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Texas Instruments sounds alarm on 3G

Someone's cutting back

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Texas Instruments, one of the world's largest semiconductor manufacturers, is sounding the alarm over the demand for 3G phones.

The company said one of its major clients had sharply cut back on its orders. Though TI declined to name the customer, analysts are speculating it is Nokia, TI's largest customer for mobile chipsets.

As a result, TI cut its financial forecasts for the first three months of the calendar year. It now expects to make revenues of between $3.21bn-$3.35bn, down from its prior forecast of $3.27bn-$3.55bn.

"The wireless market and the revenue in that market have often fluctuated on a short term basis," said Ron Slaymaker, vice president and manager of investor relations for TI. "Very recently we received pretty significant downward revision in wireless customer demand."

He tried to remain upbeat, adding: "The long term trend towards smartphones represents a great opportunity for Texas Instruments given the strength of our position with OMAP applications processors."

OMAP processors are proprietary chips designed by TI to run multimedia applications on mobile devices.

TI's downgrading of its forecasts have had ramifications for many other companies in the mobile sector. Nokia's shares tumbled six per cent on TI's news, while the European technology share index slipped two per cent. The shares of rivals Infineon and ST Micro both also fell.

The downgrading only seems to have affected TI's 3G prospects, according to Slaymaker. He said that sales of its entry-level products, which it typically sells into emerging markets, should still meet its earlier expectations.®

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