About Texas Instruments Incorporated
Texas Instruments sticks to basics -- producing analog and embedded processors, the workhorses of the industry. The company’s analog chips manage power in electronic equipment and its embedded processors handle specific tasks in electronic devices. TI’s customers, which number about 100,000, use the company's chips for applications that include autos, industrial machinery, consumer electronics, communications devices, and calculators. The company also sticks to basics in production, operating its own manufacturing plants, which is places around the world. Another TI basic: TI engineer Jack Kilby was credited as co-inventor of the integrated circuit in the late 1950s.
Texas Instruments operates through three segments: Analog, Embedded Processing, and Other products.
The Analog business, which accounts for about two-thirds of sales, includes high-volume analog and logic products, power management semiconductors, and amplifiers and data converters. The company’s analog products are used in the personal electronics, automotive, and industrial markets, as well as others.
The Embedded Processing segment, which generates about a quarter of sales, makes application specific integrated circuits (ASICs), digital signal processors (DSPs), and microcontrollers. TI’s embedded processors range from low-cost microcontrollers used in products such as electric toothbrushes to complex devices used in automotive applications such as infotainment and advanced driver assistance systems.
The remaining revenue comes from the Other segment, which includes digital light processors (DLP), used in projectors to create high-definition images, calculators, and custom semiconductors.
In terms of markets, TI gets about a third of revenue from industrial, about 25% from personal electronics, about a fifth from automotive, and more than 10% from communications, with enterprise systems and calculators accounting for the remaining revenue.
TI operates 15 manufacturing sites in nine countries.
China is the biggest single market for Texas Instruments, accounting for about 45% of revenue with other Asia/Pacific countries (including Japan) accounting for nearly 25% of revenue. The US generates more than 10% of TI’s sales. The company has facilities for service, sales, and other functions in the US, Europe, and Asia.
Sales and Marketing
Texas Instruments has a wide representation of sales channels as well as customers. About 65% of the company’s revenue comes through distributors, who keep inventory of TI products on hand. As for customers, its 100 biggest account for about 66% of sales.
Texas Instruments followed a 3% revenue increase in 2016 with a 12% jump in 2017 to $14.9 billion. The company reported strong sales gains of 16% each from its Analog and Embedded Processing units. Growth in its Power and Signal Chain products fueled Analog sales while Embedded and Processor products contributed to the Embedded Processing sales increase. The Other segment posted a 14% decline on a slowdown of ASIC products.
Profit in 2017 rose a bit to $3.7 billion compared to $3.6 billion in 2016. The 2016 profit benefited from the adoption of a stock compensation accounting standard.
TI’s cash flow from operations was $5.36 billion in 2017, about $1 billion higher than 2016. Its free cash flow was $4.67 billion, about 31% of revenue, up from 30.5% in 2016. The company returned $4.66 billion to shareholders through a combination of stock repurchases and dividends.
Texas Instruments’ focus on its Analog and Embedded Processing units is paying off. They combined to produce 90% of the company's revenue, almost double since 2004. The company believes that analog and embedded processors offer diversity of applications, long product life cycles, and lower-cost manufacturing processes.
TI has identified two markets where analog and embedded processes can generate growing sales over time: industrial and automotive. More and more functions are handled by semiconductors in industrial machinery and vehicles. In 2017, automotive and industrial combined to provide about 55% of TI’s revenue, up from 42% in 2013. TI is investing heavily in processors for those markets, shifting resources from products for other markets. It reduced overall R&D in products for the personal electronics market, but is making selective investments in it.
On the manufacturing end, TI is moving to produce more chips on 300-millimeter wafers, which hold more chips than the standard 200-millimeter wafers. Making chips on the bigger wafer reduces costs 40%. The company has 300-millimeter capacity in its Dallas and Richardson fabrication facilities and is adding more.
Unlike its rapidly consolidating competitors, TI has not made recent acquisitions nor has it been a serious target for acquisition. Its last major deal was to buy National Semiconductor in 2011. Other semiconductor companies have spent billions on mergers and acquisitions in recent years to amass market share and diversify product lines.
Texas Instruments faces strong competition around the world from other chipmakers. The industry consolidation that TI has avoided has created bigger competitors with wider ranges of products and deeper resources. On the other side of the spectrum, small companies with innovative products are capable of snatching market share away.
In China, which supplies about 45% of revenue, Texas Instruments has challenges on two fronts. One is the Chinese government’s support for Chinese chip companies as it tries to strengthen a key industry. The other is trade. A trade ware between the US and China could increase the prices of TI products made in China and even result in restrictions on its operations in the country.
12500 TI BLVD
Dallas, TX 75243-0592
Phone: 1 (214) 479-3773
Employer Type: Publicly Owned
Stock Symbol: TXN
Stock Exchange: , NASDAQ
SVP, Analog Power Products: Niels Anderskouv
EVP and COO: Brian T. Crutcher
Chairman, President, and CEO: Richard K. Templeton
Employees (This Location): 9,800
Employees (All Locations): 29,888
Laguna Beach, CA
San Diego, CA
Santa Clara, CA
Deerfield Beach, FL
West Chicago, IL
Double Oak, TX
Fort Worth, TX
Mc Kinney, TX
Sugar Land, TX
West Lake Hills, TX
New Delhi, India
Cesson Sevigne, France
Saint Priest, France
St. Petersburg, Russia
Jincheon, South Korea