How Will Texas Instruments Perform In The Second Half Of 2018 After Strong Q2 Growth?

by Trefis Team
Texas Instruments
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Texas Instruments (NYSE: TXN) announced its Q2 earnings on July 24, beating both revenue and earnings estimates. The company reported a solid 9% increase in revenues to just over $4 billion. Much of the revenue growth came from its Analog segment, as a result of increased demand for its integrated chips. Analog revenue was up 12% year-on-year to $2.7 billion, forming nearly 67% of the company’s net revenues. In addition, Embedded Processing segment revenue grew 9% year-on-year to $943 million. TI reported a massive 36% jump in its earnings to $1.40, as a result of lower costs due to the expansion of its 300mm fabs production. Further, the management upside guidance of Q3 results indicates strong demand for its products. Therefore, we believe robust demand from key automotive and industrial markets should drive the company’s full year results. Below, we provide a brief overview of the company’s results and what lies ahead.
We have summarized our expectations for the company’s 2018 results on our interactive TI’s full year results dashboard You can modify the key drivers to arrive at your own price estimate for the company.
Based on the recent results and market trends, we have revised our forecasts for Texas Instruments for the full year. We forecast Analog segment revenues to be up slightly over 7% to almost $10.6 billion for the year. Similarly, Embedded segment revenues are forecast to increase around 10% to just under $4 billion. The strong growth is driven by increased demand for chips from automakers for autonomous and semi-autonomous vehicles, as well as other technological advancements.
The Analog segment holds substantial growth potential for TI, as a result of the aforementioned demand for chips from automakers, coupled with strong demand in the industrial segment. Both markets are increasing their use of semiconductors, which should provide significant growth opportunities for TI. In addition, the planned installations of 5G wireless networks later this year, and eventual further expansion across the U.S., should result in strong demand for Texas Instruments’ equipment, leading to significant growth over the next few years. As a result of the increasing demand for Microcontrollers and Processors from automakers, driven by autonomous and semi-autonomous vehicles and other technological advancements, coupled with strong demand in the industrial segment, we believe that the strong growth of the Embedded Processing segment can continue in the future.
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