Shares of Texas Instruments (TXN) tumbled 8.73% in pre-market trading on Wednesday following the release of its third-quarter earnings report and fourth-quarter guidance. While the semiconductor giant reported better-than-expected revenue for Q3, its outlook for the upcoming quarter fell short of analysts' expectations, raising concerns about the pace of recovery in the semiconductor industry.

For the third quarter, Texas Instruments posted revenue of $4.74 billion, surpassing the Wall Street consensus estimate of $4.65 billion. However, earnings per share came in at $1.48, slightly below the expected $1.49. The company saw growth across all its end markets, with its analog unit growing revenue by 16% year-over-year.

The primary cause for the stock's sharp decline was Texas Instruments' disappointing forecast for the fourth quarter. The company projected earnings per share between $1.13 and $1.39, well below the consensus estimate of $1.41. Additionally, it guided for fourth-quarter revenue between $4.22 billion and $4.58 billion, falling short of analysts' expectations of $4.51 billion.

CEO Haviv Ilan commented on the earnings call, "The overall semiconductor market recovery is continuing, though at a slower pace than prior upturns, likely related to the broader macroeconomic dynamics and overall uncertainty." He noted that customers in the industrial sector are particularly adopting a "wait and see" approach to capacity expansion plans, as governments consider the impacts of tariff policies and other macroeconomic uncertainties.

The weaker-than-anticipated outlook has sparked concerns about the impact of ongoing trade tensions between the United States and China on the company's business, particularly in light of potential tariffs affecting key markets such as automotive and industrial sectors. With approximately 20% of Texas Instruments' revenue coming from China, the company faces increasing competitive pressure and uncertainty in this crucial market.