The chip industry continues to be weak, with Cadence predicting lower than expected Q4 revenue and profits
Cadence Design Systems predicts that its fourth quarter revenue and adjusted profit are lower than Wall Street's expectations, as semiconductor companies slow down their research and development spending amidst a challenging economic situation, putting pressure on the chip design software provider.
The slower than expected recovery in the chip industry has had a ripple effect on companies such as Cadence, which produces software tools and hardware to help semiconductors produce chip design drawings before mass production.
The United States has stricter export controls on China's high-end chip technology, which has also made investors nervous as it may harm the interests of electronic design automation (EDA) companies such as Cadence, which generated 15% of its total revenue in 2022 from China.
Cadence's costs have also increased as it has had to invest in integrating generative artificial intelligence (AI) functionality into its own software tools. As of the third quarter ended September 30th, the company's costs increased by 13.8%.
Cadence expects adjusted earnings per share in Q3 to range from $1.30 to $1.36. According to LSEG data, analysts had previously expected an adjusted profit of $1.37 per share.
Cadence expects a fourth quarter revenue of approximately $1.04 billion to $1.08 billion, with a median lower than the expected $1.07 billion. Revenue for the quarter from July to September increased by 13.4% to $1.02 billion, exceeding analysts' expectations of $1 billion. Quarterly adjusted earnings per share were $1.26, higher than expected.
The United States has stricter export controls on China's high-end chip technology, which has also made investors nervous as it may harm the interests of electronic design automation (EDA) companies such as Cadence, which generated 15% of its total revenue in 2022 from China.
Cadence's costs have also increased as it has had to invest in integrating generative artificial intelligence (AI) functionality into its own software tools. As of the third quarter ended September 30th, the company's costs increased by 13.8%.
Cadence expects adjusted earnings per share in Q3 to range from $1.30 to $1.36. According to LSEG data, analysts had previously expected an adjusted profit of $1.37 per share.
Cadence expects a fourth quarter revenue of approximately $1.04 billion to $1.08 billion, with a median lower than the expected $1.07 billion. Revenue for the quarter from July to September increased by 13.4% to $1.02 billion, exceeding analysts' expectations of $1 billion. Quarterly adjusted earnings per share were $1.26, higher than expected.