Texas Instruments reports 30 per cent rise in profits but decline in demand

Q3 net income of $784m aided by cost-cutting measures

Chip producer Texas Instruments (TI) has seen a 30 per cent rise in profits during Q3 despite a two per cent decline in revenue, the company reports in its financial results.

The Dallas-based manufacturer saw a revenue of $3.39bn during the previous quarter, with a net income of $784m. The increased profits come as a result of various cost-cutting measures.

However, the demand for chips has decreased, with the company pointing to a dip in orders from Chinese and European car manufacturers. A drop in demand for items including printers and wireless network equipment has also hit chip sales.

Reports earlier this month suggested that Texas Instrument's mobile chip arm could be acquired by Amazon, and with TI not listing mobile phones as a key product for its future, a sale of this division of the firm arguably looks increasingly likely. The company is focusing on analog and embedded processing, which each saw a two per cent growth in revenue this quarter.

"These two core businesses now comprise 70 per cent of our revenue," said TI chairman, president and CEO Rich Templeton.

"The importance of this strategy shows in the strong cash that we generate even in weak markets and in our ability to return that cash to shareholders. In the third quarter, our free cash flow exceeded $1bn, and we returned more than 75 per cent of it through dividends and share repurchases," he continued.

"Our confidence in the long-term sustainability of our business model drove the dividend increase of 24 per cent that we announced in the quarter," Templeton added.

British chip designer ARM also announced its Q3 results today, seeing a 20 per cent rise in profits after a strong quarter.