(Reuters) -Texas Instruments forecast second-quarter revenue above Wall Street estimates on Tuesday, signaling an uptick in demand for its analog semiconductors, sending the chipmaker’s shares up 5% in extended trading.
The company’s upbeat forecast comes at a time when demand for consumer electronics is improving after months of declines, indicating that the analog chip inventory correction might begin to ease.
Global PC shipments grew around 3% in the first three months of 2024, after a slump that lasted eight consecutive quarters, data from research firm Counterpoint showed.
TI’s chips help power electronic devices and allow digital processors to communicate with the “real world”.
“Analog semiconductor demand is starting to stabilize,” said Summit Insights analyst Kinngai Chan.
While analog companies are still going to see sales decline, the sector will see more typical seasonal demand in the coming quarters, Chan said.
The Dallas, Texas-based company expects revenue with a midpoint of $3.8 billion for the second quarter, compared with analysts’ average estimate of $3.77 billion, according to LSEG data.
TI’s earnings are closely watched as it is the first among major U.S. semiconductor firms to report quarterly results.
Its semiconductors are also used in tasks such as enabling industrial automation, while some of its chips form a part of the circuitry used in automobiles, among other applications.
Orders for its semiconductors had taken a hit as the automotive market is seeing a chip inventory build up for electric vehicles (EV) on account of dwindling consumer appetite, while industrial weakness continued.
TI forecast second-quarter earnings to be between $1.05 and $1.25 per share, versus analysts’ estimate of $1.16 per share.
The company reported first-quarter revenue of $3.66 billion, which, according to LSEG data, marks the sixth consecutive quarter of year-on-year declines. Analysts expected revenue at $3.61 billion.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Shilpi Majumdar)
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