The global semiconductor market is recovering, albeit at a slower pace than in previous cycles due to macroeconomic dynamics and ongoing uncertainty caused by US trade policy and tariffs, according to Texas Instruments.
America's silicon veteran reported calendar Q3 revenue of $4.74 billion, up 14 percent year-on-year. However, the stock price dropped nine percent in extended trading after the company missed analyst expectations and issued a warning of a sluggish turnaround for the chip sector.
Operating profit edged up slightly to $1.66 billion from $1.55 billion a year earlier.
TI makes a range of components including analog chips and embedded processors, targeting industrial, automotive and enterprise customers.
President and chief exec Haviv Ilan said revenue came in "about as expected," despite the protracted recovery. He claimed customers' "inventory depletion appears to be behind us," and they're ready to start new orders.
"We are well positioned with capacity and inventory and have flexibility to support a range of scenarios," he said.
TI's business environment during the three months was "a little bit hectic with the tensions related to trade and tariffs, we saw a lot of change through the quarter," said Ilan.
"We are seeing two dynamics at play. And one of them is the cyclical recovery, I think we talked through it in the second quarter call," Ilan said.
"We were thinking that we were sitting on a sharp slope. I think time taught us that it's not... We are seeing the market getting back towards trend line, but still below trend line. And that's one of the more moderate recoveries that we've seen in history. I think you have to go back many years to see similar behavior. Could still change," he explained.
The economic uncertainty around the Trump administration's ever-shifting trade rules is still putting off investors and causing companies to delay decisions, according to TI.
This isn't a big surprise. Trump threatened to stick a tariff of 100 percent on imported chips and semiconductors as recently as August.
TI manufactures chips in the US and internationally.
"If you think about investing, building new factories, putting more capex, there is a bit of a wait-and-see mode with our customers. They're just hesitant to have clarity on what exactly are the final rules. Should I put my factory in this country or another one? Even in our domain, the rules are still not finalized in terms of the rates of tariffs, for example," Ilan explained.
But there is one area bucking the trend – components for datacenters, although TI doesn't currently have a large presence here.
"The outlier is datacenter. Not a large part of our revenue, but growing more than 50 percent for TI year-to-date. That's the only place where we see a strong growth where customers are investing and moving fast, and TI wants to do more there. We are investing as well. But again, a smaller part of our revenue," Ilan said.
"We'll provide more specifics in Q1 [in 2026], but it's our fastest-growing market. It's growing year-to-date above 50 percent for the first 3 quarters. And I see customers continuing to invest, as I alluded before, that's the one market that we see capex going into."
For the fourth quarter, the chipmaker expects revenue in the range of $4.22 billion to $4.58 billion, slightly down from Q3.
CFO Rafael Lizardi said the outlook includes changes related to the new US tax legislation and assumes an effective tax rate of about 13 percent.
"We will stay focused in the areas that add value in the long term," Lizardi said. "We continue to invest in our competitive advantages, which are manufacturing and technology, and a broad product portfolio," he added. ®
Source: The register