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Texas Instruments

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Bellwether

Headquartered in Dallas Texas, the company was founded in 1930. Analog chips and embedded processors are the main focus of the firm. TI also produces calculators, microcontrollers, multi-core processors and digital light processing technology. The firm holds 45,000 patents as of 2016. 

Business classification and revenue mix in 2022 are:

  • Industrial - 40%

  • Automotive - 25%

  • Personal electronics - 20%

  • Communication equipments - 7%

  • Enterprise systems - 6%

  • Other - 2%

Geographical market and revenue mix in 2022 are: 

  • 11% - United States - (HQ-33%)

  • 49% - China - (HQ-24%) 

  • 13% - Rest of Asia - (HQ-10%) 

  • 18% - EMEA - (HQ-24%)

  • 6% - Japan - (HQ-8%)

  • 3% - Rest of World - (HQ-1%)

In 2022, TI started reporting revenue based on end customers HQ to profile where critical decisions are made. This information is useful in understanding risk & impact of re-shoring and near-shoring. 

Major acquisitions in the past decades were:

  • Burr-Brown Corp. acquired in Jun-2000 for $7.6B. BBC produces analog & mixed-signal integrated circuits used in signal processing. 

  • National Semiconductor acquired in Apr-2011 for $6.5B. The firm specialises in analog and subsystem. Products includes power management IC, display drivers, audio & operational amplifiers, communication and data conversion solutions. 

Financial Performance (9M 2023) 

Revenue had been growing for a good decade but has begun to soften due to high inflation, interest rate and weak China post-Covid recovery.

Analog portfolio constitute 74% of business and is TI major earning driver; contribution to 78% operating profit.

Embedded processing constitute 19% revenue and 14% operating profit. 

Other revenue mix was 7% and operating profit 8%. 

Industrial and Automotive were expanding while the remaining segments are largely range bound. 

Texas Instruments started separating China business from Rest of Asia. Since 2022 revenue mix for these regions appear to exhibit weakness. Re-shoring of business to EMEA and United States is evident. 

Opinion

Texas Instruments is a bellwether for the semiconductor industry. Dynamics in regional business provides us with useful insight on how geopolitical conflicts and trade war are impacting business decisions. 

There is currently no signal that the semiconductor industry is staging a strong recovery. 

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