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Texas Instruments posts 9% sequential revenue growth in Q3

Texas Instruments has reported Q3 revenues of $4.2 billion, up 9% sequentially and down 8% year on year.

Operating profit was $1.55 billion, a decline of 18% year on year.

Haviv Ilan, Texas Instruments President and CEO said that analog revenue declined 4% year-over-year and embedded processing declined 27%. The company’s other segment declined 5% from the year-ago quarter.

“Our results continue to reflect the asynchronous market behaviour that we’ve seen throughout this cycle,” Ilan told a conference call with financial analysts. “I’ll focus on sequential performance as it is more informative at this time. First, the industrial market was down low-single digits as customers continue to reduce their inventory levels. The automotive market increased upper single digit, primarily due to strength in China. Personal Electronics grew about 30%, Enterprise Systems was up about 20%, and Communication Equipment was up about 25% as the cyclical recovery continued in these three markets.

“We really need the broad industrial market and the automotive market to join,” said Ilan, though he was cagy about expecting a rebound. “It’s about time, but we haven’t seen it yet.”

Adding some detail, Ilan put automotive market growth at between 7 and 8%. “Most of the growth came from our business in China, there is momentum for EVs in China, and our content is growing there,” commented Ilan. “This is not a one quarter thing, our automotive revenue in China is at all-time high, so I don’t think that gees down in the near future.”

Ilan sees continued weakness in the rest of the automotive market.

Turning to the industrial market, Ilan observed that revenue peaked in the third quarter of 2022.

“We’ve seen eight quarters of decline. We are more than 30% down versus the peak. I think the inventory correction is still ongoing, but I do expect that to start to recover. I will just say we haven’t seen it yet and it’s been quite persistent. That’s on the industrial side and I can go even into the sectors, most of the sectors are showing either still searching for a bottom or hovering at a very low level. So it’s about time, but we haven’t seen it yet.”

He is encouraged by progress in the Personal Electronics, Enterprise Systems and Communication System segments.

“We are coming from a very low trough, but showing momentum and I think that we are in the process of strengthening. Unfortunately, these markets were about 25% of our revenue in 2023 and in our case, we really need the broad industrial market and the automotive market to join in.”