Semiconductor companies broadly are still grappling with macroeconomic concerns and an industry-wide inventory correction that stemmed from the pandemic buying spree. Buyers of chips for PCs, smartphones and some industrial segments are still holding back purchases, mostly, but automotive appears to be one of the bright spots.
One of the first to announce first quarter earnings, Texas Instruments on Tuesday announced $4.4 billion in revenues for Q1, down 11% year-over-year. Following that broader chip industry trend, TI said it saw weaker demand in all end markets with the exception of automotive, which was up by mid-single digits over the prior quarter.
The trend in other segments at TI is illustrative of the broader market: Personal electronics declined 30% amid broad- based weakness, communications equipment was down mid-teens and enterprise was down about 30%.
Analyst predictions for Intel, due to announce earnings late Thursday, show a dramatic decline in chips for PCs, continuing a trend stretching into early 2022.
Dave Pahl, TI’s vice president of investor relations, said on that company’s earnings call that weakness with personal electronics is now in its fourth quarter. For other markets, aside from automotive, weakening started two quarters ago.
TI shares were trading down by 2% on Wednesday, while Intel was flat and AMD and Nvidia shares were trading up by 3% on Wednesday.
PC shipments had dropped 29% in the first quarter compared to a year earlier, IDC reported earlier in April, and a return to PC growth is expected towards the end of 2023.
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TI Chief Financial Officer Rafael Lizardi also told analysts that the company accrued a $200 million benefit from the CHIPS Act investment tax credit in the first quarter, atop $400 million accrued last year. That $600 million total will continue increasing for the rest of the year. The tax credit is 25% of qualifying assets in the US.
Lizardi said TI is on a path of making about $5 billion in capital expenditures per year in the next four years. Capex typically includes new fabs and fab equipment.
Separately on Tuesday, NIST released its vision and strategy for a National Semiconductor Technology Center, which was contemplated in the CHIPS Act. Many companies that supported the CHIPS Act have also supported the Tech Center concept.
Among the goals for the center, NIST calls for building and sustaining a chip workforce development system to scale up the technical workforce including engineers and technicians.