Texas Instruments Reports Decline in Semiconductor Demand Impacting Q4 Results

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Essential Insights

• Texas Instruments Inc. reported a decline in both revenue and profit for the fourth quarter, primarily due to reduced semiconductor demand from industrial and automotive clients.
• The company’s stock decreased by over 2% following earnings results that fell short of analyst predictions.
• Unlike some competitors benefiting from the AI boom, Texas Instruments faced challenges amid weakening demand in key sectors.

Shares of Texas Instruments Inc. (TXN), a leader in analog semiconductor manufacturing, dropped more than 2% on Wednesday after announcing lower revenue and earnings for Q4, driven by soft demand from industrial and automotive markets.

The company’s net income declined by 30% year-over-year to $1.37 billion, or $1.49 per share, while revenue decreased by 13% to $4.08 billion, missing analyst expectations.

Dave Pahl, Head of Investor Relations, explained during a call with analysts, “Our results reflect growing weakness in the industrial sector and a sequential decline in automotive, as customers focus on reducing inventory levels.”

In 2023, 74% of Texas Instruments’ revenue originated from industrial and automotive customers, highlighting the impact of these sectors on overall performance.

Looking ahead, the company anticipates continued softness, projecting first-quarter revenue between $3.45 billion and $3.75 billion, down from $4.38 billion the previous year. Earnings per share are expected to range from 96 cents to $1.16, signaling a steeper decline than analysts had forecasted.

Despite Texas Instruments’ broad semiconductor portfolio, its recent performance contrasts with other industry players. For example, Netherlands-based ASML Holding NV (ASML) reported a surge in demand for its advanced chipmaking equipment, fueled by the ongoing artificial intelligence (AI) technology expansion.

Similarly, Nvidia Corp. (NVDA) has capitalized on the AI-driven investment wave, boosting its semiconductor business significantly.

As of approximately 1 p.m. ET Wednesday, Texas Instruments’ shares were down 2.11%, trading near $171.

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