Earnings Results: Texas Instruments focuses on long-term chip capacity buildout, while weak short-term outlook weighs on stock

by | Oct 25, 2022 | Stock Market

Texas Instruments Inc. shares dropped in the extended session Tuesday after executives of the analog-chip maker focused on the company’s long-term capacity buildout, while forecasting declining earnings and sales for the current quarter. Shares of Texas Instruments
TXN,
+0.32%
fell as much as 6% in after-hours trading, following a 0.3% rise in the regular session to close at $162.16. That’s compared with a 2.3% rise in the PHLX Semiconductor Index
SOX,
+2.26%
and a 1.6% gain by the S&P 500 index
SPX,
+1.63%.

“We expect that most of our end markets will decline sequentially, with the exception of the automotive market,” said David Pahl, head of investor relations, on a conference call with analysts. The company expects fourth-quarter earnings between $1.83 and $2.11 a share on revenue of $4.4 billion to $4.8 billion, while analysts surveyed by FactSet, on average, had forecast earnings of $2.23 a share on revenue of $4.94 billion. The company reported fourth-quarter earnings of $2.27 a share on revenue of $4.83 billion in 2021. “Customers especially value the geopolitically dependable footprint of our manufacturing additions,” Pahl said, addressing concerns that geopolitical tensions between China and Taiwan could derail the chip industry. Texas Instruments is expected to be a big beneficiary of the $52 billion U.S. CHIPS Act for domestic chip makers with fabrication facilities, or fabs, where chip designs are actually applied to silicon wafers. “That is going to decrease on a net basis our investment, because we’re going to get a 2 …

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