Texas Instruments sales up 28 percent, industrial at a new peak

What happened

Texas Instruments reported on Wednesday 21 October third-quarter revenue of $6.06 billion, 28 percent more than a year earlier, with growth in industrial, automotive and data center chips. ^[1]

Operating profit was $2.87 billion, against $1.66 billion a year before, and net income was $2.43 billion, the company reported. Cash from operations was $3.42 billion in the quarter and $9.90 billion over the past twelve months. ^[1]

Why it matters

The company expects fourth-quarter revenue of $5.80 billion to $6.30 billion, a range whose middle sits at about the third quarter's $6.06 billion, by the desk's arithmetic. On the call, an analyst noted that the fourth quarter is usually seasonally down, and chief executive Haviv Ilan said the company was 'seeing an above seasonal forecast.' Reuters read the range as a sign of recovery in industrial chip demand and of growing momentum in data center chips. ^{[1, 2, 3]}

Where the demand came from

Industrial revenue was up more than 40 percent from a year earlier, automotive was up in the mid teens and data center about 95 percent, Ilan said on the call. Data center was about 13 percent of revenue in the quarter, he said, and personal electronics was about flat. ^[2]

Ilan said industrial revenue had only now matched its level of the third quarter of 2022, a new peak after four years. He named aerospace and defense, energy infrastructure, test and measurement and robotics as the strongest areas. ^[2]

Analog chips, which manage power and turn signals such as sound and temperature into data, brought in $4.91 billion, up 32 percent. Embedded processing, the small controllers inside devices, brought in $858 million, up 21 percent, the release shows. ^{[1, 3, 4]}

Supply is tightening

Broad demand 'does put pressure on lead times,' the wait between an order and delivery, Ilan said, adding that they 'maybe ticked a little bit higher.' He said lead times on manufacturing tools are extending too, 'especially on the back end side,' where chips are packaged and tested. ^[2]

Capital spending was $463 million in the quarter, against $1.20 billion a year earlier, according to the release. Ilan said the company would say more about its spending plans on its February call. ^{[1, 2]}

What settles it next

The quarterly report on Form 10-Q is due within 40 days of the quarter for a large accelerated filer, as TI is: by the desk's arithmetic, Monday 9 November. The fourth-quarter results will test the range. The Silicon Labs purchase is expected to close in the first half of 2027, subject to regulatory and shareholder approvals, the companies said in February. ^{[1, 5, 6, 7]}

Who it reaches

Texas Instruments (TXN) is direct: the results and the range are its own. Silicon Labs (SLAB) is adjacent: TI agreed on Wednesday 4 February to acquire the company for about $7.5 billion in enterprise value, and said its own factories would supply Silicon Labs' customers. ^{[1, 5]}