TI sees short, shallow correction

CALIFORNIA, USA: As the U.S. economy continues to struggle and family incomes remain constrained, consumers are expected to be picky during the holiday season about what they buy.

"Everybody is cautious on the consumer. So if the consumer reacts a little bit better and the sentiment improves then that possibly becomes a tail-wind in the first half (of 2011)," said Vijay Rakesh, an analyst at Sterne Agee.

A bright spot for Texas Instruments in the current quarter has been microchips sold into smartphones and video game consoles, Slaymaker said.

The company is getting out of its low-margin cellphone baseband business and concentrating on its OMAP line of chips for smartphones and tablets.

Global semiconductor sales next year will likely expand 4.5 percent, according to World Semiconductor Trade Statistics, an industry organization.

Texas Instruments in October had forecast that its revenue in the quarter ending in December would fall sequentially to between $3.36 billion to $3.64 billion, also implying a midpoint of $3.5 billion. Sales in the third quarter were $3.74 billion. It had forecast fourth-quarter earnings per share of 59 cents to 67 cents.

Shares of Texas Instruments, which is increasingly focusing on its analog chip business, dipped 0.9 percent after-hours after closing up 1.40 percent at $33.41.