Shares of the Dallas-based company fell about 7 percent in after-hours trading on Tuesday after earnings also failed to exceed Wall Street expectations for the first time in at least two years.
Investors also reacted to a tepid forecast for current-quarter revenue.
TI's revenue rose nearly 10 percent in the fourth quarter, but growth is expected to slow down to about 7 percent in the quarter ending March, based on the mid-point of the company's forecast.
That compares with growth of 12 percent to 13 percent each in the first three quarters of 2017.
Though TI saw strong demand for chips used in automobiles and by industries, Chief Executive Officer Richard Templeton said the business that makes chips used in communications equipment faced soft demand.
"That's a market that traditionally is choppy," he said.
Communications equipment made up 13 percent of Texas Instruments' revenue in 2016.
TI has benefited in recent years as many automakers pivot toward self-driving vehicle technology. The automotive market contributed 18 percent of the company's revenue in 2016.
The company reported a 67 percent slump in profit to $344 million in the fourth quarter ended Dec. 31, mainly due to tax-related expenses from new U.S. tax laws.
Excluding the tax expense, Texas Instruments earned $1.09 per share, matching analysts' average estimate, according to Thomson Reuters I/B/E/S.
"It's not a blow-out result, but it is perfectly fine," said Stacy Rasgon, an analyst at Bernstein.
TI forecast current-quarter earnings of $1.01 to $1.17 per share. Analysts were expecting $1.06.
The chipmaker's shares have climbed nearly 15 percent this year after a 43 percent rise in 2017.
(Reporting by Munsif Vengattil in Bengaluru; editing by Sai Sachin Ravikumar)
By Munsif Vengattil and Aishwarya Venugopal