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Texas Instruments, the biggest maker of chips for mobile phones, warned on Monday that orders declined in the third quarter and would probably lead to weaker semiconductor growth than normal in the fourth.
TI blamed an inventory correction in Japan and a mix more weighted towards low-priced cell phones – echoing the comments of its biggest customer Nokia last week.
The Dallas-based chip maker matched its own and Wall Street’s expectations of profits of 45 cents a share for the third quarter but fell short on revenues, reporting $3.76bn. Analysts expected $3.8bn, according to Reuters Estimates, and the company had narrowed its own range to $3.71bn to $3.87bn in a September update, for a mid-point of $3.79bn.
TI shares fell 1 per cent to $31.55 in after-hours trading after closing 1.6 per cent higher in New York.
Analysts had suspected a softer fourth-quarter for TI, particularly after Nokia’s comments. It reported a
4 per cent fall in third-quarter profits as average selling prices for its phones fell. This was caused by weaker sales of more advanced and pricier 3G phones in Europe and solid sales of low-
end phones in emerging markets such as China and India.
Rich Templeton, TI chief executive, said its customers were also comfortable operating with lower inventories now that chip supplies had improved.
In addition, NTT DoCoMo had built up its inventory in the first half, in anticipation of a surge in demand in the second half.
Japanese consumers are able to take their existing numbers with them if they switch services from this month – tempting many to change operators and buy new phones.