July 22 (Bloomberg) -- Texas Instruments Inc., the second- largest U.S. semiconductor maker, fell the most in almost six years in New York after forecasting earnings that fell short of analysts' estimates because of slowing demand for its chips.

Third-quarter profit will be as little as 41 cents a share on sales of at least $3.26 billion, the Dallas-based company said yesterday. Analysts in a Bloomberg survey had estimated earnings of 51 cents a share on sales of $3.56 billion.

Mobile-phone chip revenue dropped because Texas Instruments lost orders at Sony Ericsson Mobile Communications Ltd., while sales of so-called analog chips were worse than expected in June, Chief Financial Officer Kevin March said yesterday in an interview. That left investors concerned that a slowing economy is curbing demand for electronics.

``TI is saying they're definitely seeing some macroeconomic slowness,'' Mark Mowrey, an analyst at Al Frank Asset Management in Laguna Beach, California, said in a Bloomberg Television interview. ``The outlook looks a little light.''

Texas Instruments fell $4.02, or 14 percent, to $24.50 at 4 p.m. in New York Stock Exchange composite trading, the most since October 2002.

Conservative Forecasts

Distributors of analog chips, which perform basic functions in devices from computers to washing machines, cut back orders last month to reduce inventory, March said. Analog chips have been one of Chief Executive Officer Rich Templeton's most resilient businesses, with sales growing 10 percent to $1.29 billion in the second quarter.

Texas Instruments' management often gives conservative forecasts, said Al Frank's Mowrey, adding that he may add to his fund's holdings of the company's stock.

Second-quarter net income declined to $588 million, or 44 cents a share, from $610 million, or 42 cents, a year earlier, Texas Instruments said. Sales fell 2.1 percent to $3.35 billion. Analysts had predicted, on average, a profit of 46 cents on sales of $3.39 billion.

``It's probably not coming from any one segment,'' Doug Freedman, an analyst at American Technology Research in San Francisco, said in Bloomberg Television interview. He has a neutral rating on the stock. ``Their revenue outlook is actually soft.''

Texas Instruments, whose total chip sales trail only Intel Corp.'s among U.S. companies, said wireless sales fell 12 percent to $903 million in the quarter. The company, the second-largest maker of mobile-phone chips, lost the top spot in the market to Qualcomm Inc. last year.

Analog chips accounted for about 35 percent of sales in 2007, making them the company's biggest business, and semiconductors used in phones provided 30 percent.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

Last Updated: July 22, 2008 16:07 EDT