Texas Instruments Kicks Off Chip Earnings Season with Mixed Semiconductor Outlook

The earnings season is about to kick off in full swing, with Texas Instruments (TXN.US) taking the lead as a harbinger of the semiconductor industry by being the first to release its financial report. Although the performance of the previous quarter seemed to herald a dawn for the industry, analysts anticipate that the automotive and industrial supply chains will face challenges in the December quarter due to weak demand in the automotive and electric vehicle sectors, as well as a lackluster outlook for the industrial market. Moreover, competition among global companies is intensifying, particularly in the domestic analog market in the United States. These factors have led analysts to lower their expectations for the December quarter for Texas Instruments, NXP Semiconductors (NXPI.US), Microchip Technology (MCHP.US), ON Semiconductor (ON.US), and Allegro MicroSystems (ALGM.US), even though they have raised their target price for Texas Instruments to $200.

Analysts at Mizuho Securities have noted that despite the negative market sentiment, there are still some positive aspects in the analog chip sector. They believe that ON Semiconductor and Allegro MicroSystems are in the "best position" among their peers, thanks to their investment portfolios in renewable energy and power system-agnostic fields (i.e., applications that are not dependent on a specific type of power system, such as those that can be used in both fuel vehicles and electric vehicles).

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However, it is expected that analog prices may decrease by 5% to 10% in the December quarter, which could dampen any positive sentiment. Analysts also anticipate that electric vehicle growth will slow down by 2025, with a lack of affordable model launches causing headwinds for the automotive industry. They believe that the average selling price of semiconductors for automotive original equipment manufacturers in 2025 will同比下降 by more than 10% year-over-year, while overall analog prices will decrease by about 5-10% year-over-year.

Furthermore, with the global manufacturing PMI of the United States, the European Union, and China all below 50, the industrial sector may remain weak for some time. Analysts believe that analog/industrial lead times will continue to shorten, customer inventory will remain high, and demand will not recover soon.

It is reported that Texas Instruments is scheduled to announce its quarterly results and guidance after the market closes on October 22nd. Analysts generally expect the company to report earnings of $1.41 per share for the third quarter, with revenue of $4.12 billion.

Despite the challenges, Texas Instruments' target price has been raised from $190 to $200, while the target prices for the other four companies have been lowered. NXP Semiconductors, Microchip Technology, ON Semiconductor, and Allegro MicroSystems are rated as "outperform," while Texas Instruments is rated as "neutral."