Texas Instruments Inc.,
which has one of the biggest customer lists in the semiconductor
business, gave an outlook suggesting demand remains strong for
components across industries from cars to factory equipment.
The
company “saw strength across the board,” Chief Financial Officer Rafael
Lizardi said. It posted its first quarter of revenue growth above 10
percent since 2010, and Lizardi forecast sales and profit in the current
quarter that may be better than analysts’ projections.
The
results were “driven by continued strength in industrial and
automotive,” Lizardi said. “That’s where semiconductor content is
growing. We believe that’s the place to be for the next 10 or 20 years.”
Texas Instruments chips are used
in almost everything that has an on-off switch, making its earnings an
indicator of demand across the economy. The increasing addition of
electronic functions to industrial equipment and attempts to make even
simple machinery smarter is driving demand for the semiconductors. The
company has about 100,000 customers.
Chief Executive Officer Rich
Templeton has tried to spread the company’s bets as widely as possible.
Texas Instruments has moved away from digital products that are
concentrated on one end device, such as modems for smartphones, and now
has the broadest product lineup in the industry.
“The industrial
market is doing really nicely,” said Tore Svanberg, an analyst at Stifel
Nicolaus & Co. “It’s the largest end market for the analog
industry.”
Second-quarter profit will be 89 cents to $1.01 a share, the Dallas-based company said Tuesday in a statement.
Revenue will be $3.4 billion to $3.7 billion. Analysts on average
projected profit of 90 cents a share on sales of $3.5 billion, according
to data compiled by Bloomberg. The company said its profit forecast
includes a $30 million “discrete” tax benefit.
Texas Instruments’
first-quarter net income climbed to $997 million, or 97 cents a share,
from $771 million, or 69 cents a share, a year earlier. Sales rose 13
percent to $3.4 billion. Analysts’ estimated $3.31 billion.
Shares
were little changed in extended trading, following the report. They had
earlier gained 1.6 percent to $82.36 at the close in New York, leaving
them up 13 percent this year.
The company is the biggest maker of
analog chips, electronics components that perform functions such as
regulating power within a device or converting a physical action, such
as button push, into an electronic signal. Its chips perform functions
as varied as allowing an industrial robot to sense the environment
around it to processing sound in a wireless headset.
Unlike many
of its analog competitors, Texas Instruments has upgraded some of its
factories to build chips on more advanced production. That’s helping it
to improve its profitability.
The company also led the industry in prioritizing returning cash to
investors via share repurchases and dividend payments, spending $3.8
billion on that last year. It’s also stayed away from industrywide
consolidation and hasn’t made a major purchase since its 2011
acquisition of National Semiconductor, lightening its debt load and
freeing up more cash.
Texas Instruments’ forecast may diffuse
concern that demand was declining from the automotive industry. On March
20, Maxim Integrated Products Inc. said
the U.S. auto market was weakening, while government incentives in
China to help sales of electric vehicles were slowing, hurting demand
for battery-management components. Maxim gets more than 20 percent of
sales from the automotive market.
https://www.bloomberg.com/news/articles/2017-04-25/texas-instruments-seeing-strong-chip-demand-in-auto-industrial
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