Recently, Texas Instruments announced its Q4 2022 financial report, but the data and signals released were rather bleak. In terms of revenue, the quarter ended its streak of nine consecutive quarters of sequential growth. Additionally, due to an increase in order cancellations from Texas Instruments’ customers, the analog and logic semiconductor markets are expected to slow down.
Q4 2022 Revenue Decline
According to the financial report, Texas Instruments’ Q4 revenue was $4.67 billion, a decrease of 11% quarter-over-quarter and a decrease of 3% year-over-year, with automotive and industrial accounting for 65% of total revenue; net profit was approximately $1.96 billion, down 8% year-over-year; gross profit was $3.087 billion, compared to $3.35 billion in the same period last year; operating profit was $2.176 billion, down from $2.463 billion in the same period last year.
By business segment, the company’s Q4 analog business revenue was $3.558 billion, down 5% year-over-year; embedded processing revenue was $837 million, up 10% year-over-year; other business revenue was $275 million, down 11% year-over-year.
As Texas Instruments has the largest customer and product list in the chip industry, its financial report can serve as an indicator of overall economic demand. This report indicates a poor outlook for Texas Instruments’ fundamentals, reflecting adverse factors that may have spread, weakening the areas of the semiconductor industry that have so far maintained resilience.
Increase in Customer Order Cancellations
Investor relations manager Dave Pahl stated that there has been an increase in order cancellations in Q4 2022 due to customers actively reducing inventory, which has led to first-quarter demand being below traditional seasonal conditions.
Although the company’s CEO Rich Templeton stated that the automotive market was the only exception to the weak demand last quarter, analysts expect that orders in the automotive market have begun to decrease moderately.
Texas Instruments forecasts Q1 2023 revenue to be between $4.17 billion and $4.53 billion, with the midpoint below analysts’ average expectation of $4.41 billion. Additionally, earnings per share are expected to be between $1.64 and $1.90, with the midpoint also below analysts’ expectation of $1.87.
This outlook suggests that Texas Instruments may not quickly rebound from the sales slowdown.
Wall Street expects the company’s revenue to decline throughout 2023, as its customers focus on reducing old chip inventory rather than ordering new chips. However, Texas Instruments stated that the long-term trend for electronic products will increase demand for semiconductors, but no predictions were made regarding when orders and revenue might rebound.
Furthermore, Texas Instruments noted that the situation of weak demand continues to spread, even the more resilient analog IC business market is beginning to show signs of weakness.
Analog Chips Expected to See Demand After April
Regarding chip IC prices, previous media reports indicated that analog IC prices continue to decline, and customers are still negotiating prices. Since analog chips are mostly focused on the consumer electronics industry, first-quarter orders remain quite weak, and new demand is expected to begin to emerge only after April, but inventory remains high, so new momentum or new production will take time to wait for.
Despite the weak demand, expansion plans are still underway.
Texas Instruments’ 300mm wafer fabs in Richardson, Texas, and Utah are increasing production, and plans are in place to build two more fabs in Sherman, Texas.
Another analog chip manufacturer, ADI, has recently invested $1 billion to upgrade its semiconductor plant near Beaverton, Oregon, including modernizing existing manufacturing space, reconfiguring equipment to improve productivity, and expanding overall infrastructure by adding 25,000 square feet of additional cleanroom space, with the goal of doubling capacity.
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Note: This article is compiled from various sources including the Science and Technology Innovation Board Daily, Financial Associated Press, Zhitong Finance, and Jiwei Network. Images are sourced from the internet and are for learning and communication purposes only. If there are any issues, please contact us ([email protected]), thank you.
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