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Texas Instruments’ forecast sees chip stocks drop

By Philip Smith

Statement sends shiver through semiconductor sector

Shares in semiconductor manufacturers slipped after Texas Instruments released a poor forecast.

Texas is among the first chip makers to release quarterly results. These “below-seasonal forecasts” raised fears that the sector may be heading for a dip. TI shares dropped 13 per cent this week, its biggest fall in 11 years, rebounding slightly.

Investors have poured money into chip stocks this year, reports Bloomberg, betting on a rebound in demand. That hasn’t happened, in part due to global economic friction.

“Trade tension is making customers far more cautious,” the firm stated. Companies are cutting back on orders as they wait for China and the US to reach a definitive trade agreement, said chief financial officer Rafael Lizardi.

US investment bank Morgan Stanley has said that the issues extend beyond Texas Instruments. “For us, this is a definitive indicator of demand conditions for broader based distribution-based businesses, not something specific to TI – and is consistent with our cautious view on the sector,” said analyst Joseph Moore.

The forecast and comments led to sell-off in semiconductor stocks.

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