(Reuters) - Chipmaker Texas Instruments Inc’s (TXN.O) first-quarter revenue and second-quarter revenue forecast topped analysts’ estimates on growing demand for its chips used in communication equipment, industrial machines and automotive parts.
Shares of Texas Instruments, also called TI, rose as much as 6 percent in extended trading.
RBC Capital Markets analyst Doug Freedman said TI’s revenue got a boost due to higher demand from end-customers and an overall growth in the semiconductor industry.
“The inventory levels for semiconductor devices are presently very low. So any uptick in demand is driving an uptick in sales,” Freedman said.
TI said customer cancellations were “incredibly low right now”.
The company, already looking to reduce its workforce and cut costs in less lucrative markets, said it would keep a cap on capital spending, which would help boost its margins.
TI is exiting the low-margin mobile chip business to focus on the more profitable analog business, which makes chips for everything from automotive safety devices to electronics.
Rival Qualcomm Inc (QCOM.O) on Wednesday posted its smallest quarterly revenue increase since 2010 as it wrestled with a smartphone market increasingly catering to consumers favoring less expensive devices.
TI gets about 62 percent of its sales from its analog chip business, where revenue rose 11 percent in the first quarter ended March 31.
Total revenue rose 3 percent to $2.98 billion, beating analysts’ average estimate of $2.96 billion, according to Thomson Reuters I/B/E/S.
Excluding its wireless business, which the company is winding up, revenue grew 11 percent.
The Dallas, Texas-based company forecast second-quarter revenue of $3.14-$3.40 billion, largely above analysts’ estimates of $3.15 billion.
Chief Financial Officer Kevin March said TI plans to keep its capital spending at about 4 percent of revenue, which would help gross margins.
The cost consciousness meant its second-quarter earnings forecast of 55-63 cents per share was well ahead of analysts’ average estimate of 52 cents per share.
The company’s first quarter net income rose 34 percent to $487 million, or 44 cents per share, including a gain of 2 cents per share from asset sales.
TI shares closed at $46.46 on the Nasdaq on Wednesday. The stock has risen about 6 percent this year.
Editing by Kirti Pandey, Simon Jennings and Savio D'Souza