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CEO Q&A
TI's strategy is designed to direct the energies of the company and its people to fuel growth and profits by leveraging our broad product portfolio to solve our customers’ most pressing technological needs.
Learn more about the strategy from TI Chairman, President and CEO Rich Templeton.
Richard K. Templeton
Chairman, president and chief executive officer
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| Q: |
TI grew profit last year, although not revenue. How do you view the role of revenue growth in TI’s strategy? |
| A: |
Revenue growth, especially in the right areas, is fundamental to our strategy. I believe the most important driver of future growth will be Analog. It’s a large market, and small share gains translate into hundreds of millions of dollars of growth. Another important growth driver for us will be Embedded Processing. It shares many of the characteristics of Analog, including high growth and higher-profit products. With only about 10 percent share, there’s lots of headroom for us to grow. Wireless remains important as applications processors become an increasingly significant tool for customers to deliver a better user experience. |
| Q: |
Why such enthusiasm for Analog? |
| A: |
With nearly every electronics device in the world requiring analog, this market is $36 billion and growing. TI is the market leader in Analog, and even though we’ve expanded that lead over the past few years, we only have about 13 percent share. That means we have plenty of room to grow. Our investments in Analog over the last decade, including several acquisitions of companies, are bearing fruit with a larger, improved and more profitable product portfolio and more differentiated manufacturing process technologies. |
| Q: |
What about Embedded Processing? |
| A: |
Embedded Processing is a new term, but not a new business for us. It combines our catalog and embedded digital signal processor, or DSP, business, a technology we pioneered, with our low-power and automotive microcontroller products, areas where we’ve been successful for 10 years. It’s a proven high-growth market with high-profit products and diverse customers and end equipments. In addition, our customers innovate their own products by writing software that runs on our processors, resulting in long-lasting and strategic relationships that often span multiple generations of their products. All this makes Embedded Processing an exciting opportunity for us – a large market with a proven financial model and ample room for growth. |
| Q: |
How is wireless changing? |
| A: |
There’s a lot of change underway in today’s wireless market. Modems, which connect the handset to the network, are becoming more standardized and the market for these products is becoming more competitive. As a result, customers are increasingly adopting these off-the-shelf products and are redirecting more of their own R&D investments to create more user-friendly interfaces and provide consumers with more and better mobile applications. These smartphones are fast becoming the most important segment of the wireless market. TI’s OMAP™ applications processors already have the lead in this market, and I’m excited about the opportunity for TI to play an even greater role in our customers’ success. Our expertise in mobile multimedia processing lies at the center of our wireless strategy going forward. |
| Q: |
What has been the impact of your manufacturing strategy? |
| A: |
Our hybrid model, combining support from third-party foundry manufacturers with TI’s internal manufacturing for advanced digital processess, gives us greater flexibility to respond faster to shifts in customer demand while minimizing the fluctuations in our own factory loadings. This also allows us to focus more of our manufacturing resources on analog, where asset lives are long and returns are high. The net result is that declining demand doesn’t hurt our profitability as much as it did in the past. We have also been able to reduce our capital spending from the levels needed to support an internal-only manufacturing model. The result is better customer support – plus higher capital efficiency, cash flow and return on invested capital. |
| Q: |
What opportunities do you see on the horizon? |
| A: |
Analog and embedded processing technologies will be key to helping our customers solve some of the major problems facing society today: affordable, available health care; more-efficient use of energy; and making our lives safer, to name a few. I believe medical electronics will emerge to become one of the great growth markets for semiconductors in the next decade. By leveraging TI’s expertise in imaging, low power and wireless, customers today are designing products like life-saving portable defibrillators and high-quality imagers, which provide physicians with the capability for highly accurate and non-invasive diagnostics. Further out on the horizon, we see significant opportunities for medical electronic devices that will be implanted in human bodies, as well as products that will aid in remote health care or home-based monitoring systems, helping bring quality medical services to more people around the world. |
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