July 21, 2020 / 8:29 PM / 17 days ago

Texas Instruments sees strong quarter as work-from-home boosts chip demand

FILE PHOTO: A Texas Instruments Office is shown in San Diego, California, U.S., April 24, 2018. REUTERS/Mike Blake

(Reuters) - Texas Instruments Inc (TXN.O) forecast third-quarter revenue above estimates on Tuesday as a global shift to work-from-home boosted demand for chips used in tablets, personal computers and servers, offering some hope to an industry reeling from disruptions caused by the coronavirus pandemic.

TI, which supplies chips for everything from smart phones to automobiles, often reports quarterly results before its peers. Investors watch its numbers closely as a proxy for both the health of the industry and other sectors where semiconductors are key components.

The company’s sales to the personal electronics market shot up 20% in the second quarter due to the switch to remote work, Dave Pahl, head of investor relations, told analysts on a conference call.

When asked if TI sees China’s efforts to ramp up domestic semiconductor capabilities as a meaningful threat, Chief Financial Officer Rafael Lizardi said the company’s competitive advantages put it in a good place to compete against any challenges.

Shares of TI, which also beat second-quarter revenue and profit estimates, were up more than 1% in extended trading.

TI said it expects current-quarter revenue in the range of $3.26 billion and $3.54 billion, above analysts’ expectations of $3.12 billion, according to IBES data from Refinitiv.

Total revenue fell about 12% to $3.24 billion, but came in above estimates of $2.94 billion.

The overall revenue was impacted due to a 40% slump in sales to the automotive market, without which second-quarter revenue was down 3% from a year ago, Pahl said.

Net income rose 6% to $1.38 billion, or $1.48 per share, in the quarter ended June 30, beating estimates of 88 cents.

Reporting by Munsif Vengattil in Bengaluru; Editing by Maju Samuel

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