TI Paints It Bleak

TI's update for the fourth quarter has been anxiously awaited by investors as a barometer of the semiconductor industry's health.

Last week, a trio of chipmakers delivered disappointing reports to the Street. Xilinx(XLNX) and Altera(ALTR) both cut their sales projections, while National Semiconductor(NSM) said orders in its current quarter plunged 16%.

TI, the world's largest cell-phone chipmaker, warned in October that demand for high-end 3G phones was proving to be softer than expected. With bookings in its third quarter down $468 million sequentially, TI said it needed a strong infusion of turns -- new orders for shipments in the same quarter -- if it were to make the high end of its sales guidance.

Monday's report suggested that those turns did not materialize.

TI said that it now expects semiconductor sales in the fourth quarter to range between $3.28 billion and $3.42 billion, vs. its initial expectation of $3.39 billion and $3.66 billion in fourth-quarter chip sales.

TI also said revenue in its educational group, which makes calculators, will be $10 million less than initially expected.

About the only business that TI said was performing well was the market for low-end cell-phone handsets for which the company sells an integrated chip dubbed Locosto.

"The entire base of products we sell into low-cost handsets, that whole segment of the market is continuing to do well for us even into the fourth quarter," said Slaymaker.

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