Texas Instruments lowered expected revenue for the second quarter by 10% due to factory shutdowns in China as a result of Covid-19 restrictions.
Instead of an earlier expectation of about $5 billion in revenue, the company has now reduced that amount to $4.5 billion, officials said Tuesday.
“Dozens if not hundreds of factories are shut… with restrictions beyond Shanghai,” said TI Chief Financial Officer Rafael Lizardi in comments to analysts during a first quarter earnings call. Some factories are operating at 20% or 50% of capacity, if not completely shuttered, he said.
In addition, freight companies won’t move TI components to assembly factories in Shanghai and elsewhere, Lizardi said. “Factories are shut and cannot accept deliveries,” he said.
The factories affecting TI revenues are producing components or assembling them into larger components often on behalf of TI’s customers who purchase from TI and then contract with factories in China for downstream work.
Despite the impact of China shutdowns on the current quarter, TI reported a strong first quarter with revenues of $4.91 billion, up 14% from the same quarter a year ago, due primarily to growth in industrial and automotive.
In comments to analysts, Lizardi also said prices for its chips has increased along with the rest of the market over the past two to three quarters. “We have moved prices as well,” he said. “Our growth in the first quarter did benefit from price.”
Net income for the first quarter was $2.2 billion with earnings per share of $2.35. TI shares dropped 3% at market close on Tuesday, reaching $168.44, amid a strong overall downturn in markets.
TI is one of the stalwarts of chip manufacturing and reached $18.3 billion in revenues in 2021. It is based in Dallas and has 31,000 employees.
By segment, TI saw a 16% improvement in revenues for analog chips, reaching $3.8 billion for the first quarter. Embedded was up by 2% to $782 million and revenue for other products was $307 million.
TI has been investing in expanded manufacturing capacity and continues on course to own 90% of its manufacturing capacity in coming years, Lizardi said. The company expects to invest $2.5 billion per year over the next four years on average.
TI expects to break ground next month on new 300-mm wafer fabrication plants in Sherman, Texas, with a potential investment of up to $30 billion. Production from the fabs will begin in 2025. TI also has 300-mm fabs in Dallas and Richardson, Texas. The company will start production in 2023 in Lehi, Utah at a fab acquired from Micron Technology.
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