Texas Instruments lessens focus on mobile devices

U.S. chipmaker will not invest as much in mobile devices such as smartphones and tablets as the market opportunity is "less attractive", but will focus on industrial customers such as carmakers instead.
Written by Kevin Kwang, Contributor

Texas Instruments (TI) will not be as enthusiastically investing in mobile devices such as smartphones and tablets going forward due to increased competition and declining market opportunities. Instead, it will focus on manufacturing embedded chips for industrial clients.

According to a Reuters report Monday, TI's mobile application chip business would continue to support its customers such as Amazon.com but it would not invest in their future roadmap for tablets and smartphones in the same degree as before. The chipmaker produces chips for Amazon's Kindle Fire tablet.

Greg Delagi, senior vice president for embedded processing, said: "We believe that opportunity is less attractive as we go forward."

The company had faced fierce competition in this market segment having lost ground to rival Qualcomm, and seeing the world's biggest smartphone makers Apple and Samsung producing their own chips instead of procuring them from chipmakers, the report noted.

It will now focus on expanding the sale of its OMAP wireless application chips to its embedded chip business and target industrial clients such as car manufacturers, with Delagi saying TI is "reprofiling" its investment in this area and research and development will need to look different.

He added OMAP's growth in the embedded product market will be slower than the high-growth wireless market but it would "generate a more stable, profitable long-term business". He expects TI's embedded processor and wireless chips to generate gross margins of 55 percent to 60 percent and operating margins of about 30 percent, but did not state a timeframe to achieve these targets.

He added it is still too early to say how this shift in focus will affect the company's financials.

IHS iSuppli earlier put TI as the top semiconductor manufacturer for the industrial electronic chip market in 2011, claiming 7.3 percent of market share--up from 6.4 percent in 2010. Its revenue from this business also grew to US$2.2 billion, a 24.9 percent spike from the US$1.8 billion the year before.

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