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Texas Instruments Slides on Slump in Demand for Its Semiconductors

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Key Takeaways

  • Texas Instruments Inc. reported lower revenue and profit for the fourth quarter, attributed to soft demand for semiconductors from its industrial and automotive customers.
  • The company's stock dropped more than 2% Wednesday its latest quarter earnings missed analyst estimates Tuesday.
  • The analog chipmaker's decline contrasted with competitors in the semiconductor industry that are reporting surges in business tied to artificial intelligence (AI) development.

Shares of analog chipmaker Texas Instruments Inc. (TXN) fell more than 2% Wednesday after the company reported revenue and earnings fell in the fourth quarter amid soft demand from industrial and automotive clients.

Texas Instruments’ net income dropped 30% year-over-year (YOY) to $1.37 billion, or $1.49 per share. Revenue slid 13% to $4.08 billion, falling short of analyst estimates.

“Our results reflect increasing weakness in industrial and sequential decline in automotive, as customers work to reduce their inventory levels,” said head of Investor Relations Dave Pahl in a call with analysts.

Texas Instruments derived 74% of its revenue in 2023 from industrial and automotive customers.

And the company is expecting weakness to continue this quarter. Texas Instruments forecast first-quarter revenue of between $3.45 billion and $3.75 billion, down from $4.38 billion last year. Earnings per share (EPS) are expected to fall to a range of 96 cents to $1.16, a much larger drop than analysts were expecting.

But the story at Texas Instruments, despite its array of semiconductor offerings, isn’t that of the entire semiconductor industry

Netherlands-based ASML Holding NV (ASML) on Wednesday reported a surge in demand for its chipmaking equipment, which is used to make the sophisticated chips that run smartphones and data centers. The company, like Nvidia Corp. (NVDA), has benefited from the artificial intelligence (AI) arms race, which has generated a tidal wave of investment in advanced semiconductors and the means to make them.

Shares of Texas Instruments were off 2.11% at almost $171 at about 1 p.m. ET Wednesday.
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