.86 billion, according to data compiled by Bloomberg. Profit per share will be 94 cents to $1.16, compared with the average forecast of $1.17.

The tepid forecast suggests much of the electronics industry remains mired in a slowdown. Texas Instruments generates most of its sales from makers of industrial equipment and vehicles, making its forecasts a bellwether for much of the global economy. Three months ago, executives said some of the company’s end markets were showing signs of moving away from excess inventory.

The company’s shares fell in after-hours trading following the announcement. As of the close of regular trading, their shares are up about 7% this year.

The Dallas-based company is the largest maker of chips that perform simple but important functions in a variety of electronic devices. It is also the first major U.S. chipmaker to report results during the current earnings season.

Chipmakers in other parts of the world have seen mixed demand for their products. TSMC, Samsung Electronics and SK Hynix pointed to the continued strength of data center products, helped by the artificial intelligence boom. But overall growth remains hampered by downturns in other markets such as smartphones and personal computers.

The industrial and automotive markets combined account for about 70% of Texas Instruments’ revenue. The chipmaker makes analog and embedded processors, a broad category of semiconductors. Although these chips handle important functions, such as converting power inside electronic devices, they don’t cost as much as chips from AI-focused Nvidia Corp. or even Intel Corp.

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Texas Instruments’ chips also generally don’t require state-of-the-art manufacturing. Even so, the company has begun aggressively expanding and upgrading its facilities in the United States. While the expenses hit profitability, the company said the move would help reduce costs in the long run and help it compete with Chinese rivals.

More stories like this can be found at Bloomberg.com

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