One of the world’s oldest and largest semiconductor makers, Texas Instruments (TI) is the market leader in digital signal processors (DSPs). Considering the growing role of DSPs in consumer devices, it’s no wonder TI jumped 25 slots from its 2009 ranking at 60th on our list of the top employers in electronic design to 35th in 2010. It also improved 12 places among OEMs, from 22nd in 2009 to 10th in 2010.
Many of the wireless phones sold worldwide contain TI’s DSPs, which are also found in other products, such as DVD players, automotive systems, and computer modems. Additional TI semiconductor offerings include logic chips, microprocessors, microcontrollers, and display components. And, the company has a long history of making calculators.
Nokia accounts for about 20% TI’s sales. Nearly three-quarters of its sales are in the Asia/Pacific region. The analog chip segment generates 41% of its sales. The company has manufacturing, design, or sales operations in more than 30 countries. It sells its products through a direct sales force, distributors, and third-party sales representatives. Also, it has a collaboration agreement with Gemalto NV, a Dutch company specializing in digital security.
Based in Dallas, TI was founded in 1930 as a geophysical exploration company that used seismic signal processing technology to search for oil. It adopted the name Texas Instruments Inc. in 1951 and entered the semiconductor market with its 1954 introduction of the first commercial silicon transistor. Its competitors include Freescale Semiconductor, Qualcomm Inc., and STMicroelectronics.
The global recession took its toll on TI, as its sales dropped 16.6%, its pretax income fell 18.7%, and its R&D funding was cut 23.9% from 2008 to 2009. Yet things are looking up for the first quarter of 2010.
Economies are generally growing again and consumers are beginning to spend. The automotive and industrial sectors are also improving. Demand was strong and broad across end markets and regions, while supply chains across the electronics industry continue to be constrained and inventories appear to remain lean, certainly for the first half of 2010.
Key Performing Sectors
Analog, embedded processing, and its core wireless products, excluding baseband, were TI’s growth drivers in the first quarter of 2010, and the company is investing to accelerate its growth from here. These segments received about 90% of its R&D investments in the first quarter. These businesses comprised 66% of first quarter revenue, up from 61% a year ago and 58% in the first quarter of 2008, with very nice gross margins, which should continue to improve as the product mix does.
Once again, all three of the major analog product areas were strong contributors to this growth with each expanding about equally from its fourth-quarter level. For high-volume analog and logic (HVAL), this was the fourth consecutive quarter of solid sequential growth, further evidencing the turnaround in this business that is now being achieved.
Wireless revenue declined 5% sequentially and was up 27% from a year ago. Baseband revenue of $424 million fell 9% sequentially and was up 6% from a year ago, reflecting a stronger mix of 3G products. Baseband is now down to 13% of TI’s revenue compared with 15% in the fourth quarter and 19% in the year-ago quarter.
Revenue of $293 million collectively from applications processors and connectivity products was even with the fourth quarter and was up 80% from a year ago. It also was up 12% compared to the third quarter of 2008, another indication of TI’s strong performance in the smart-phone market.
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