Chipmaker Texas Instruments forecasts earnings below estimates as automotive begins to falter
TEXAS Instruments (TI) forecast quarterly revenue and profit below market estimates on Tuesday (Jan 23), as chip inventory builds up in its key markets with initial signs of weakness in the automotive sector adding to continued industrial weariness.
The analogue chipmaker’s shares fell about 4 per cent in extended trading.
Analysts believe automotive – once one of TI’s fastest-growing end markets – is now starting to show signs of inventory corrections.
The pressure of high borrowing costs has dampened end-market demand for the automotive industry. United States new vehicle sales are expected to rise just 1 per cent in 2024, according to car shopping website Edmunds.
Demand from industrial customers – one of the company’s largest – has waned as global manufacturing activity remains weak.
A survey from the Institute for Supply Management also showed US manufacturing, an indicator of industrial activity, remained subdued in November 2023, with factory employment declining further as hiring slowed and layoffs increased.
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The world’s largest contract chipmaker Taiwan Semiconductor Manufacturing Company (TSMC), warned that in terms of manufacturing capacity for analog chips, too much may be building up.
TSMC, which acts as a bellwether for chip production, raised concerns around over-capacity for analogue chips, producing which requires relatively older technology compared to the machines used for building advanced chips for artificial intelligence.
Peer Mobileye also forecast preliminary 2024 revenue below estimates, with a pullback in orders from its customers clearing excess inventory, further suggesting the automotive chip industry, which had managed to remain on the sidelines of the supply glut crisis, might face a downturn too.
TI forecast first-quarter revenue between US$3.5 billion and US$3.8 billion, compared with analysts’ average estimate of US$4 billion, according to LSEG data.
The company expects earnings in the range of 96 US cents to $1.16 per share for the current quarter, missing analysts’ estimate of US$1.41. REUTERS
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