SAN FRANCISCO - Texas Instruments and SK Hynix offered a gloomy view of the chip market in their latest quarterly reports, dashing hopes of a quick rebound for the US$550 billion (S$779 billion) industry.

US giant Texas Instruments, whose chips go into everything from home appliances to missiles, said on Tuesday that revenue will top out at US$4.8 billion this quarter at best, short of the US$4.93 billion analysts had projected.

Hynix, meanwhile, said memory prices fell 20 per cent over the last quarter and warned of “unprecedented deterioration in market conditions”.

The South Korean company slashed its capital spending for next year by at least half.

The pair of earnings reports followed a rally for chip stocks in recent days. The Philadelphia Stock Exchange Semiconductor Index, a key benchmark, had climbed for seven straight sessions, gaining about 11 per cent since the middle of the month.

Investors have been trying to pinpoint when flagging demand for chips would begin to ease.

Some welcomed Hynix’s action to stem oversupply and whittle down production of lower-margin products. Its shares rose as much as 2.1 per cent in Seoul on Wednesday after falling 29 per cent on the year.

“The South Korean chipmaker’s dramatic capital expenditure cut is a bold statement demonstrating their determination to confront the escalated uncertainties,” said IG Markets analyst Hebe Chen.

The production cut “could boost the company’s margin if investors are willing to take a long-term view”, she added.

Texas Instruments rekindled fears that the slowdown is spreading, saying sluggish demand had affected chips for industrial equipment – an area that had been seen as more immune to the slump. Its shares fell as much as 6 per cent in late trading on Tuesday.

Microsoft added to concerns by posting its slowest growth in five years, with sales of its Windows software to PC-makers falling shy of estimates.

The effort by US President Joe Biden’s administration to rein in China’s chipmaking power has also cast a cloud over the industry.

Hynix warned that its Dram production plant in Wuxi, near Shanghai, may be forced to close in an extreme scenario where United States sanctions prevent it from importing the equipment it needs to sustain and expand production.

“SK Hynix diagnosed that the semiconductor memory industry is facing an unprecedented deterioration in market conditions,” the company said in its report. “Shipments of PCs and smartphone manufacturers, which are major buyers of memory chips, have decreased.”

Fellow memorymaker Kioxia Holdings, which is cutting output by 30 per cent, also said the market is in a severe condition and there is little certainty of when sentiment will improve.

Demand for Nand memory is weakening across the board, the Japanese company said in a news conference at its Yokkaichi factory on Wednesday.

“The memory market condition is severe, and how long and how deep the current adjustment period would be is what everyone wants to know,” said Kioxia president Nobuo Hayasaka. “Demand from PCs, smartphones and data centres is falling, and I can’t foresee when this will start recovering.”

Texas Instruments said it was not surprised by a slowdown in demand for personal devices, but the industrial equipment market was weaker than expected.

Overall, orders have worsened and cancellations have increased during the current quarter, the chipmaker said.

Chip peers such as Samsung Electronics, Taiwan Semiconductor Manufacturing Company, Intel and Nvidia have all sounded the alarm about slumping demand. Samsung reported its first profit drop since 2019 at the start of this month and will detail its full earnings on Thursday.

But Texas Instruments chief financial officer Rafael Lizardi said it is impossible to say whether the current slump is simply customers cutting back to reduce inventory or if there is deeper economic concern at play.

Even when the economy is steady, “you still have semiconductor cycles”, he said. “Over the last two years I wouldn’t be surprised if customers have built too much inventory. Now we’re going the other way.” BLOOMBERG