January 29, 2025 /SemiMedia/ — Texas Instruments Inc. (TI) has released a first-quarter financial forecast that fell short of market expectations, highlighting ongoing weakness in semiconductor demand and rising manufacturing costs.

As one of the world's largest suppliers of analog chips, TI has a strong presence in industrial, automotive, and consumer electronics markets. Its financial outlook is often regarded as an important indicator for the semiconductor industry and global manufacturing. Despite TI executives stating three months ago that inventory issues in some end markets were improving, the pace of recovery has been slower than anticipated. "Industrial automation and energy infrastructure markets have yet to bottom out. We have not seen the bottom yet—let me be clear," TI CEO Haviv Ilan said on a call with analysts.

In the automotive sector, while demand in China continues to grow, its slower pace is insufficient to offset weakness in other regions. As a leading supplier of automotive semiconductors, TI’s forecast suggests that the sector remains in an adjustment phase.

TI expects first-quarter revenue to be between $3.74 billion and $4.06 billion, compared with the market consensus of $3.86 billion. At the same time, rising manufacturing costs are further weighing on the company’s profitability. In recent years, TI has been expanding its 300mm wafer fabrication capacity, including new facilities in Texas and Utah. However, during a market downturn, these investments have resulted in higher fixed costs, while demand has yet to fully recover, putting pressure on profit margins.

Despite TI’s cautious outlook, its fourth-quarter 2023 results exceeded market expectations. Revenue declined 1.7% year-over-year to $4.01 billion but still surpassed the consensus estimate of $3.86 billion.

TI is the first major U.S. semiconductor company to report earnings this season, offering an early read on industry conditions. In contrast, the performance of other major global chipmakers has been mixed. Companies such as TSMC, Samsung Electronics, and SK Hynix have benefited from strong demand for artificial intelligence (AI) and data center chips, driving growth in high-end memory and advanced foundry services. However, the consumer electronics market, including smartphones and personal computers, remains sluggish, weighing on the broader semiconductor industry’s recovery.

As a leader in analog and embedded semiconductor solutions, TI’s warning suggests that, while some chipmakers are capitalizing on AI-driven demand, the recovery of traditional industrial and automotive electronics markets will take more time. This trend could impact the global semiconductor supply chain and influence market performance in the coming quarters.