Say hello to the big Texan. One of the world's oldest and largest semiconductor makers, Texas Instruments (TI) is the market leader in digital signal processors (DSPs) and a leading maker of analog semiconductors, which change real-world signals (such as sound and images) into the digital data streams processed by DSPs. Many wireless phones sold worldwide contain TI's DSPs, which are also found in DVD players, automotive systems, and computer modems. The company's other semiconductor products include logic chips, microprocessors, microcontrollers, and display components. TI also makes calculators. About three-quarters of sales come from customers in the Asia/Pacific region.
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. The deal will do more than add to the breadth of TI's analog product lines, which, combined with National Semiconductor, will have a portfolio of nearly 45,000 analog chips. The two companies share many of the same customers and chips from each are often included in the same end products. Where products do not overlap, chips from the combined company will expand TI's reach to additional customers in new markets, particularly for power management applications.
TI touts its combination of expertise in analog and DSP technologies as a key advantage in allowing it to deliver more highly integrated components for customers in areas such as wireless and broadband communications. The breadth of its offerings means that in some cases it can supply several different kinds of chips for a single electronic device, such as separate chips that enable the telephone and camera features in new wireless phones. The company is also banking on even larger markets for its DSPs in the future, as their use becomes more widespread in areas such as wireline communications and medical equipment.
After a dip in sales and profits in 2008 and 2009, as the global recession dampened demand for consumer electronics, TI's sales recovered in 2010, though not quite reaching the peak set in 2006. The company reported that overall sales were up by 34% in 2010 compared to 2009, and net income rose 120%, primarily on higher sales and better production capacity utilitization. Revenue growth was led by its analog and embedded processing products, as well as the portion of its wireless segment focused on smartphones and tablet computing. The company increased shipments across a broad range of products for the year.
As the electronics industry started to recover from the prolonged downturn in 2010, TI began to boost its capacity for the analog chips used in electronic gadgets. In 2010 the company bought two wafer fabs in Japan from the Japanese unit of Spansion. TI plans to run the first fab, which could add capacity for around $1 billion in analog revenue per year; it plans to keep all of the plant's employees. The second facility will be used to expand future capacity. The company will also provide FLASH products foundry and sorting services to Spansion through June 2012.
Also in 2010, TI sold its cable modem product line to Intel. The unit supplies customers such as ARRIS and Cisco's Scientific Atlanta brand with chips for cable modems. TI considered the operation non-core to ongoing operations.
During 2009 TI cut its workforce by more than 3,000 positions, around a 10% reduction in force. At the same time the company purchased manufacturing equipment from bankrupt German chip maker Qimonda for more $170 million. TI will use the equipment to make analog and embedded semiconductors.
▲ Show Less▼ Show Full Description