Has TI also decided to reduce production? The economic downturn continues, and Q4 revenue is expected to be lower than Q3

【Lansheng Technology News】Texas Instruments announced its financial results for the third quarter of 2023 after the market closed, and made forecasts for the fourth quarter, indicating that demand for a variety of electronic components, including industrial equipment, remains sluggish.

01.TI’s third quarter revenue

■ TI’s revenue in the third quarter was flat quarter-on-quarter and down 14% year-on-year. The automotive industry grew but industrial weakness expanded.

According to Reuters, on October 24, Eastern Time, TI announced its Q3 revenue of US$4.53 billion, net profit of US$1.71 billion, and earnings per share of US$1.85, including items not included in the company’s initial guidance. Come get 5 cents of profit.

■ TI’s revenue in 2023 is expected to drop by 10%, putting pressure on the share prices of other chip manufacturers

TI's revenue in Q3 fell by 14%, falling within TI's previously forecast third-quarter revenue range of $4.36-4.74 billion. Revenue is expected to fall by 10% this year, according to analyst forecasts, which would break a three-year streak of sales growth. It shows that the entire semiconductor industry is still having a hard time.

Texas Instruments shares are still down 11% in 2023, even as other chipmakers' shares have rebounded. That makes it one of the worst-performing members of the Philadelphia Stock Exchange Semiconductor Index.

The report also weighed on shares of other chipmakers. Analog Devices Inc fell 3% and On Semiconductor Corp fell 2.5%.

02.TI’s fourth quarter revenue forecast and production reduction strategy

■ TI’s fourth-quarter revenue forecast will be lower than that of the third quarter, which does not bode well for the chip industry

TI has the broadest customer base in the semiconductor industry, and its forecasts have become a bellwether for demand across the economy. TI's fourth quarter (Q4) revenue is expected to be between US$3.93 and US$4.27 billion, a 10% decrease from Q3 expectations, and earnings per share are between US$1.35 and US$1.57.

The chip industry is trying to recover from a severe economic slowdown, but TI's forecast for Q4 is lower than Q3 revenue, which is not a good sign for the chip industry.

■ TI slows down factory production to prevent the accumulation of parts and boost its profitability by increasing under-full production capacity

Chip investors, who have been waiting for an opportunity to look for signs that electronics manufacturers are resolving inventory accumulation issues and increasing orders again, have been particularly pessimistic about TI this year.

In response to the economic slowdown, TI explained that its products have a long shelf life that can last up to ten years. For chipmakers, this means inventory buildup appears to be less of a problem and may even help companies respond more quickly when demand returns.

According to Quiksol data at the end of September, TI's factories have been able to meet this year's production needs, and some factories have looked at some long-term ordering opportunities to reduce costs. At present, market demand for spot goods remains low, and the turmoil in the spot market will continue in the coming months. Lead times for most chips have returned to 6-8 weeks, and perhaps there are some opportunities ahead.

In the process, TI has slowed production at some factories to prevent too many unused parts from piling up. Not being able to run factories at full capacity is clearly taking a toll on TI's profitability, and it will need to bear those costs this quarter.

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