Will the slowdown in chip demand continue? Texas Instruments' first quarter revenue fell 5.1%
According to Reuters, chip maker Texas Instruments (TI) said on Tuesday that the slowdown in chip demand, which began at the end of last year, could last for several quarters. As a leader in the semiconductor industry, TI's warning dragged its share price down 3% to $113.88.
In a conference call with analysts, Chief Financial Officer Rafael Lizardi said, "The analysis we just completed shows that TI will also decline year-on-year in the second quarter, but usually, the industry will have a four- to five-year decline. And then can we resume growth," he added. "We are not trying to predict the cycle, but just providing some historical perspectives."
As the economy slows and manufacturers face continued trade disputes with the United States, chipmakers have been struggling to cope with the decline in Chinese demand.
TI said last quarter that after more than 10 quarters of sustained growth, the semiconductor cycle will decline, and trade tensions may "affect the depth and duration of the cycle."
In the first quarter report, revenue and profit decreased compared with the same period of last year, because demand in most markets continued to slow down. However, the growth in chip sales to promote 5G telecom network helped TI surpass Wall Street's expectations.
However, Lizardi said he expects demand for communication chips to be unstable in the future.
Two Wall Street analysts said that the growth of the communications sector has masked the slowdown in core businesses such as TI's industrial and automotive, but "unsustainable."
TI said it expects revenue in the second quarter to be between $3.46 billion and $3.74 billion. According to Refinitiv's IBES data, analysts expect revenue for the second quarter to be $3.67 billion.
Rosenblatt Securities analyst Hans Mosemann said, "The outlook is weaker than market expectations, but not as bad as fear."
First-quarter revenue fell 5.1% to $3.59 billion, but exceeded analysts' average estimate of $3.48 billion.
In a conference call with analysts, Chief Financial Officer Rafael Lizardi said, "The analysis we just completed shows that TI will also decline year-on-year in the second quarter, but usually, the industry will have a four- to five-year decline. And then can we resume growth," he added. "We are not trying to predict the cycle, but just providing some historical perspectives."
As the economy slows and manufacturers face continued trade disputes with the United States, chipmakers have been struggling to cope with the decline in Chinese demand.
TI said last quarter that after more than 10 quarters of sustained growth, the semiconductor cycle will decline, and trade tensions may "affect the depth and duration of the cycle."
In the first quarter report, revenue and profit decreased compared with the same period of last year, because demand in most markets continued to slow down. However, the growth in chip sales to promote 5G telecom network helped TI surpass Wall Street's expectations.
However, Lizardi said he expects demand for communication chips to be unstable in the future.
Two Wall Street analysts said that the growth of the communications sector has masked the slowdown in core businesses such as TI's industrial and automotive, but "unsustainable."
TI said it expects revenue in the second quarter to be between $3.46 billion and $3.74 billion. According to Refinitiv's IBES data, analysts expect revenue for the second quarter to be $3.67 billion.
Rosenblatt Securities analyst Hans Mosemann said, "The outlook is weaker than market expectations, but not as bad as fear."
First-quarter revenue fell 5.1% to $3.59 billion, but exceeded analysts' average estimate of $3.48 billion.