On Monday, semiconductor giant Texas Instruments
Texas Instruments says that its customers haven't been putting in the order volumes expected, so it's cutting back production to keep inventory levels from careening out of control. That's a marked change from management's bullish position not two months ago, when it presented original guidance alongside third-quarter results.
The problem could have been worse, if TI relied on its own foundries to produce its chips. As it is, management can simply withhold a production run or two from outsourcing foundries like Chartered Semiconductor
This pessimistic update closely follows similarly dour outlooks from National Semiconductor
"Given the combination of seasonal weakness that typically occurs in first quarter, and also considering that these kinds of corrections typically last more than a single quarter, we don't believe we've bottomed yet," said TI Vice President Ron Slaymaker. "So our expectation is first-quarter revenue will be lower than what we're seeing in the current quarter."
In other words, it looks like National Semi's pessimism set the pace for the semiconductor industry at large, rather than being an isolated issue at that company. Brace yourselves for some stormy seas, chip maker shareholders.
- Taiwan Semiconductor: Making Profits Chip by Chip
- Ericsson: Ringing Up the Gains
- National Semi Offers Gloomy Guidance
Fool contributor Anders Bylund holds no position in any of the companies discussed here, though he does own shares in a couple of other semiconductor businesses. You can check out Anders' holdings if you like, and Foolish disclosure is always worth a read.