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Analog

Analog | TI’s Analog Strategy | Application Specific | Market Conditions and Growth

Analog: A Fundamental Technology for the Digital World

Analog and digital signal processing (DSP) are the key technologies fueling innovative, high-growth applications for many of today’s fast-growing markets such as digital wireless, broadband access, digital audio, high-resolution imaging and medical. Texas Instruments specializes in these real-time technologies that are widely used in thousands of different end products.

Analog chips are an essential element of almost all applications in today’s digital world. They convert “real-world” signals such as voice, sound, pressure, temperature and electricity into the 1s and 0s of the digital world, where the digital signals can be processed very fast by digital signal processors (DSPs) and back into real world signals again. Here’s the role one type of analog chip – the data converter -- plays in a cell phone:

Diagram

As the interface between digital and “real-world” signals, analog chips play an integral role in most electronic equipment. DSP and analog chips are the engines driving the digital world. Texas Instruments is an established market leader in these technologies that are fueling innovative, high-growth applications such as:

Wireless and wired communications
Consumer video and audio
PC peripherals
Digital TVs
Medical
Video security
Industrial

TI’s Analog Strategy

To strengthen technology expertise and market position, TI has acquired and integrated a number of analog companies over the years. With the acquisitions of Unitrode, Power Trends and, more recently, POWERPRECISE, TI strengthened its technology position in power management integrated circuits (ICs). The acquisition of Burr-Brown demonstrated how important analog is to TI’s company strategy and made TI’s analog product portfolio one of the best in the high-performance analog market. The Chipcon acquisition added a key element by allowing TI to provide customers with industry-leading ZigBee™-compliant solutions and a broad range of proprietary radio frequency ICs that are catalysts for innovative low-power wireless applications, and the acquisition of Integrated Circuit Designs expanded TI’s design resources in this area.

As one of the largest segments of the semiconductor industry, the analog IC market comprises a critical part of TI’s semiconductor revenue (40 percent) and is an important area of growth for the company. For example, depending on the system, for every DSP in an electronic system, there are approximately ten analog components. The compatibility of TI’s analog and DSP product portfolios affords the company an exceptional opportunity to pull through analog business as a result of DSP wins and vice versa. High-performance analog is a critical differentiator for TI’s customers.

TI offers the broadest portfolio of differentiated and innovative analog chips to meet the market’s growing needs. TI’s portfolio of data converters, amplifiers, power management, interface and low-power RF transceiver products for high-performance and low-power applications is among the industry’s strongest. Also, TI has more analog field specialists than any other supplier, with supporting tools and documentation to make analog design easier and faster. All in all, TI has what it takes to be a premier high-performance analog supplier: the innovation of an analog specialist combined with the manufacturing muscle and advanced process technology capabilities of a broad-spectrum supplier. TI’s high-performance analog business addresses more than 50,000 customers of different sizes requiring unique, off-the-shelf solutions.

Application Specific

TI’s application-specific analog business focuses on a small number of large customers that require custom application-specific products. Those customers include Sony, Samsung, LG, Seagate, Hitachi Global Storage Technology, Toshiba, WD, HP, Canon, Continental Teves and Siemens VDO for products ranging from printers to automotive electronic systems. TI has the most complete offering of signal processing solutions, fueling new opportunities in existing and emerging high-growth markets.

Market Conditions and Growth

The analog IC market is a highly fragmented and competitive sector of the semiconductor industry. Demand for analog has been fueled by the rapid growth of digital electronics. The analog market in 2007 is $36.6 billion according to estimates by World Semiconductor Trade Statistics (WSTS). The WSTS forecasts it to grow to $41 billion in 2008. The industry’s broad application markets, the increasing need for high-performance analog in digital systems, relatively stable pricing and high gross margins suggest that the analog IC industry will continue its stable growth pattern in the future.

With diverse applications, analog chips are divided into two broad market categories: standard (mass market) and vertical (application-specific). Industry analyst Databeans, Inc., divides the standard and vertical markets into separate categories to distinguish their different uses. Standard products include data converters, amplifiers, power management, interface and special function chips. Analog chips within vertical markets are used in data storage, multimedia and automotive components and communications integrated circuits.

According to Databeans Inc., TI held an overall analog market share of 14 percent in 2006. Texas Instruments is a leading worldwide supplier of analog and mixed-signal components.

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About Texas Instruments
Texas Instruments Incorporated provides innovative DSP and analog technologies to meet our customers’ real world signal processing requirements. In addition to Semiconductor, the company includes the Education Technology business. TI is headquartered in Dallas, Texas, and has manufacturing, design or sales operations in more than 25 countries.

Texas Instruments is traded on the New York Stock Exchange under the symbol TXN. More information is located on the World Wide Web at www.ti.com.

Statements contained in this editorial backgrounder regarding growth in the analog market and other statements of TI management's beliefs, goals and expectations may be considered "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, and are subject to risks and uncertainties that could cause actual results to differ materially from those expressed or implied by these statements. Statements regarding analog market projections are based on projections provided by Databeans Inc, an independent market analyst, and the Semiconductor Industry Association (SIA). The following factors and the factors discussed in TI's most recent Form 10-K could cause actual results to differ materially from the statements contained in this press release: the introduction of new and competitive technologies; TI's ability to meet manufacturing demands; changes in customer intentions or preferences and other factors affecting market growth or sales. TI disclaims any intention or obligation to update any forward-looking statements as a result of development occurring after the date of this editorial backgrounder.