China's 3G Build-up Boosts Texas Instruments

Texas Instruments on Monday became the latest chip maker to increase its view of the first quarter because of increased demand for communications chips from China.

The second largest chip maker in the U.S. raised the mid-point of its first quarter revenue guidance by about US$50 million compared to its previous forecast, to between $1.79 billion and $2.05 billion.

"The upside is most notable in embedded processing and analog communications infrastructure products that are being driven by China 3G programs," said Ron Slaymaker, a vice president at Texas Instruments, in a conference call.

China is the world's largest mobile phone market in the world, with 641.23 million subscribers as of the end of last year.

The construction of China's 3G (third generation mobile telecommunications) network, which is a priority alongside the government's 4 trillion Chinese yuan (US$585 billion) economic stimulus package, is lifting a number of communications chip makers.

Altera and Xilinx of the U.S. and MediaTek of Taiwan are among companies that last week revised their quarterly revenue guidance up because of increased orders related to telecommunications spending in China.

Overall, Slaymaker said Texas Instruments' orders have trended up from very weak levels seen in the fourth quarter. But he cautioned that the uptick, and China-related demand, do not translate into a chip industry rebound.

"We have not seen the kind of broad based strengthening that would normally be associated with the end of an inventory depletion cycle," he said.

He also said that TI expects end demand to continue to decline, which will impact the company's chip business.

Revenue in the global chip market is expected to drop 22 percent in 2009, compared to last year, according to IDC. The market researcher said the chip market won't recover until 2010.

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