Texas Instruments (TI) reported its Q2 2023 results on July 25. The IDM saw US$4.53 billion in revenue and US$1.72 billion in net income. Despite a 3% sequential increase in Q2 revenue, it dropped 13% from a year ago, owing to the weakness across all TI end markets, with the exception of automotives. For Q3 2023, TI expects revenue between US$4.36 - US$4.74 billion.
Compared to Q1 2023, TI pointed out that the markets for personal electronics and automotive chips were both up low-single digits. Communications equipment was down mid-teens, while enterprise systems was down mid-single digits. The industrial market was flat.
In Analog sector, sales declined 18% sequentially to US$3.2 billion. Embedded Processing saw sales increasing 9%, reaching US$894 million.
Dave Pahl, TI's vice president and head of investor relations, noted in the earnings call that the vast majority of TI's products are available for immediate shipment. Whenever demand rises, the company will have product available as well as the capacity behind it to support the demand, Pahl said.
When it comes to its embedded business, Pahl expressed confidence in future growth and market share gain over the long term, noting that TI is putting in place the internal capacity to support that growth. "That is a position that we haven't been in for quite some time," said the TI vice president, who pointed to the greater supply constraints faced by TI over the last two years in the embedded market, forcing the IDM to rely on foundries.
"Now if a customer wants to give us an order at lead time, those lead times over the cycle haven't changed that much. So they can place that order or if they need inside of that, they can -- for the vast majority of the products, have it available," the vice president pointed out. Though Pahl indicated that a supply and demand imbalance will always exist somewhere, "those hotspots are closing and closing pretty quickly." As TI brings on capacity every quarter, the company gains more flexibility to meet the customer demand.
Given TI's emphasis on internal manufacturing and more 300mm capacity than competitors, Pahl said that the company's pricing strategy hasn't changed, and "nothing unusual" is going on with pricing.
Nevertheless, the TI vice president indicated that "cancellations remain at elevated levels," and that customers are continuing to work down inventories to get that more in line with their demand.
As a part of TI's long-term 300mm manufacturing roadmap to support customers for decades to come, the IDM undertook the construction to build a 300mm fab in Utah, next to another existing 300mm fab, in February 2023. Construction of the new fab is expected to begin in the second half of 2023, with production as early as 2026. Four new 300mm wafer fabs are also under construction in Sherman, Texas.
To complement its expanding manufacturing capacity, TI is also building two new assembly and test facilities in Malaysia, in line with the IDM's plan to grow internal assembly and test operations to more than 90% by 2030. According to TI, its global manufacturing footprint includes 12 wafer fabs, seven assembly and test factories, and multiple bump and probe facilities across 15 worldwide sites.
