(Reuters) -Texas Instruments forecast fourth-quarter revenue and profit below estimates on Tuesday as the chipmaker navigates a buildup of inventory in some segments such as industrial, even as it indicated improving demand from China’s automotive market.
The company forecast revenue in the range of $3.70 billion to $4.0 billion, compared with analysts’ average estimate of $4.07 billion, according to data compiled by LSEG.
TI’s “results and outlook are consistent with the current market trends of mixed PC and smartphone end-markets and soft industrial and automotive demand,” said Summit Insights analyst Kinngai Chan.
The analog chipmaker also forecast fourth-quarter earnings between $1.07 and $1.29 per share, compared with analysts’ estimate of $1.36.
An ongoing weakness in the industrial market, which utilizes chips for tasks such as automating factories, has hurt Texas Instruments and peers as customers struggle to clear existing inventory stemming from stock-piling during the pandemic.
The results are closely watched as an indicator of demand across a slew of sectors since the company’s chips find widespread application. It is also the first among major U.S. chipmakers to report results for the September quarter.
Meanwhile, revenue from the automotive market rose “upper single digits” sequentially, CEO Haviv Ilan said on a post-earnings call with analysts, attributing the uptick to growth in the China market.
“There is momentum for EVs in China, our content is growing there, and that’s what really drove the growth in the third quarter,” Ilan said. Weakness is expected to persist in the remainder of the automotive market, he said.
Shares of the company rose 1.2% in extended trading, following a rise of about 14% so far this year.
Third-quarter revenue dropped 8% to $4.15 billion, but was the smallest decline in seven quarters.
The company beat profit expectations for the three months ended September, recording earnings of $1.47 per share, above estimates of $1.37 according to estimates compiled by LSEG.
Texas Instruments has been working to produce more chips on its cost-effective 300mm manufacturing technology, which the chipmaker had indicated would help bolster profits.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sriraj Kalluvila)
