Texas Instruments also gave a tepid outlook for sales and earnings in the quarter ending March but analysts said results overall were not as bad as feared, and the company's shares edged up 1 percent in after-hours trading.
The semiconductor industry has had a tumultuous opening to 2019 amid concerns of a global tech slowdown with warnings from Samsung Electronics, Taiwan's TSMC and Apple Inc, which this month cut its sales forecast due to poor iPhone demand in China.
TI supplies touchscreen controllers and power management chips for Apple's iPhones and iPads, and is among a series of chip producers which have seen their stocks take a beating due to fears of falling demand from Apple and other smartphone makers.
On a conference call with analysts, TI executives said its Chinese business suffered the most across all regions during the final quarter of 2018. Personal electronics, and specifically the smartphone segment was weaker, they added.
"The weakness we are seeing is primarily due to the semiconductor cycle," TI Chief Financial Officer Rafael Lizardi said on the call.
"In addition, the macro environment, including uncertainty because of trade tensions, could impact the depth and duration of this cycle," he added.
"The reason why the stock is up a little bit is because people were expecting even worse results," Stifel, Nicolaus & Co analyst Tore Svanberg said. "It does not mean everything is behind them ... We are still in downturn."
Meanwhile, results from two other U.S. chipmakers, Xilinx and Lam Research, reassured investors worried about the fallout from weaker demand, inventory adjustments and U.S.-China trade issues.
Xilinx surged 8 percent in extended trade after the programmable chip producer's quarterly results and outlook beat analysts' expectations.
Lam Research, which makes semiconductor manufacturing equipment, jumped 7.4 percent after the bell following its better-than-expected results and its announcement of a $5 billion stock buyback.
The Philadelphia Semiconductor Index <.SOX> is down 19 percent from its record high in March 2018.
TI's revenue overall fell 1 percent to $3.72 billion in the quarter ended Dec. 31. That missed analysts' average estimate of $3.74 billion, according to IBES data from Refinitiv.
Its first-quarter forecast of between $3.34 billion and $3.62 billion in revenue and earnings of $1.03 to $1.21 per share largely missed analysts' expectations of $3.59 billion in revenue and $1.20 in earnings per share.
TI's net income surged to $1.24 billion from $344 million a year earlier, thanks to a significantly lower provision for income taxes. Excluding one-time items, the company earned $1.27 per share, beating analysts' estimates of $1.24.
(Reporting by Sayanti Chakraborty and Sonam Rai in Bengaluru and Noel Randewich in New York; Editing by Sai Sachin Ravikumar)
By Sayanti Chakraborty and Sonam Rai