Chip supplier Texas Instruments missed Wall Street estimates for quarterly revenue on Wednesday as demand in China worsened in the midst of a trade dispute with the United States and a slowing smartphone market.
Texas Instruments also gave a tepid outlook for sales and earnings in the quarter ending March but analysts said results overall were not as bad as feared.
The semiconductor industry has had a tumultuous opening to 2019 amid concerns of a global tech slowdown with warnings from Samsung Electronics, Taiwan's TSMC and Apple Inc, which this month cut its sales forecast due to poor iPhone demand in China.
TI supplies touchscreen controllers and power management chips for Apple's iPhones and iPads, and is among a series of chip producers which have seen their stocks take a beating due to fears of falling demand from Apple and other smartphone makers.
On a conference call with analysts, TI executives said its Chinese business suffered the most across all regions during the final quarter of 2018. Personal electronics, and specifically the smartphone segment was weaker, they added.
"The weakness we are seeing is primarily due to the semiconductor cycle," TI Chief Financial Officer Rafael Lizardi said on the call.
"In addition, the macro environment, including uncertainty because of trade tensions, could impact the depth and duration of this cycle," he added.
Meanwhile, results from two other U.S. chipmakers, Xilinx and Lam Research, reassured investors worried about the fallout from weaker demand, inventory adjustments and U.S.-China trade issues. Xilinx's and Lam Research’s quarterly results and outlook beat analysts' expectations.
The Philadelphia Semiconductor Index is down 19 percent from its record high in March 2018.
TI's revenue overall fell 1 percent to $3.72 billion in the quarter ended Dec. 31. That missed analysts' average estimate of $3.74 billion, according to IBES data from Refinitiv.
Its first-quarter forecast of between $3.34 billion and $3.62 billion in revenue and earnings of $1.03 to $1.21 per share largely missed analysts' expectations of $3.59 billion in revenue and $1.20 in earnings per share.
TI's net income surged to $1.24 billion from $344 million a year earlier, thanks to a significantly lower provision for income taxes. Excluding one-time items, the company earned $1.27 per share, beating analysts' estimates of $1.24.
Source: CNBC
Latest comments