Texas Instruments Expects Lower Revenue in First-Quarter

Texas Instruments, a prominent player in semiconductor manufacturing, has released its financial report for the fourth quarter of 2023, showcasing a challenging period marked by declining figures across key financial metrics.
Texas Instruments chip businessIn Q4 2023, Texas Instruments has reported a total revenue of $4,077 million, marking a significant 13 percent decrease. Operating profit also witnessed a downturn, falling by 30 percent to $1,533 million. The net income for the same period followed suit, experiencing a 30 percent decline, resting at $1,371 million.

Breaking down the performance by segments, Analog revenue experienced a 12 percent decrease, while Embedded Processing witnessed a 10 percent decline. The Other segment faced the steepest decline, plummeting by 25 percent compared to the year-ago quarter.

Zooming out to the full year of 2023, Texas Instruments reported a total revenue of $17,519 million, with operating profit at $7,331 million and net income of $6,510 million. Diving into the revenue composition, industrial claimed the lion’s share at 40 percent, followed by automotive at 34 percent, personal electronics at 15 percent, communications equipment at 5 percent, enterprise systems at 4 percent, and other accounting for 2 percent.

A noteworthy trend emerged in the full-year figures, with industrial and automotive combined constituting a significant 74 percent of Texas Instruments’ revenue. This marks a substantial increase of nine percentage points from the previous year and a remarkable rise from the 42 percent reported in 2013. Company executives emphasized their strategic focus on the industrial and automotive sectors, citing growing opportunities and increased demand for analog and embedded technology in these areas.

Despite the challenging market conditions, Texas Instruments reported capital expenditures of $1,148 million in Q4 2023 and $5,071 million for the entire year.

Looking ahead, Texas Instruments provided projections for Q1 2024, expecting revenue to fall within the range of $3.45 billion to $3.75 billion. Earnings per share are projected to be in the range of $0.96 to $1.16. Notably, these projections hint at potential weakness in the automotive sector, raising concerns about a downturn in the automotive chip industry.

Industry analysts, including Kinngai Chan from Summit Insights, connected this projection to supply chain corrections in the automotive segment. Factors such as weakened demand for electric vehicles and recent United Auto Workers strikes at major automakers are believed to contribute to ongoing inventory corrections into the first quarter. Chan anticipates a potential recovery in the latter half of the year.

In response to the challenging market conditions, Texas Instruments strategically addressed the situation by reducing factory loadings in the fourth quarter. This move aimed to align with the weak end-market demand and normalize inventory levels. The company remains cautiously optimistic about the potential for recovery in the upcoming quarters.