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Investing.com - Shares of Texas Instruments slumped by more than 8% in premarket U.S. trading on Wednesday after the company reported soft guidance for the current quarter, fueling worries surrounding the outlook for an analog chip sector already grappling with murkiness around U.S. tariff policies.
For three months ended September 30, the group posted adjusted profit of $1.48 per share on revenue of $4.74 billion, compared with analysts estimates for $1.49 and $4.65 billion, respectively.
TI expects fourth-quarter per-share income to be in a range of $1.13 to $1.39, versus analyst estimates for $1.41. Revenue is anticipated to come in between $4.22 billion and $4.58 billion, or $4.4 billion at the midpoint. Wall Street had seen the figure at $4.51 billion.
"Macro headwinds inflicted by ongoing trade uncertainty is weighing on core auto/industrial demand and preventing the sharper, above-seasonal recovery slope that many had hoped to see with acutely short lead times and a large catalog business [...] further murkying visibility," analysts at BofA Securities including Vivek Arya and Duksan Jang said in a note.
Heading into the results released after the close of U.S. markets on Tuesday, investors had been keen to see how demand at TI has evolved following a tariff-driven spike in orders earlier this year.
The firm has recently flagged a cooldown from this surge, which was fueled in large part by companies looking to avoid sweeping U.S. tariffs that President Donald Trump unveiled in April. Finance chief Rafael Lizardi has said that "things did slow down" after that month, adding that sales "didn’t grow as they normally would have."
All five of the end markets for TI’s specialized chips have "exhibited sub-seasonal performance in August, reversing July’s results" in which all of them showed "above-seasonal billings," analysts at Stifel also flagged prior to the returns. Some 70% of TI’s sales are exposed to these markets, which include industrial, automotive, personal electronics, enterprise systems, and communications equipment.
In July, TI warned of both a sluggish recovery in its key auto market and disruptions Trump’s tariffs could have on global supply chains. Although a series of trade deals have helped to bring down its exposure to the levies, TI’s guidance paints a cloudy picture for the months ahead, with the costs of manufacturing processors rising and some end-market customers ratcheting down spending.
(Yasin Ebrahim contributed reporting.)