Texas Instruments Warns of Slump in Chip Demand, Shares Slide

Key Takeaways:

  • Texas Instruments’ Q3 profit and sales guidance disappoints analysts.
  • Weak chip demand expected to impact current quarter results.
  • Second-quarter earnings and revenue exceeded estimates.

Texas Instruments (TXN), a prominent semiconductor maker, witnessed a 5.4% decline in shares on Wednesday, following a warning about the impact of sluggish demand on its current quarter results.

For the third quarter, the company foresees sales ranging from $4.36 billion to $4.74 billion, with the midpoint falling below analysts’ projections of $4.59 billion. The anticipated earnings per share (EPS) are expected to be in the range of $1.68 to $1.92, lower than analysts’ estimate of $1.91.

One of the significant contributing factors to this decline is the decrease in orders for new chips, particularly outside the automotive industry. TI’s CEO, Haviv Ilan, expressed concerns about the prevailing weakness across various end markets, with the exception of the automotive sector.

Despite facing challenges, Texas Instruments managed to outperform expectations in the second quarter, reporting an EPS of $1.87. Although revenue declined by 13% to $4.53 billion, it still surpassed estimates.

While the company’s shares experienced a setback on Wednesday, it’s worth noting that Texas Instruments had performed well overall in 2023.

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