Texas Instruments Incorporated

One of the world's oldest and largest semiconductor makers, Texas Instruments (TI) offers more than 100,000 products. Its largest segment is analog semiconductors, which change real-world signals (such as sound and images) into the digital data streams. Analog product are used to manage power in all electronic devices; TI sells these products to customers in the consumer electronics and industrial markets, among others. The company also makes embedded processors, which can process data from analog chips and handle specific tasks in electronic devices. TI's other products include DLP chips used in high-definition projectors, custom semiconductors, and calculators. It generates most of its sales from the Asia/Pacific region.

Operations

The company operates through three segments: analog, embedded processing, and other. The analog business, which accounts for about 60% of sales, includes high-volume analog and logic products, power management semiconductors, and catalog analog products such as amplifiers and data converters. The embedded processing segment, which includes digital signal processors (DSPs) and microcontrollers, generates about 20% of sales. The remaining 20% of sales comes from smaller products lines such as calculators and application-specific integrated circuits (ASICs).

Geographic Reach

TI has design, manufacturing, or sales operations in some three dozen countries across Asia, Europe, and North America. The Asia-Pacific region (including Japan) represents its leading market, accounting for about 70% of revenue; Europe and the US each account for about 15%.

Sales and Marketing

The company markets its product through a direct sales force, as well as via distributors and third-party sales representatives. Distributors generate about 55% of sales. 

Financial Analysis

After a dip in sales and profits in 2008 and 2009, when the global recession dampened demand for consumer electronics, TI's sales recovered in 2010, though they have declined a bit since then. In 2013, the company reported revenue of about $12.2 billion, down 5% from 2012. Although it saw growth in both its analog and embedded processing segments (3% and 9%, respectively), TI's third segment (other) fell nearly 30% after the company completely exited the legacy wireless products business (baseband products, as well as connectivity and other products for smartphones and tablets).

Net income was up in 2013, jumping more than 20% to $2.2 billion, as the company invested about $350 million less in R&D and recorded a net credit of nearly $200 million in relation to its wireless product divestiture. Cash flow from operations remained steady in 2013 at about $3.4 billion.

Strategy

TI's strategy is to focus on its analog and embedded processing businesses, which the company expects to account for 90% of revenue in the next few years (up from 44% in 2006). To that end, in 2013 it closed the books on its wireless business, moving away from products for mobile devices and toward embedded markets, which the company sees as more suitable for growth.

The company is also working to expand its customer base, including attracting more small customers. In 2013 its largest customer accounted for just 7% of revenue, compared to nearly a quarter of revenue in 2009.

Company Background

TI jockeys back and forth with European chip giant STMicroelectronics to be the world's top maker of analog chips; both companies far outpace other analog rivals. In 2011 TI looked to take the lead in the analog race when it bought smaller rival National Semiconductor for about $6.5 billion in cash.

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Texas Instruments Incorporated


12500 Ti Blvd.
Dallas, TX 75243
Phone: (972) 995-3773
Fax: (972) 927-6377
www.ti.com

STATS


  • Employer Type: Public
  • Stock Symbol: TXN,
  • Stock Exchange: , NYSE
  • Chairman, President, and CEO: Richard Templeton
  • SVP and CFO: Kevin March
  • Chairman, President, and CEO: Richard Templeton

Major Office Locations

  • Dallas, TX

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