TI began focusing on energy conservation during the energy crisis of 1973, and since then has implemented thousands of projects to successfully reduce our energy consumption.

In the last two decades, TI has commissioned an average of 100 projects each year, collectively saving $4 million to $5 million annually. TI's threshold for identifying "cost-effective" projects has ranged from a one-year payback on investment to as much as five years, varying with business conditions. Our projects have typically had a simple payback period of less than two years.

TI also invests capital and employee resources on site-based and global initiatives, sharing best practices to more fully leverage success. We contain costs by consuming less energy and paying less for what we consume. Our energy steering team spent much of 2007 working to lower energy use and rates, boost facility and manufacturing tool efficiency, and build employee awareness of reduction measures.

Reduction efforts

To provide an additional focus on areas where TI could conserve energy or reduce its costs, our energy steering team chartered sub-teams to identify power-saving opportunities. Over the last several years the sub-teams focused on manufacturing equipment, facilities equipment and computer workstations, as well as server equipment and software.

Some of the areas these teams have impacted include:

• Manufacturing equipment: Wafer fabrication is the most energy-intensive process at TI, with the energy consumption of tools now representing more than 50 percent of facility energy consumption. To date, the sub-team dedicated to reducing energy use in this area has identified point-of-use chillers and vacuum pumps as some of the most energy-hungry, and has worked with manufacturers to identify replacement parts that use much less energy. This evaluation process is ongoing. TI also works with competitors, tool manufacturers and industry associations to improve the efficiency of future tool sets.
• Central utilities plant: Next to manufacturing equipment, the consumption of central plant equipment is the most energy-intensive. The facilities conservation team routinely evaluates the efficiency of chillers, boilers, pumps and cooling towers, recommending replacement or a change in operation where cost-effective.
• Heating, ventilation and air-conditioning systems: TI can also save energy by replacing or upgrading air handling units, fans, coils and valves, as well as their control equipment.
• Building envelope: Central heating and cooling costs are impacted by projects that involve the use of insulation, double-paned glass, window films, reflective roof coatings and air curtains at door locks. These areas are evaluated for improvement or replacement to improve efficiency.
• Lighting: TI tailors our internal lighting schemes to be as efficient as possible and has implemented controls that turn off lights when areas are not in use.
• Office equipment: More efficient office equipment is chosen where it makes economic sense, and we specify and monitor control rules that include the use of energy-saving features such as sleep modes.

In addition to these areas of conservation, TI continued to focus efforts on purchasing energy at the most reasonable rates possible. Where markets permit, TI pursues smart buying tactics, such as negotiating for fixed-price contracts, as well as contracts indexed to natural gas or electricity markets.

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2007 performance

In 2007, TI continued identifying capital equipment that could be replaced with higher efficiency versions; vacuum pumps and chillers are two examples. We have also followed through with our plans to communicate energy efficiency reduction goals to our vendors.

TI successfully moved forward with our Reduce Your Use communications campaign in 2007, which recognized employees who submitted outstanding energy reduction ideas.

Energy use comprises about 66 percent of TI's carbon footprint. We also spent about 94 percent of our overall utility budget on energy and just 6 percent on water and sewer services. As a result, our reduction strategy focused on lowering energy consumption and costs, as well as minimizing the environmental impact of its use.

The number of energy reduction projects commissioned in 2007 was 37 – only about one-third the normal level of activity. First quarter capital-spending curtailments were necessary to preserve share value. As a result, many energy reduction initiatives were sidelined. With energy prices on the rise, we recognize the need for additional conservation efforts in 2008.

TI's total energy use decreased 1 percent to an estimated 9.3 million British thermal units in 2007. TI analyzed areas where we can shave energy consumption by focusing on new purchases of more energy-efficient equipment or instituting campaigns designed to use existing equipment more efficiently. In this category, TI met our goal to commission projects saving about $3 million annually.

Looking forward, TI will continue our prudent management of rising energy costs by making adjustments to capital spending and expectations for returns on our investments

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