Richard K. Templeton
Chairman, President and
Chief Executive Officer
To our shareholders
Five years ago, we began a journey to
fundamentally remake Texas Instruments into a company focused on two of
the industrys most attractive semiconductor markets Analog and Embedded
Despite its ups and downs, I believe 2011
became the most important year yet in that journey given the strategic
progress made in our businesses. The year began with high expectations for
sustained strength in world economies; but before the first quarter was
over, one of the worst natural disasters of our lifetime the earthquake
and tsunami in Japan began to impact the production of electronics, and
by summer, political and economic uncertainty was unraveling the recovery.
Even so, it was a year in which TI outpaced the market in Analog and
Embedded Processing and again gained share.
Foremost among the things that made 2011
important was our acquisition of National Semiconductor. This
strategically significant purchase gave us immediate access to a
high-quality portfolio of more than 12,000 analog products and a large
pool of highly talented analog engineers. Together, we offer customers a
powerful and unparalleled suite of solutions.
In Embedded Processing, we continued to
heavy up our investments in microcontrollers, where our ultra-low power
capabilities enable an expanded range of applications. As a result, weve
increased our portfolio fourfold in the last three years, and today offer
products across the breadth of the microcontroller spectrum.
In our third major business, Wireless, two
significant things occurred. First, we continued our planned exit from
basebands; as we enter 2012, we expect revenue from this product line to
become only a couple of percent of our revenue compared with almost 25
percent four years ago. More strategically, we strengthened our position
in applications processors and connectivity products both of which offer
great growth potential. As cloud computing increasingly takes hold, the
opportunity for these products in many smart, connected devices will
Across all our businesses, there is a
meaningful story developing in the diversity of our customer base. We now
have more than 90,000 customers and, excluding our wireless baseband
products, no single customer comprises more than 5 percent of our revenue.
This breadth of customers alongside our breadth of portfolio sets TI apart
from our competitors.
The transition at TI is evident in our
numbers. Today, our core businesses constitute more than 70 percent of our
revenue, and that number should continue to grow as almost 90 percent of
our R&D investments are targeted there. Nowhere is the progress more
obvious than in Analog, which now comprises half of our companys total
revenue, up from a third in 2006. During 2011, we again returned cash to
stockholders through stock repurchases of $2 billion and an increase of 31
percent in the dividend rate. Even so, the balance sheet remained robust
with year-end cash and short-term investments of almost $3 billion.
As we look to future growth, we continue
to make strong investments in China, the geographic region we believe most
critical to success. We have a large, determined sales and applications
engineering team there with offices in 16 cities, four times more than we
had six years ago. Weve taken a similar approach in India, Eastern Europe
and Russia all emerging markets with growing middle-class populations
that will shape future economies.
By the end of 2011, the challenges from
earlier in the year were abating. The industry was recovering from Japans
natural disasters, semiconductor demand was becoming better aligned with
customer demand, and our revenue was starting to improve. We know that
great technology companies deliver growth lots of it. The chips we make
are increasingly pervasive in our daily lives, so we believe the
opportunity to achieve this goal is within reach. Our job now is to
transform great potential into great results and to make consistent
outperformance the hallmark of our company. And that is our sole priority