Semiconductor company Texas Instruments (TXN 95.12, -5.13, -5.1%) reported its 3Q results after Tuesday's close. WDC came up shy of revenue estimates and issued an earnings warning for the fourth quarter. More importantly, WDC noted that demand for its products has slowed across most markets.

There are multiple reasons why this market seems to be bothered by what Texas Instruments said this morning:

• TXN Broad base of customers: (~100,000 across various end markets), serving the needs of nearly 40 sectors through its industrial (35% of revenue), automotive (19% of revenue), personal electronics (25% of revenue), communications equipment (12% of revenue), enterprise systems (6% of revenue), and other (3% of revenue) segments.

• Texas Instruments sells predominately to private markets

• Texas Instruments didn’t quickly assign blame to macro factors for its disappointment, but the disappointment it mentioned fit the narrative of a weakening semiconductor industry that is a leading-indicator.

  • In that vain, TXN validates worries about a normal cyclical slowdown taking place just in line with fed concerns that a cyclical slowdown could be longer lasting if macro issues, like a trade war with China, worsen.

    • Approximately 85% of the company's 2017 revenue came from shipments to locations outside the U.S., with shipments into China accounting for a large portion of revenue (source: 10K filing)

• The warning from Texas Instruments comes ahead of reports from other leading semiconductor companies like:

• Intel INTC 43.64, -0.86, -1.9%

• Adv. Micro Devices AMD 23.72, -1.37, -5.5%

• NVIDIA NVDA 212.03, -9.04, -4.1%

• Broadcom AVGO 221.31, -7.74, -3.4%

• Qualcomm QCOM 65.33, -1.05, -1.6%

With that said, pay close attention to AMD and WDC earnings due and other semi conductor and related companies echoing that very sentiment.