San Francisco - Texas Instruments, the worlds second-largest maker of chips for mobile phones, Monday lowered its guidance for the first quarter on slumping demand for chips in higher-end mobile phones, including 3G handsets.
"Very recently, we received what I would call a pretty significant downward revision in wireless customer demand," said Ron Slaymaker, a vice president at TI, in a conference call. The decline was concentrated in 3G handsets and base stations, he said, adding that demand for entry-level products in emerging markets has remained consistent with initial expectations at the beginning of the first quarter.
The company cut its revenue forecast for the first quarter to the low end of its original guidance, to a range of $3.21 billion to $3.35 billion compared to its original forecast of $3.27 billion to $3.55 billion. The company also lowered its earnings-per-share (EPS) forecast to a range of $0.41 to $0.45 per share, from $0.43 to $0.49.
Investment bank Credit Suisse had expected the company to revise its first quarter guidance to the midpoint of its earlier prediction, to earnings-per-share of around $0.46 on revenue of around $3.41 billion.
The companys first quarter ends March 31.
TI also dispelled some rumors of reduced demand for handsets in China, at least for mobile phones from major manufacturers. Slaymaker said TI has not seen lower demand from customers, which include Nokia and Motorola, but could not speak for smaller handset manufacturers in China.
The companys reduced forecast comes on the heels of a report by Gartner a day earlier calling for chipmakers to rein in production to control rising inventories. Global inventories of semiconductors, the building blocks of electronic devices, spiked in the fourth quarter due to lackluster fourth-quarter gadget sales and lower expectations for sales in the first quarter, Gartner said. The market researcher blamed fears of a U.S. recession for part of the reduction in demand.
Slaymaker indicated that TI would be able to maintain its gross margins in the quarter in part by cutting orders to contract chipmakers and maintaining its own factories at full production. Around half of the production of TIs high-end chip products is outsourced, he said, while the remainder is done in TI factories. The companys foundry partners include Taiwan Semiconductor Manufacturing and Chinas Semiconductor Manufacturing International (SMIC).
"Very recently, we received what I would call a pretty significant downward revision in wireless customer demand," said Ron Slaymaker, a vice president at TI, in a conference call. The decline was concentrated in 3G handsets and base stations, he said, adding that demand for entry-level products in emerging markets has remained consistent with initial expectations at the beginning of the first quarter.
The company cut its revenue forecast for the first quarter to the low end of its original guidance, to a range of $3.21 billion to $3.35 billion compared to its original forecast of $3.27 billion to $3.55 billion. The company also lowered its earnings-per-share (EPS) forecast to a range of $0.41 to $0.45 per share, from $0.43 to $0.49.
Investment bank Credit Suisse had expected the company to revise its first quarter guidance to the midpoint of its earlier prediction, to earnings-per-share of around $0.46 on revenue of around $3.41 billion.
The companys first quarter ends March 31.
TI also dispelled some rumors of reduced demand for handsets in China, at least for mobile phones from major manufacturers. Slaymaker said TI has not seen lower demand from customers, which include Nokia and Motorola, but could not speak for smaller handset manufacturers in China.
The companys reduced forecast comes on the heels of a report by Gartner a day earlier calling for chipmakers to rein in production to control rising inventories. Global inventories of semiconductors, the building blocks of electronic devices, spiked in the fourth quarter due to lackluster fourth-quarter gadget sales and lower expectations for sales in the first quarter, Gartner said. The market researcher blamed fears of a U.S. recession for part of the reduction in demand.
Slaymaker indicated that TI would be able to maintain its gross margins in the quarter in part by cutting orders to contract chipmakers and maintaining its own factories at full production. Around half of the production of TIs high-end chip products is outsourced, he said, while the remainder is done in TI factories. The companys foundry partners include Taiwan Semiconductor Manufacturing and Chinas Semiconductor Manufacturing International (SMIC).
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