Amid sluggish demands across the board, Texas Instruments reported declining performance over the past quarter and provided weak financial guidance for the next period, signaling the chip industry is still in the cyclical downturn.
Texas Instruments released its financial results for the quarter that ended in December, recording sales of US$4,077 million, down 12.7% from a year ago, and a net income of US$1,371 million, a 30.12% decrease year-over-year.
Texas Instruments said in a press release that the company experienced increasing weakness in the industrial segment and a sequential decline in the automotive segment during the quarter. The industrial and automotive segments accounted for 74% of Texas Instrument's sales in 2023. Personal electronics, communications equipment, enterprise systems, and others accounted for 15%, 5%, 4%, and 2%, respectively.
By segments, Texas Instruments saw revenue for the Analog segment decline 12% year-over-year, and sales for the Embedded Processing declined by 10%. The Other segment declined 25% from the year-ago quarter.
Meanwhile, Texas Instruments' R&D expenses increased by 6% year-over-year, reaching US$460 million, slightly surpassing the estimated expense of $465.4 million. Capital expenditure for the quarter amounted to US$1.15 billion, a 19% year-over-year increase, slightly above the estimated expenditure of US$1.16 billion.
The company said the first quarter revenue is expected to be from US$3.45 billion to US$3.75 billion, with EPS at US$0.96-1.16.
Dave Pahl, vice president and head of Investor Relations at Texas Instruments, said at the earnings call that the company saw weakness in the industrial sector and a sequential decline in the automotive sector, adding that the company will continue to operate in a weak environment.
Pahl said that Texas Instruments has not changed its inventory targets over the last two or three quarters, and the company still has some way to go regarding the inventory issue.
Meanwhile, although Texas Instruments raised its capital expenditure targets from US$3.5 billion to US$5 billion per year, the company refused to share its progress on the CHIPS Act, saying it's up to the Department of Commerce.
Texas Instruments earnings summary (US$m) | ||||||
Financial | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | Annual change (%) |
Revenue | 4,670 | 4,379 | 4,531 | 4,532 | 4,077 | -12.7 |
Gross profit | 3,087 | 2,863 | 2,910 | 2,815 | 2,431 | -21.25 |
Operating profit | 2,176 | 1,934 | 1,972 | 1,892 | 1,533 | -29.55 |
Net income | 1,962 | 1,708 | 1,722 | 1,709 | 1,371 | -30.12 |
Source: Texas Instruments, January 2024
Texas Instruments sales by segment (US$m) | ||||||
Segment | 4Q22 | 1Q23 | 2Q23 | 3Q23 | 4Q23 | Annual change (%) |
Analog | 3,558 | 3,289 | 3,278 | 3,353 | 3,120 | -12.31 |
Embedded Processing | 837 | 832 | 894 | 890 | 752 | -10.16 |
Other Business Activities | 275 | 258 | 359 | 289 | 205 | -25.45 |
Source: Texas Instruments, January 2024
