Texas Instruments reports Q4 revenue down 13% YoY to $4.08B, vs. $4.13B est., and FY 2023 sales down ~13% YoY, the company's biggest fall in over a decade
This report confirms that the downturn extended through year-end. A later Q3 decline tied to worsening industrial demand provides the clearest indication in the coverage of where the pressure was concentrated.
First-order effects
Texas Instruments enters 2024 with quarterly revenue below expectations and its steepest annual sales contraction in more than a decade, increasing pressure on management to navigate weaker demand and customer purchasing.
The result reinforces that the company’s industrial-facing analog business was still in a downcycle at year-end, rather than seeing a near-term rebound.
Second-order effects
Chip suppliers with similar exposure to industrial customers may face more cautious investor expectations and customer ordering as Texas Instruments’ results validate sustained demand weakness.
Customers and channel partners are likely to keep purchases tightly aligned with immediate needs while the inventory and demand correction remains unresolved, extending the sales impact beyond a single quarter.
Third-order effects
If the pattern persists, analog semiconductor suppliers’ results may remain more dependent on the pace of industrial demand normalization than on a broad semiconductor-market recovery.
The coverage points to a longer inventory-driven cycle in which a recovery emerges gradually: Texas Instruments was still reporting its eighth consecutive quarterly sales decline later in 2024, even as it said conditions were nearing recovery.
The trend: Texas Instruments’ results are one data point in a prolonged industrial-analog semiconductor downturn, where demand recovery is lagging the initial market correction.
“Texas Instruments has the chip industry's biggest customer list and the most varied product range, making its forecasts an indicator of demand across the economy.” -Bloomberg
Texas Instruments is one of the largest semiconductor cos. & certainly has the broadest exposure (unlike NVDA or INTC), with “well over 100,000 customers” & 80,000 different products. Six consecutive qtrs. of Y/Y rev. drops. Order cancelations continued at an “elevated” level.
Texas Instruments VP on order cancellations: “As you would expect, we have seen cancellations in the fourth quarter, have remained elevated. I wouldn't describe them as increasing, but just at higher levels” $TXN
$TXN conference call summary: Industrial and automotive are strong growth drivers going forward, but not right now. The good news is that the weakness in Industrial is merely due to excess inventories that we will work off. We can't see our customers' inventory levels, but we are…
There are no signs of an improvement in business conditions, in fact, they deteriorated further in Q4 & Q1 guide indicates more to go. The sequential decline was across all global regions (except “rest of Asia"). TXN “Hasn't seen a recovery in China that most of us expected.”
Ugly quarter from Texas Instruments but the results shouldn't really be a surprise. '23 into '24 were already expected to be weak with sales rebounding after that. Obviously we'll have to see how it plays out but shareholders should have already been aware of the situation. $TXN