Texas Instruments Says Japan Plant Damage to Hurt Sales
Texas Instruments Says Japan Plant Damage to Hurt Sales
Jason Janik/Bloomberg
Mercedes Arguelles picks up a tray of silicon wafers in a clean room at the Texas Instruments semiconductor fabrication plant in Dallas.
Mercedes Arguelles picks up a tray of silicon wafers in a clean room at the Texas Instruments semiconductor fabrication plant in Dallas. Photographer: Jason Janik/Bloomberg
Texas Instruments Inc. (TXN), the second- largest U.S. chipmaker, said “substantial” damage to one of its plants in Japan from last week’s earthquake will hurt sales in the first and second quarters.
The plant in Miho, Japan, produced about 10 percent of Texas Instruments’ output by revenue and won’t be able to return to full shipment capacity until September, the Dallas-based company said today in a statement. The company is working to shift production to its other facilities and has identified alternatives for about 60 percent of that lost production.
Texas Instruments said revenue will be affected by “multiple factors,” such as its ability to move production and the level of demand from customers in Japan. The company said it will provide more information in an earnings report April 18.
“Semiconductor factories are extremely sensitive to power and vibration,” said Doug Freedman, an analyst at Gleacher & Co. Freedman, who is based in San Francisco. “They need a lot of power and clean power. Unstable power is bad for yields.”
The 9.0-magnitude earthquake and resulting tsunami killed thousands of people and left millions without electricity and water. Texas Instruments is the biggest maker of analog chips, used in everything from military equipment to washing machines, making its earnings performance a window into demand across the electronics industry.
Higher Prices Possible
While production will be hampered in the near term, chipmakers such as Texas Instruments may benefit down the road. Disruptions to manufacturing in Japan may spur higher prices and more orders as electronics makers increase stockpiles to hedge against possible shortages in the future, Freedman said.
The Miho plant is located about 40 miles northwest of Tokyo, Texas Instruments said. A second factory, in Aizu- wakamatsu, was also damaged and will be returned to full production by mid-April. The company said a third plant, located 500 miles south of Tokyo, was undamaged.
On March 8, Texas Instruments forecast first-quarter net income of 56 cents to 60 cents a share on sales of $3.34 billion to $3.48 billion, according to a statement. That compared with profit of 59 cents on revenue of $3.4 billion, the average of analysts’ estimates compiled by Bloomberg.
Texas Instruments slipped as much as 84 cents, or 2.4 percent, to $33.72 in extended trading after the announcement. It had gained 17 cents to $34.56 at 4 p.m. on the New York Stock Exchange. Intel Corp. is the largest U.S. chipmaker.
Separately, Freescale Semiconductor Inc. said its plant in Sendai, Japan, ceased operations following the earthquake. The entire staff was safely evacuated, said Rob Hatley, a spokesman for the Austin, Texas-based company.
Freescale has been unable to obtain a full damage assessment because of disruptions to local communications, power and transportation, he said. The factory, which makes chips used in cars, is up for sale.
To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net;
To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net
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