As earnings season ramps up for US semiconductor companies, Texas Instruments in its third quarter 2023 earnings report this week provided signs that the sector continues to be mired in a macroeconomic funk.
TI’s third quarter revenue was down 14% year-over-year to $4.5 billion, although TI officials urged analysts to focus more on sequential comparison. In that light, overall revenue movement was flat compared to the second quarter this year. Revenue in the company’s Analog segment declined 16%, while Embedded Processing grew 8%, and the firm’s broad-based “Other” segment was down 32% over the same period.
The automotive market continued to be a strong point for TI, as it has been for many chip firms, with revenue rising in the “mid-single digits”sequentially and about 20% year-over-year, the company said. But, officials observed that economic weakness had spread across several customer industries and sectors.
As a result, TI CFO Rafael Lizardi said that the company’s fourth quarter revenue would come in between $3.93 billion to $4.27 billion “as we continue to operate in a weak environment.” The outlook seemed to surprise analysts, whose estimates for the quarter averaged above $4.4 billion.
Despite the pressure, TI gave no indication that it would cut spending on manufacturing expansion efforts, and reiterated plans to keep its capex budget at about $5 billion per year for this year and each of the next three years.
“We’re very pleased with the progress on our manufacturing expansion,” Lizardi said. “They will provide geopolitically dependable capacity to support customer growth for the coming decade. And as you know, semiconductor content continues to increase. And to provide us the ability to grow at that 10% growth rate that we talked about at the last capital management call, if the market requires that, we’ll continue to make those investments.”
He also reminded analysts that the $5 billion-per-year figures “are gross, meaning they do not include benefits from the ITC or grants from the CHIPs Act. So we’re actively working through the grant application process with the CHIPS program office, which we believe will be meaningful to our manufacturing operations in Texas and Utah and will help support semiconductor growth for decades to come… and funding from the CHIPS Act grants was comprehended in our decision making for these investments.”
TI is usually among the first earnings reports each quarter by US semiconductor companies. Intel was scheduled to report earnings Thursday, with AMD and Nvidia to follow next month.