Shares of Texas Instruments sank more than 8 per cent on Wednesday in premarket trading, after the chipmaker’s downbeat fourth-quarter profit and revenue outlook deepened worries over a drawn-out recovery in the analog chip market as tariff uncertainty plagues the wider industry.
While TI has reduced some of its business exposure to the Trump administration’s tariffs through trade deals, uncertainty over additional levies and trade negotiations has weighed on investor sentiment and delayed the pace of recovery.
“The recovery pace is much more gradual than anticipated,” said J.P. Morgan analysts, adding the wider industry “could still be muted by tariff/trade and sluggish auto recovery”.
Trump said in August the U.S. would impose a tariff of about 100 per cent on imports of semiconductors but offered an exemption to companies that are manufacturing in the country or have committed to do so.
However, this was not a formal tariff announcement, and it remains unclear how companies would be impacted.
TI forecast fourth-quarter revenue to be $4.4 billion and earnings per share to be $1.26, both well below Street forecasts.
The Dallas-based company reported third-quarter earnings of $1.48 per share, just shy of consensus expectations of $1.49, with restructuring charges and lower gross margins weighing on results.
TI has pledged more than $60 billion to expand its U.S. manufacturing footprint, underscoring its commitment to onshoring chip supply chains.
Following the results, at least five brokerages have cut their price targets on the stock.
The stock has fallen about 3.5 per cent so far this year, giving it a 12-month forward price-to-earnings ratio of 29.03, compared with rivals Analog Devices and Micron Technology, 26.24 and 11.98, respectively.
