Head of investor relations Dave Pahl and chief financial officer Rafael Lizardi discussed the company’s results in a call after markets closed Tuesday.
Lizardi, who joined TI in 2001, took over the CFO helm for Kevin March on Feb. 1. March will retire from TI in October and has since been overseeing a transition of duties to Lizardi. March had been CFO for 13 years.
Here are four takeaways:
1. Automotive demand remains strong
The company has seen this growth for more than four years now, Pahl said. Lizardi said its competitors didn’t capitalize on this area until the last year or two. TI supplies chips to five automotive sectors: infotainment; passive safety; advanced driver assistance systems; hybrid, electric and power train systems; and body electronics and lighting.
2. Industrial demand is strengthening
This growth was broad-based across sectors, Pahl said. The industrial market comprises 14 sectors, Lizardi said, so TI is not dependent on any one product or customer. Because of the nature of the market, products last a long time, which means one investment results in years’ worth of cash flow. Factory automation was one area of growth. Lizardi also cited home technology, including thermostats, which he said 10 years ago contained about $4 worth of semiconductors. Now, smart thermostats may have $20 worth of semiconductor content, including chips for power management, analog-to-digital conversion, and Wi-Fi.
3. TI invested $1.4 billion in R&D
Lizardi said that’s “far above” what its competitors spent for research and development in the last year. Some of that investment has gone toward making its website user-friendly. In May, the company announced a revolutionary new radar chip.
4. Third-quarter outlook is positive
Lizardi estimated revenue will be between $3.74 billion and $4.06 billion, and earnings per share to be between $1.04 and $1.18. Analysts predict third-quarter growth of 3.4 percent, with revenue of $3.8 billion and earnings per share of $1.05.