TI Continues To See Growth Due To Demand From Automotive, Industrial Markets

by Trefis Team
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Texas Instruments
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Texas Instruments (NYSE:TXN) once again posted solid growth in Q2, as revenues grew by 11% to $3.69 billion in Q2. While the company’s revenue came in at the high end of its guided range, diluted earnings per share (EPS) beat both company guidance and analyst expectation. The growth in revenues was once again driven by TI’s increasing strength in the automotive and industrial markets.  The company reported that its book to bill ratio stood at 1.06, which implies that the order backlog for the company was around $3.9 billion.

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Key Takeaways From The Earnings Release

  • In Q2, Analog revenue grew 18% y-o-y, while Embedded Processing revenue grew 15% y-o-y. The operating margin increased in both businesses, as 300 mm fab facility utilization grew during the quarter.
  • Automotive and Industrial products continue to drive growth as the automation in these industries is increasing the semiconductor demand. The company, through its 300-millimeter analog production, has a diverse product portfolio for these segments
  • The company’s gross margin improved by 300 basis points to 64.3% due to improved manufacturing efficiency. The significant increase in TI’s gross margins in the last few years has been driven by an increasing proportion of production occurring on the 300-mm capacity. As the analog business grows, the company’s incremental growth will be built on 300mm. In addition to the expanding revenue base, the increasing proportion of manufacturing on 300mm, as opposed to 200mm, will help sustain or even further grow gross margins.

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