Texas Instruments beat analysts’ estimates for second-quarter profit on Tuesday, as demand for analog chips from markets such as personal electronics stabilized following a years-long glut fueled by stockpiling during the pandemic.
Shares of the company were up 4% in extended trading, set to add to the about 16% year-to-date gain.
A rebound in smartphones and personal computers sales has allowed providers to clear existing semiconductor inventory and boosted orders for TI’s chips that assist in powering these devices.
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The company reported earnings of $1.22 per share for the second quarter, compared to analysts’ average estimate of $1.16, according to LSEG data.
Texas Instruments forecast revenue with a midpoint of $4.1 billion for the third quarter, in line with analysts’ estimates.
The company’ earnings are closely watched as it is the first among major U.S semiconductor firms to report results for the June quarter.
Reported gross profit rose 31.6% to $2.21 billion for the quarter ended June 30 , compared to estimates of $2.18 billion.
“Gross margin has been a focus of investors over the past year so that number coming in above consensus is most likely driving the market’s positive reaction,” said Charter Equity analyst Jack Egan.
The company has also come under activist pressure. Elliot Investment Management in May urged TI to improve its free cash flow and temper its plans to spend about $5 billion per year through 2026 to build-out its manufacturing capacity.
TI reported free cash flow of $507 million in the second quarter, compared to estimates of $461.8 million. The company’s capital expenditure stood at $1.06 billion, compared to expectations of $1.25 billion, during that period.
TI has pushed to expand its production capacity to capitalize on longer-term demand, and to prevent shortages such as those seen during the pandemic.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sriraj Kalluvila)
