Texas Instruments revenue drops 13% to $4.53 bn

Texas Instruments said its revenue fell 13 percent year-on-year and rose 3 percent sequentially to $4.53 billion, as it experienced weakness across end markets with the exception of automotive, during the second quarter of 2023.
Texas Instruments chip businessTexas Instruments in its earnings report said the industrial market was about flat; the automotive market was up low-single digits; Personal electronics was up low-single digits; Communications equipment was down mid-teens; enterprise systems was down mid-single digits.

Over the past 12 months, Texas Instrument invested $3.6 billion in R&D and SG&A, invested $4.2 billion in capital expenditures.

The Dallas, Texas-based Texas Instruments forecast revenue in the current quarter to be in the range of $4.36 billion to $4.74 billion, bogged down by sluggish recovery in end-market demand that has forced clients to cancel orders.

Wobbly China recovery after the country put an end to its “zero-COVID” policy has also prevented demand from rebounding quickly.

“China was roughly half of sales at the end of fiscal 2022, so China has the largest impact on TI’s business,” said Edward Jones analyst Logan Purk.

Inflation and rising interest rates have eroded spending across sectors, including in the industrial segment, its key market, comprising about 40 percent of its revenue.

“(Order) cancellations remain at elevated levels… and we believe that customers are continuing to work down inventories to get that more in line with their demand,” said Dave Pahl, TI’s head of investor relations.

Top chipmakers including TSMC and Infineon Technologies also flagged global economic woes denting broader, end-market chip demand, with the former saying even a high demand for artificial intelligence has not been able to offset the widespread weakness.

Despite a demand crisis, the company said it will continue ramping up supply even at the cost of its profit margin, to support long-term demand and create a “geopolitically dependable capacity”.

But that could hurt its gross margin at a time when demand recovery remains elusive, Summit Insights Group analyst Kinngai Chan said.