Annual Meeting of Stockholders
April 17, 2008
Rich Templeton, President and CEO

Introduction

Good morning. It’s a pleasure to welcome all of you here today, and we thank you for coming to this event. This company quite simply would not be where it is today without your ongoing support, enthusiasm and confidence in Texas Instruments.

As we look ahead, we see enormous opportunities for our company to grow as a business, but also to make an impact on lives around the globe. We’ve already seen electronics innovation revolutionize the way we work and connect – and at TI, we’ve had the privilege of being at the heart and center of companies that are leading that revolution. But what we’ve seen and done so far is merely the beginning. Our potential to grow and make a difference is enormous, and we are investing today to open new possibilities – for our customers, for this company, and for our world.

2007 Performance

But before I talk about where we’re going – our strategic direction and opportunities – let me take a few minutes to review the past year. All of us at Texas Instruments look back on 2007 with a sense of accomplishment about the returns we delivered to you. We increased our operating profit and earnings per share, and we raised cash flow from operations to a record level, an achievement that underscores the success of our customers, the quality of our products, and the effectiveness of our manufacturing strategy. With the proceeds from this performance, we raised your quarterly dividend 150 percent. Moreover, we steadily repurchased TI stock to reduce the number of shares outstanding and, in the process of that, have increased your ownership in our company.

We left the year feeling confident that the investments we made will have a positive impact on our future performance. We continued to strengthen our position in analog by increasing our funding for research and development, by expanding our manufacturing capacity, and by significantly growing our sales network. Our share gains in high-performance analog were substantial, and we expect further growth in 2008.

We also built upon TI’s strength in digital semiconductors, especially those for embedded processing, such as digital signal processors and low power microcontrollers. Our expertise in embedded processing puts us at the heart of some very exciting new applications, such as automotive navigation systems, portable ultrasound products, energy efficient motors, as well as uninterruptible power supplies.

We invested for business growth in 2007, but we also maintained our long-held commitment to the values that have made our company great. Innovation, environmental stewardship, diversity, and active citizenship – these are the principles upon which TI was built and that continue to distinguish us in the marketplace, as well as the communities in which we operate.

We believe that ethics and high standards are inseparable from business success – and have been, in fact, a large part of TI’s strength for the past 80 years. We operate as we do because we believe in doing the right thing. But we still take pride in the fact that, last year, we received more than 30 awards for excellence in manufacturing, diversity, employee relations, environmental leadership and other categories. For example:

• Fortune Magazine selected TI again as one of the “100 Best Places to Work in America” and as the Global Semiconductor Industry’s “Most Admired Company.”
• Our customer Sony named TI a “Green Partner” for providing environmentally-friendly products. Today, all TI manufacturing sites are Sony Green Partners.
• The National Association for Female Executives ranked us among the “Top 30 Companies for Executive Women” for the second year in a row.
• We won the Obelisk award for outstanding business support for arts and cultural agencies in North Texas.

But even with our strong financial performance, our solid business investments, and our adherence to TI values, we did not leave 2007 fully satisfied, as revenue growth did not meet our expectations. As a result, we have intensified our emphasis on growth and are sharpening our focus on customers. We are accelerating our reach into emerging economies, markets that will drive both the world economy and the semiconductor industry for many years. We opened four new sales offices in China and India to serve customers there; and in Eastern Europe, we added three new offices and a customer support center. We also expanded our sales force around the world and added 20 percent more application engineers to work directly with our customers in the field.

As a result, today, we are well-positioned to provide customers with the best products and the best support in our industry. As we go forward into 2008, we face new challenges. As you are all aware, we are entering an uncertain economic environment. We have been through these in the past and have learned to respect economic cycles by being prudent in our operations. We have also learned that during challenging times, it is critical that we stay focused on investing in the long term growth of our company. It is in times like these when we have the greatest opportunity to outperform our competition – by maintaining the highest level of customer support, innovation, and business execution.

Going Forward

Looking ahead, our strategy is clear: We will remain focused – on customers, and on analog, and digital semiconductor technologies. I mentioned earlier that TI has been at the center of some the greatest electronic innovations, from Jack Kilby’s invention of the integrated circuit to the DSP and analog chips that today enable cell phones to connect almost 60 percent of the planet. It’s hard to imagine that it was 50 years ago this September that Jack invented the IC. It’s even harder to imagine life without it – or without the cell phone and the countless number of other devices that grew from his invention.

Though it is amazing to look back, I am even more excited about looking forward. Semiconductors have revolutionized the way we live; they’ve forever changed computing and communications. But I believe the revolution has just begun.

Building on TI’s experience in wireless, power management, and signal processing, we have the power to help our customers use electronics to tackle some of the world’s most critical challenges. We believe TI semiconductor innovation has an enormous role to play in making health care more accessible to more people, reducing power consumption, uncovering new sources of energy, as well as improving personal and public safety.

When you imagine the impact that chip technologies like analog and DSP can have on millions of people in every region of the globe, you start to see a world and an opportunity that is nothing short of amazing.

Let me give you a few examples of what I mean.

Think about what it’s like to travel today. We face longer security lines at the airport, but I don’t think people feel any safer. Chip technology has the potential to completely flip this equation. We’re working with a company called Bioscript that has developed a face recognition device that can identify people at security points, literally, in seconds. Plus it operates on very low power and is about the size of a shoe – today – soon it will be the size of your cell phone. Which means it’s easy and relatively inexpensive to install. Plus, it delivers convenience and effectiveness – which means we all get shorter lines and a greater feeling of security.

Health care is another area where TI technology can make a real difference. We’ve been working with a customer called SonoSite that has developed a portable ultrasound device. This is a high-precision diagnostic tool that costs about a quarter of the price of a traditional ultrasound machine and can fit into a backpack.

What’s the impact?

A doctor who uses the SonoSite ultrasound recently spoke at our TI Developers Conference and told us how this device is helping him to be a better doctor. He can take it with him anywhere in the world – even to military hospitals in Iraq. And it helps him deliver better care, better diagnoses, and to eliminate unnecessary surgeries.

Another TI customer that’s breaking new ground is HD Medical that has developed what they call a visual stethoscope. But the name doesn’t even begin to give credit for what the device does. It’s a portable system that can identify heart problems, present the doctor with a visual image, and record data for reference or follow-up care.

The ability to make medical devices smaller, more powerful, more efficient and more affordable means that doctors everywhere can take quality care to the patient anywhere he is, even in remote areas, far from the nearest hospital. This is the power of semiconductor innovation – the power to change the way we think about health care and to open new possibilities for treatment.

Semiconductor innovation impacts the way we live and in doing so, it opens new markets we never before imagined. This is the enormous opportunity we have at TI. And we are investing to lead the next revolution.

Tom Engibous

This year’s annual meeting is different from many others, because today Tom Engibous is retiring as TI’s Chairman.

Tom began working for TI in 1976 designing linear integrated circuits, also known as analog today. He grew up inside the analog and DSP businesses, and was named CEO in 1996.

Tom has led this company through enormous change and has instilled in all of us his passions – engineering, winning, and values. He saw the opportunity for analog and DSP, he was dogged in his efforts to get us focused on these areas, and he led the way in putting customers at the center of all we do. Tom put TI in the right markets at the right time, and that strategy has paid off. And Wall Street agrees. Under Tom’s leadership, the value of TI stock has multiplied 5 times.

We have all learned from Tom’s leadership style. He is truly humble, a great listener, and capable of saying more with fewer words then anyone I know. His passion to win is tremendous, but so is his belief that how you win really matters.

Tom, we will miss your direct involvement in the company, but your imprint will stay with us for many years to come. We hope you enjoy your retirement.

Conclusion

In closing, I’d like to thank all of you again for attending – and for your continued support. Your enthusiasm for this company acts as an incentive for all of us at TI to keep raising the bar in everything we do.

We believe that the best is yet to come, and we appreciate your taking the time to better understand how we are positioning ourselves for future growth. The impact of semiconductor technology has only just begun. And as it continues to touch more and more aspects of our lives, we are committed to developing semiconductor technologies that make the world smarter, healthier, safer, greener and more fun.

Thank you.

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