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Tom
Engibous (left), Chairman of the Board, and
Rich Templeton, President and Chief Executive Officer. |
To Our
Shareholders
In 2004, Texas Instruments outperformed the semiconductor
market with excellent revenue growth. We also significantly improved
profitability and enhanced TI’s cash position, even as we spent
almost $1 billion for common stock repurchases and dividends paid
to shareholders.
We are pleased but not surprised with these results. Communications
and entertainment are the new driving forces in technology. People
increasingly demand flexibility in how they communicate, use the Internet,
take pictures, watch movies and listen to music.
These demands are fully aligned with TI’s core skills. We’ve
been investing in digital signal processors (DSP) and analog for many
years, and we have augmented these revenue generators with a promising
new growth engine in Digital Light Processing™
(DLP™) technology. We believe the recent past is just a hint
of TI’s full potential.
In December of 2004, we began sampling TI’s single-chip cell-phone
product. This chip will help accelerate wireless penetration into
new growth markets by enabling low-cost cell phones in places such
as China, India and Latin America. Hundreds of millions of people
could experience telecommunications for the first time because of
this single-chip breakthrough.
For third-generation (3G) cell phones, modem DSPs and OMAP™
application processors from TI lead the world in performance and sales
volume. Customers are sampling our new OMAP 2 processors to create
cell phones with multi-megapixel cameras, digital video recorders,
CD-quality audio, three-dimensional gaming and more.
Our DLP technology has become one of the world’s most popular
choices for digital imaging in projectors and high-definition televisions.
DLP products deliver excellent detail, clarity and reliability at
an affordable price. The long-term potential is significant given
the early stage of digital TV deployment and DLP technology’s
compelling benefits.
For TI’s high-performance analog products, it’s a profitable
paradox that the more the world shifts to digital, the more our customers
need analog functionality for critical tasks such as data conversion,
amplification and power management. In 2004, roughly half of TI’s
high-performance analog revenue came from products introduced in the
last few years. TI clearly is delivering what customers demand in
this promising market.
Of course, there are challenges. 2004 presented a real-world test
of TI’s manufacturing strategy, which combines internal and
foundry capacity. Early in the year, this strategy helped TI meet
surging demand while maintaining disciplined capital spending. Then,
when semiconductor inventories built up in the second half of the
year, we were able to make quick adjustments that reduced inventory
even as we maintained high utilization levels in our most advanced
manufacturing facilities.
TI celebrates its 75th anniversary in 2005. We look back with pride
on the first commercial production of silicon transistors, the first
integrated circuit and many other innovations that helped shape the
electronics industry. We look forward with great optimism because
our latest innovations are enabling and accelerating the penetration
of digital technology into daily life. We are convinced that the best
is yet to come.
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