TI Q3 Outlook Weakens Despite Strong Q2

According to a Reuters report, Texas Instruments (TI) CFO Rafael Lizardi said that from January to April 2025, market demand remained strong as customers rushed to place orders ahead of U.S. tariff changes. But starting in April, momentum slowed noticeably, falling short of expectations. Analysts now see this as a signal that growth in the analog semiconductor market may lack strength.

Wall Street has been hoping for a recovery in analog chips, but estimates suggest the sector's revenue has dropped about 25% from its peak. While TI beat forecasts in both profit and revenue during the first half of the year, Lizardi’s comments have raised new concerns over the pace of recovery.

In Q2 2025, TI reported revenue of $4.45 billion, a 16% year-over-year increase, topping market estimates. CEO Haviv Ilan noted during the earnings call that strong demand was largely driven by customers stocking up ahead of tariff deadlines.

Looking ahead, TI's guidance for the third quarter came in below market expectations. Lizardi explained that although four of the company's five end markets are showing signs of recovery, demand in the automotive sector remains under pressure from economic uncertainty.

Interestingly, TI, Infineon, and onsemi highlighted that U.S. and European automotive demand faces uncertainty due to tariffs, while STMicroelectronics and NXP painted a more optimistic picture, forecasting quarter-over-quarter growth in the auto market by Q3 2025.

On the topic of U.S. government stakes in semiconductor firms, Lizardi clarified that TI has not discussed any such investment plans with Washington. He also noted that the company's free cash flow is under strain due to heavy capital expenditures. While share buybacks continue, expansion projects remain the top priority.