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TI's quake-damaged fabs resume operations

Posted: 28 Jul 2011 ?? ?Print Version ?Bookmark and Share

Keywords:Japan earthquake? semiconductor fabs? production?

Texas Instruments Inc. has reported that two of its semiconductor fabs that were damaged in the devastating Japan earthquake in March 11 have resumed production. The resumed operations of the fabs are ahead of schedule and come with the company's report of its second quarter results that beat analysts' expectations.

TI Japan fabs down
Texas Instruments reported on March 14 that its semiconductor fab in Miho was damaged in the 8.9-magnitude earthquake that hit Japan on March 11, 2011.
The company's fab in Aizu-wakamatsu was also damaged. Read more about the damage on TI's Miho and Aizu-wakamatsu fabs.

TI's fabs in Aizu-wakamatsu and Miho stopped operations in the aftermath of the quake. The Miho fab suffered substantial damage, while the Aizu-wakamatsu fab was expected to resume its production last April. However, TI announced at the time that the Miho fab will not be back to full production until the middle of this month. TI's Miho fab is believed to be the last fab to remain idle after the March 11 earthquake and tsunami. This is with the exception of one Freescale fab in Sendai, Japan, which Freescale has decided not to reopen. The fab was the closest to the earthquake's epicenter.

"In the quarter, we also resumed production ahead of schedule at our Japan factories that were damaged in the earthquake, thanks to excellent work by our teams on the ground," said Rich Templeton, TI's chairman, president and CEO, in a statement.

TI also announced that its pending acquisition of National Semiconductor Corp. has cleared all antitrust reviews with the exception of China, which is underway. The company said it expects the transaction to close before the end of the year.

"We look forward to welcoming the people of National Semiconductor and to expanding the portfolio of unique products we can offer our analog customers," Templeton said.

TI reported second quarter sales of $3.46 billion, up 2 percent from the previous quarter and down 1 percent from the second quarter of 2010. The company reported a net income of $672 million, or 56 cents per share up 1 percent from the previous quarter but down 13 percent compared with the year-ago quarter.

Consensus analysts' expectations had called for TI to report sales of $3.44 billion and earnings of 53 cents per share, according to Yahoo Finance.

Sequential revenue growth was driven by 12 percent growth in embedded processing products and 3 percent growth in analog products, TI said. The company believes it gained market share in both segments, according to Templeton.

Templeton said TI expects modest sequential growth in the third quarter, but that a combination of factors make the outlook for the quarter less clear than usual.

Kevin March, TI's senior vice president and chief financial officer, said the company expects revenue for the third quarter of between $3.4 billion and $3.7 billion, a sequential change of down 2 percent to up 7 percent.

"Management cited macroeconomic uncertainty in computing and consumer as driving more conservative guidance than typical," said Craig Berger, an analyst with FBR Capital Markets, in a report circulated Thursday. "We think management gave conservative guidance that TI may ultimately beat in three months, perhaps giving investors confidence that this is the 'bottom' for chip stocks and fundamentals."

Berger maintained FBR's "outperform" rating on TI's stock, but cut its target price on TI's stock to $36 from $39.

Bobby Burleson, an analyst with Canaccord Genuity, said in a separate report that analog IC sales are tracking poorly so far in the third quarter for PCs and consumer electronics, a potential issue for TI. "We believe sell-through trends in Asia are tracking well below normal seasonality early in Q3 and are likely to remain weak," Burleson said.

- Dylan McGrath
??EE Times





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