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(Bloomberg) -- Analog Devices Inc. is close to an all-stock agreement to acquire Maxim Integrated Products Inc., according to people familiar with the matter.The semiconductor companies are talking about a deal that values San Jose, California-based Maxim at more than its current market capitalization of roughly $17 billion. Norwood, Mass.-based Analog has a market value of $46 billion and also has a large office in the San Jose area. The deal could be announced as early as Monday, though discussions could still fall apart, said the people, asking not to be named discussing private negotiations.Representatives for Analog Devices and Maxim declined to comment. The Wall Street Journal first reported the negotiations.Acquisitions are starting to return after a lull of several months caused by the Covid-19 pandemic. This comes on the heels of Uber Inc. announcing a $2.65 billion deal for Postmates Inc., Allstate Corp. agreeing to a record $4 billion takeover of National General Holdings Corp. and Warren Buffett’s Berkshire Hathaway Inc. spending roughly the same amount on a gas pipeline and storage assets.Some chip deals have either been delayed or abandoned if they require approval in China, the world’s largest market for semiconductors. The process has been complicated by the ongoing trade war between China and the U.S.Analog Devices is currently less than half the size of market leader Texas Instruments Inc. by revenue. While Maxim wouldn’t allow it to close the gap totally, it would broaden the range of products in the analog portfolio, something that Texas Instruments has touted as helping to cement its dominance.All three companies specialize in analog and embedded computing components. Once a sleepy backwater of the industry, this segment has enjoyed a resurgence as the list of uses and customers has grown in recent years. Analog chips convert real-world things like sound and pressure into electronic signals, and the rush to add automation to factory equipment and buildings and to move cars toward a world where they won’t need human drivers has stirred new demand.It’s also a very profitable area of the chip industry. Analog Devices and Maxim have gross margins, or the percentage of sales remaining after deducting the cost of goods sold, in the region of 65%.Since 2015, the Philadelphia Stock Exchange Semiconductor Index has tripled in value. The benchmark index now has a market capitalization of more than $1.5 trillion. Over that same period, chip companies have been increasingly consolidating to help them lower costs and serve customers that have done the same. Their earnings have become more predictable and their cash generation has provided them with war chests and the ability to carry debt they couldn’t have sustained in the past.(Updates with further details from fourth paragraph)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
The Zacks Analyst Blog Highlights: Alphabet, AT&T, Philip Morris International, Amazon, Microsoft, Texas Instruments and United Parcel Service
The semiconductor space is a hot topic these days, and for good reason. While chip sales have tended to generally fluctuate with the economy, we are entering an age dominated by high-powered silicon. As the coronavirus has accelerated trends such as working from home, telemedicine, cloud computing, the Internet of Things, and the race to 5G infrastructure, leading-edge chips are powering the most resilient parts of the economy today.
Texas Instruments (TXN) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.
(Bloomberg) -- Texas Instruments Inc. reported first-quarter revenue that beat analysts’ estimates, helped by customers stocking up on components to avoid potential supply disruptions caused by the Covid-19 pandemic. It also forecast sales that exceeded some Wall Street expectations.Chief Executive Officer Rich Templeton made a rare appearance on an earnings conference call to emphasize that the company will keep plants running and maintain spending on research and new production. The chipmaker also stuck to its pledge to return free cash flow to investors though share buybacks and dividends. The stock rose in extended trading.First-quarter net income fell to $1.17 billion, or $1.24 cents per share, from $1.22 billion, or $1.26 per share, from a year earlier. Revenue dropped 7% to $3.33 billion. That easily beat Wall Street expectations, according to data compiled by Bloomberg, although there was a wide range of forecasts.Texas Instruments said second-quarter earnings will be 64 cents to $1.04 a share, on revenue of $2.61 billion to $3.19 billion. On average, analysts predicted profit of 93 cents and sales of $3.1 billion. One analyst was looking for revenue to be as low as $2.5 billion.“With a COVID-19 recession likely upon us, and with reduced visibility of customer demand, we are using the 2008 financial crisis to model our second quarter outlook,” the company said. “To reflect the increased uncertainty, we have expanded the range of our guidance.”Texas Instruments is the first major U.S. chipmaker to report results following the lockdown of the much of the population in an attempt to contain the spread of the virus. The company’s semiconductors are in everything from dishwashers to satellites, making the business an important indicator of demand across the economy.Executives said they’re seeing short-term demand from customers building chip inventories. When that’s complete, the company expects demand to fall, and it is predicting orders will decline in May.The chipmaker is nonetheless determined to keep production running and build its own stockpile to make sure it can satisfy any snap-back in demand that happens once the pandemic has passed.“Many customers are still processing what’s happening,” said Chief Financial Officer Rafael Lizardi on the conference call. “This thing could go multiple ways in the second quarter and the third.”Under Templeton, the chipmaker has bet on expanded use of electronics in vehicles and industrial systems. Car sales have plummeted during the pandemic and production has halted at many different factories.“Automotive, industrial and consumer are the end markets most impacted by the pandemic,” Susquehanna Investment Group analyst Christopher Rolland wrote in a research note before Tuesday’s results. He cited predictions that vehicle sales will decline 11% this year and noted that economic indicators related to manufacturing are at the lowest levels since the financial crisis in 2009.Texas Instruments shares rose 2% in extended trading after closing at $106.84 in New York. The stock is down 17% this year, a steeper decline than the Philadelphia Stock Exchange Semiconductor Index. The shares have surged in the past six years, partly based on stock buybacks and dividends.“Our objective is to return all free cash flow to the owners of the company,” Lizardi said on Tuesday.(Updates with executive comments throughout)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Investing.com - Texas Instruments (NASDAQ:TXN) reported on Tuesday first-quarter earnings that beat analysts' forecasts and revenue that topped expectations.
Could Texas Instruments Incorporated (NASDAQ:TXN) be an attractive dividend share to own for the long haul? Investors...
(Bloomberg) -- Broadcom Inc. warned customers they’ll need to place orders for parts at least six months ahead of time, a surprisingly long lead time that points to wider than anticipated disruptions to the tech industry’s global supply chain.Lockdowns in Malaysia, Thailand, Singapore and the Philippines are “closing or severely restricting business operations,” according to a letter to customers from Nilesh Mistry, Broadcom’s vice president of sales, dated April 13 and seen by Bloomberg News. He urged clients to put in their orders at least 26 weeks ahead of delivery -- meaning anything ordered now will get shipped right around the crucial holiday season. The typical lead time for deliveries is about two to three months.The missive from Broadcom -- which makes crucial components for Apple Inc.’s iPhone -- drives home concerns that Covid-19 is disrupting the tech supply chain well beyond China, where the novel coronavirus first emerged to impact global production lines. While China’s recovering its footing, lockdowns and quarantine orders in crucial regions such as Southeast Asia are exerting a still-unknown impact on the supply of everything from Nintendo Switches to smartphones.“Air and sea transport options have become unreliable and become more expensive and have increased delays,” Mistry wrote. His letter to customers didn’t specify which products are experiencing delayed shipments and what Broadcom’s normal lead time is between orders and delivery. “We hope that as the global community finds better methods to address the Covid-19 pandemic, the conditions will abate and we will be able to resume our normal operations.”The San Jose, California-based company declined to comment.Not Made in China Is Global Tech’s Next Big Trend: Supply LinesTerry Gou, whose Hon Hai Precision Industry Co. makes many of the world’s most recognizable consumer electronics including the iPhone, said in March China’s production restart had proven faster than expected. But he was worried that disruptions outside of China could become an issue as the coronavirus spreads globally.Broadcom is part of the same supply chain that most of the world’s chipmakers use to outsource production, testing and packaging of their products. It’s a critical link for products from mobile phones to data-center hardware. Any delays in the delivery of its semiconductors could spread throughout that supply network, potentially leading to missed launches of some of the world’s most high-profile and widely used electronic devices.Intel Corp. and Texas Instruments Inc. will report earnings next week, when they’re certain to face questions from investors about their ability to keep their factories running and fill customer orders. Products from companies such as Qualcomm Inc., Nvidia Corp. and Advanced Micro Devices Inc. are built mostly by Taiwan Semiconductor Manufacturing Co., then tested and packaged by other companies in China and Southeast Asia. Some companies perform elements of the process in-house, and a shrinking group are capable of doing all the steps themselves.Wireless customers include Apple and Samsung Electronics Co., which use Broadcom chips to add Wi-Fi and other connectivity to some of the world’s best-selling smartphones. In networking, Broadcom’s switch chips are the market leaders, going into machinery that’s used by all of the biggest equipment makers, including Cisco Systems Inc. and Huawei Technologies Co., and companies such as Amazon.com Inc. that build their own gear.Read more: Nintendo Is Likely to Suffer Global Switch Shortages From VirusOn March 12, Broadcom withdrew its annual sales forecast and gave weak near-term guidance, citing the impact of the pandemic. Chief Executive Officer Hock Tan told investors that, while fundamental demand was still strong and he hadn’t see any negative impact in the first quarter of the year, “visibility was lacking.”As part of a bond offering last week, Broadcom warned investors it was experiencing some disruption to parts of its global supply chain. In the “related risks” section of a regulatory filing, the company highlighted that a main warehouse and a number of assembly and test subcontractors are in Malaysia, which has shut down all non-essential businesses. The warehouse is fully operational, but “many of the facilities of our suppliers and service providers are not,” the company said at the time.“An extended closure of these facilities may require us to move assembly and test services to providers in other countries, and may, eventually, lead to a shortage of some components needed for our products,” Broadcom said. “In the event restrictive measures in Malaysia are intensified and our warehouse is shut down or required to operate at a reduced capacity, our ability to deliver product to our customers would be severely limited.”The test and assembly of chips includes coating them in protective plastic, adding electrical contacts that let them communicate with the rest of the device, and making sure they function. Such work is less expensive and easier to conduct than the processing of silicon wafers that make up the fundamental circuits of the chips. Much of the packaging work was shifted to countries with lower labor costs decades ago.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Today we'll look at Texas Instruments Incorporated (NASDAQ:TXN) and reflect on its potential as an investment. To be...
(Bloomberg) -- Apple Inc. kept its business rolling through the coronavirus pandemic this week by launching a new iPad Pro and two new Macs. But that doesn’t mean its supply chain is in the clear.Deliveries of the new products will begin arriving on doorsteps next week. However, production of those devices likely started in early January, before the worst effects of China’s virus lockdown in February, according to people familiar with Apple’s supply chain.With a fresh round of supplier factory closures enforced by Malaysia, and the virus disrupting operations in much of the rest of the world, the iPhone maker’s supply chain has not fully recovered yet.Apple’s next flagship iPhones, with 5G wireless capabilities, are still on schedule to launch in the fall, although that’s partly because mass production isn’t due to begin until May, said the people. They asked not to be identified discussing private supply chain issues.“Even as China comes back on line, we are beginning to wonder if Covid-19 will impact other supply oriented geographies,” Brad Gastwirth, chief technology strategist at Wedbush Securities, wrote in a recent note to investors. “While China is improving, the supply chain for the electronics industry may yet see substantial disruptions.”An Apple spokesman declined to comment. Chief Executive Officer Tim Cook, the architect of the company’s China-focused supply chain, said Feb. 28 that production issues would be a “temporary condition.”Apple’s assembly factories in China, run mainly by Hon Hai Precision Industry Co., were in low gear for much of February. The manufacturing giant, also known as Foxconn, hopes to begin operating normally by the end of March.The February slowdown led to iPhone and AirPods supply constraints, but those have begun to subside. This week, Apple has been limiting iPhone purchases to two per customer on its online store in several countries. In early March, the company warned retail employees about shortages of replacement iPhones.One new product unveiled this week suggests there’s strain on Apple’s supply chain, but also shows the company can still mass produce gadgets given enough time. The keyboard accessory for the iPad Pro was announced Wednesday but goes on sale in May, an unusual delay.Read more: Supply Shock Is Wiping Out Hopes of Smartphone Sales GrowthMass assembly is only one part of Apple’s supply chain. The company and its many partners spend months or years sourcing individual components that are assembled into final products. Any disruptions in this complex network could slow the introduction of future devices.One person who works in Apple’s supply chain said not all operations are moving at normal speed because the flow of components to assemble is still slow. It will take another month or more to get parts moving steadily through the system, the person added.Jabil Inc., which makes iPhone casings, recently said its factories in China were “near normal,” while plants in other parts of the world were running 5% to 10% below capacity.“Most of that is due to supply chain issues. In some odd way, as we sit today, I think China is the least of our concerns,” CEO Mark Mondello told analysts during a March 13 conference call. “We’re able to accommodate all of the demand that’s in front of us as long as we can get parts.”A two-week lockdown in Malaysia is affecting several key suppliers that have operations in the country. Murata Manufacturing Co., Renesas Electronics Corp. and Ibiden Co., which make chips and circuit boards for Apple, have halted production there.Micron Technology Inc., which makes memory chips for Apple devices, is also impacted, but said an exemption allows “limited semiconductor operations to continue.” Texas Instruments Inc. and On Semiconductor Corp. have facilities in Malaysia, too.Apple has suppliers and operations in other countries that have been hammered by the virus, including Italy, Germany, the U.K. and South Korea.Samsung Display and LG Display Co. make iPhone screens in South Korea, while many Apple engineers working on cellular modems are based in Munich, Germany. Apple also operates former Dialog Semiconductor Plc facilities that work on power-management chips in Livorno, Italy, Nabern and Neuaubing, Germany, and Swindon, U.K.Apple has several hundred research and development engineers for future processors and underlying technologies in Israel, which is only letting citizens leave their homes for essential reasons, like buying food and medicine.Read more: Israel’s Netanyahu Orders Near Total LockdownIn the U.S., Apple has suppliers such as Corning Inc. for glass, and Qorvo Inc., Skyworks Solutions Inc. and Broadcom Inc. for wireless chips. Broadcom Chief Executive Officer Hock Tan said recently that the virus “is going to have an impact on our semiconductor business, in particular in the second half of the fiscal year.”Chips take months to make and test, and companies build up months of inventory. That means Apple and other device makers may not have seen the worst of the disruptions yet.The virus is likely challenging Apple’s ability to design and test early versions of future products in Silicon Valley, which is grappling with a shelter-in-place mandate. The company has instated a remote work order, save for some mission-critical employees, for all its offices outside of China.San Francisco’s Shelter-in-Place Order Shows U.S. What’s to ComeThese struggles have yet to severely derail the 5G iPhone launch in the fall. During China’s factory shutdown in February, Apple was able to build a limited number of test versions of the new models, one of the people familiar with the company’s supply chain said.Apple finalizes the majority of design features for new iPhones between November and December of the year prior to launch, the people said. It begins mass-producing new casings around April and then starts a late manufacturing stage called Final Assembly, Test and Pack in about May.Should Apple be unable to send full teams of engineers to China factories to finalize designs and resolve issues, this typical timeline could still slip, another person familiar with the company’s supply chain said.(Updates with Jabil comments in 12th paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.