Texas Instruments Forecasts Easing Demand Slump for Industrial and Automotive Components in Q2 2024

Texas Instruments Inc., a major semiconductor company, has projected second-quarter revenue above analysts' estimates, signaling an uptick in demand for its analog semiconductors after a prolonged slump. The company's upbeat projection, along with improving consumer electronics demand, suggests that analog chip inventory corrections might be easing.

For the second quarter of 2024, Texas Instruments anticipates revenue in the range of $3.65 billion to $3.95 billion, with a midpoint of $3.8 billion, slightly above the average analyst estimate of $3.77 billion. The company also predicts Q2 2024 profit between $1.05 and $1.25 per share, compared to the estimated $1.16 per share.

The positive outlook from Texas Instruments has led to a 6.4% rise in the company's stock price in extended trading. The projection indicates that downcycles in certain markets, like automotive, might not be as bad as feared, and the industrial market might be starting to flat-line or recover from the downturn.

Why this matters: Texas Instruments' improved projection and demand provides a glimmer of hope for the semiconductor industry, which has been struggling with a prolonged demand slump. As a major supplier of analog chips used in various applications, including industrial automation and automobiles, the company's performance serves as a bellwether for the broader market.

In the first quarter of 2024, Texas Instruments reported robust results and guidance amid recovering demand of $3.66 billion, exceeding analysts' estimates of $3.21 billion. However, the company's gross profit of $2.01 billion, while beating estimates, fell from the year earlier due to reduced factory loadings.

Rafael Lizardi, Texas Instruments' CFO, stated that most of its industrial equipment customers have worked through an inventory backlog, but some are still in the process, leading to an uneven recovery in demand. The company's semiconductors are used in a wide range of electronic devices, industrial automation, and automobiles.

Texas Instruments' earnings are closely watched as it is the first among major U.S. semiconductor firms to report quarterly results. The company's upbeat projection

Key Takeaways

• Texas Instruments forecasts Q2 2024 revenue above analysts' estimates
• Improved demand for analog semiconductors after a prolonged slump
• Positive outlook suggests easing of analog chip inventory corrections
• Texas Instruments' performance seen as a bellwether for semiconductor industry
• Company's Q1 2024 results and guidance also beat analysts' estimates