TI Gives Dour Quarterly Forecast as Tariffs Prolong Analog Chip Recovery

Reuters
Oct 22

Oct 21 (Reuters) - Texas Instruments forecast fourth-quarter revenue and profit below Wall Street estimates on Tuesday, stoking fears of a long road ahead for a full recovery in the analog chip market due to murky tariff rules for the semiconductor industry.

Shares of the chipmaker fell over 9% in premarket trading. The stock is down about 3% this year, as investors remained cautious about the impact of additional levies and trade negotiations on the company's business.

"There is a recovery, but it's at a very moderate pace," CEO Haviv Ilan said during a post-earnings call, as the company struggled to emerge from a prolonged glut of analog chips.

Though a slew of trade deals has helped reduce businesses' exposure to U.S. President Donald Trump's tariffs, TI's poor outlook underscores uncertainty around regulations for new duties that continues to plague chipmakers.

Data points on demand for analog chips across end-markets remain mixed in light of tariffs and trade-disputes, said Tore Svanberg, managing director at Stifel.

TARIFF UNCERTAINTY PERSISTS

TI expects fourth-quarter revenue between $4.22 billion and $4.58 billion, compared with estimates of $4.51 billion, according to data compiled by LSEG.

"When I talk with customers, especially on the industrial side, and if you think about investing, building new factories, putting more capex- there is a bit of a wait-and-see mode," Ilan said.

"In our domain ... the rules are still not finalized in terms of the rates of tariffs."

Trump said in August the U.S. will impose a tariff of about 100% on imports of semiconductors but offered an exemption to companies that are manufacturing in the U.S. or have committed to do so. However, this was not a formal tariff announcement, and much still remains unclear about how companies would be impacted.

TI has committed to spending more than $60 billion to expand its U.S. manufacturing footprint amid this push to onshore chip supply chains.

It forecast per-share profit between $1.13 and $1.39 for the quarter, below estimates of $1.41.

The company reported earnings of $1.48 per share for the third quarter, just shy of estimates of $1.49.

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