RealTime IT News

Texas Instruments Betting on Wireless Chips

NEW YORK -- Texas Instruments vice president Rich Templeton Wednesday argued that growth in the wireless industry will lead the revival of the bruised semiconductor chip sector.

Delivering a keynote address at the Bear Stearns tech conference here, Templeton likened the problems in the chip sector to the beating the PC industry took in the mid 1980s and argued that the chip market had seen its worst days.

"The first quarter of 2001 was the toughest in 40 years. But, much like the problems the PC industry faced after the meteoric rise of sales in 1983 and 1985, the chip group will rebound. I think we've got good years to look forward to," Templeton said.

Templeton said Texas Instruments remained excited about doing business in three key markets -- wireless, broadband and home products -- arguing that those product groups will "push five years of growth over the long term."

He said the Dallas-based firm, a powerhouse in the digital signal processors (DSPs) and analog chip-making business, recorded strong sales in chips for GPRS-enabled mobile phones.

"There is no denying that the hype (in the wireless sector) has led to disappointments. But, the market will evolve. The data over wireless handset market will flourish and we will be there to take advantage of it," Templeton said.

In the first quarter this year, sales from GRPS products accounted for 25 percent of Texas Instruments revenues and Templeton said those numbers would double by the end of this year.

"We keep losing sight of the fact that customers are already GPRS-ready. People are not running out to buy special GPRS phones. They are buying them mostly for color screens," he said, nothing that this helps to fix the "chicken and egg" problems that have ensnared the rollout of GPRS networks.

More than half of the wireless phones sold around the world contain chips made by Texas Instruments but Templeton said the company must concentrate on technology that powers home devices like washing machines and VCRs to power long-term growth.

Templeton said Texas Instruments had no reason to adjust earnings projections, despite the industry-wide weakness that has hurt many of its competitors. He said the company keep a tight lid on expenses and did a good job with inventory management to stave off crippling financial trouble.

Facing questions on the need for consolidation in the chip group, Templeton remained cautious on making pronouncements. "I'm cautious about making expensive forecasts on consolidation but, the inevitable answer to that questions is yes."

"That said, I think the industry still has a lot of vitality," he said, noting that a core group of single-product chip companies offering still competition to the heavyweights like Texas Instruments, IBM and Intel .