Texas Instruments Shares Fall 6% as Weak Outlook Points to Extended Chip Market Slowdown
Texas Instruments (TXN.O) shares dropped 6% on Wednesday after the chipmaker issued a disappointing forecast for the fourth quarter, warning of a prolonged slump in the analog semiconductor market. The bleak outlook has fueled fears that the chip industry’s long-awaited rebound could take longer than expected amid tariff uncertainty and sluggish industrial demand.
TI projected fourth-quarter revenue of $4.4 billion and earnings per share of $1.26, both falling short of analyst expectations. The company’s gross profit margin also slipped by 50 basis points from the previous quarter. Analysts say customers remain cautious about new capital spending, taking a “wait-and-see” approach as global trade and tariff rules remain unclear.
The company’s struggles highlight how geopolitical tensions and U.S. trade policies under President Donald Trump’s administration are weighing on the semiconductor industry. Though TI has reduced some of its exposure to tariffs through trade deals, the potential for new 100% semiconductor import duties has rattled confidence, even as domestic manufacturers are offered exemptions.
Brokerage firm Jefferies said it expects the rest of the Analog group to experience similar softness, while Charter Equity Research noted that weak customer demand and excess inventory could suppress margins for several more quarters.
Shares of other analog chipmakers, including On Semiconductor (ON.O), NXP Semiconductors (NXPI.O), and Analog Devices (ADI.O), also fell between 2% and 3% following the report. At least 16 brokerages cut their price targets for TI after the announcement, with the company poised to lose around $10 billion in market value if declines persist.
Despite a $60 billion investment plan to expand U.S. manufacturing, TI’s near-term outlook remains clouded by macroeconomic uncertainty and weaker industrial spending. Its stock has fallen 4% this year, trading at a 12-month forward P/E ratio of 29.05, above Analog Devices’ 26.24 — a sign investors remain cautious on its valuation amid the slowdown.