Weak iPhone Sales Likely Affected Texas Instruments’ Q2’16 Earnings
Leading analog chip maker, Texas Instruments (NYSE:TXN) is scheduled to report its Q2’16 earnings on July 25th. In Q1’16, the company’s revenues were affected by a decline in its personal electronics segment. With an 18% market share in the Analog market and a 16% market share in the Embedded Processor space, Texas Instruments has a wide exposure to multiple end markets. The company sells its products to around 100,000 customers. However, TI derives approximately 10% of its revenues from Apple, which is its single largest customer. As Apple’s sales are expected to decline again in Q2, after it plunged for the first time in Q1, Texas Instruments might as well witness a decline in its personal electronics segment. (For more details check: How Is Texas Instruments’ Sales Dependent Upon Apple?)
That said, the company is shifting additional analog production to larger 300 mm wafers, which increases the number of devices per wafer while lowering their cost. This should allow for higher profitability and greater pricing power, once demand picks up as expected. Also, we can expect TI to again see higher revenues around the time of next iPhone launch. For now, it has been rumored that iPhone 7 can hit the market around September this year. Below we look at the key financial metrics as expected for Texas Instruments in Q2’16:
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