By Akriti Shah (Reuters) -Shares of Texas Instruments sank more than 8% on Wednesday in premarket trading, after the chipmaker’s downbeat fourth-quarter profit and revenue outlook deepened worries over a drawn-out recovery in the analog chip market as tariff uncertainty plagues the wider industry. The overall rebound has been dampened by an uncertain economy and […]
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TI shares slide as bleak outlook signals delayed industry recovery
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By Akriti Shah
(Reuters) -Shares of Texas Instruments sank more than 8% on Wednesday in premarket trading, after the chipmaker’s downbeat fourth-quarter profit and revenue outlook deepened worries over a drawn-out recovery in the analog chip market as tariff uncertainty plagues the wider industry.
The overall rebound has been dampened by an uncertain economy and customer caution, especially due to a “wait-and-see” approach on new factory and capital expenditure investments in the industrial sector.
Unresolved regulatory and tariff rules are driving customer hesitancy, even as TI reduced some of its business exposure to the Trump administration’s levies through trade deals. The company has pledged more than $60 billion to expand its U.S. manufacturing footprint.
“We expect the rest of the Analog group to see similar softness,” brokerage Jefferies said.
Following the results, at least 16 brokerages have cut their price targets on the stock. TI was set to lose over $14 billion from its market value if premarket losses hold.
TI forecast fourth-quarter revenue to be $4.4 billion and earnings per share to be $1.26, both well below analysts’ estimates. In the third quarter, its gross profit margin declined by 50 basis points sequentially.
Analysts at Charter Equity Research said they expected customer demand to reduce TI’s excess inventory and factory idle capacity by now. Instead, profit margins could remain low for several more quarters, worsened by potential tariffs or China’s trade actions.
President Donald Trump said in August the U.S. would impose a tariff of about 100% on imports of semiconductors but offered an exemption to companies that are manufacturing in the country or have committed to do so. However, this was not a formal tariff announcement, and it remains unclear how companies would be impacted.
The stock has fallen nearly 4% so far this year, giving it a 12-month forward price-to-earnings ratio of 29.05, compared with 26.24 for rival Analog Devices.
(Reporting by Akriti Shah and Jaspreet Singh in Bengaluru; Editing by Krishna Chandra Eluri)