DALLAS--Texas Instruments Inc. has nudged up its capital spending plans to $2.8 billion this year from a previous target of $2.5 billion as the company attempts to increase its production capacity for analog ICs.
TI announced the increase in capital spending today while posting second-quarter net income of $1.28 billion--including gains on the sale of Micron Technology Inc. stock--and revenues of $2.84 billion in the period, ended June 30.
Looking ahead, TI predicted that revenue growth would accelerate in current third quarter as demand for analog and digital signal processing products increase in a range of communications applications. TI also said its hard-disk drive revenues are now expected to resume sequential growth in the third quarter after declining for nearly a year.
TI's second-quarter revenues grew 19% from $2.4 billion in the same period last year. The revenues were up sequentially 7% from $2.65 billion in the first quarter this year. The Dallas company's net income of $1.28 billion included gains of $1.21 billion from the sale of 20 million shares of Micron stock, which TI received when it sold its memory business to the Boise, Idaho-based DRAM supplier in 1998 (see Oct. 1, 1998, story). At the start of May, TI was able to begin selling a portion of its 58 million shares of Micron stock (see June 13 story).
On a pro forma basis--excluding the extraordinary gains and charges in the period--TI's income increased 35% $525 million in the second quarter compared to $384 million in the quarter last year.
TI said its semiconductor revenues increased 22% to $2.4 billion in the second quarter compared to $2.0 billion in the period last year, when the company recorded a $85 million catch-up royalty payment from Hyundai Electronics Industries Co. Ltd. Excluding the one-time royalty, TI said its chip revenues would have increase 28% from the second quarter last year. Sequentially, TI's chip sales were up 6% from the first quarter.
"While we're beginning to harvest the gains from the divestiture of our memory business, we're also accelerating our growth through acquisitions," said Tom Engibous, chairman and CEO of TI. "We announced several important acquisitions during the quarter, including Burr-Brown, which strengthen TI's position in catalog analog and DSP for the mass market." In June, TI announced plans to acquire Burr-Brown Corp. for $7.6 billion in stock (see June 21 story).
In response to expected growth in demand for ICs into next year, TI said it was raising capital spending by about $300 million from previous plans to increase analog chip production. The extra capital spending will be used to convert 150-mm frontend processing lines to larger diameter 200-mm wafers, said the Dallas-based company.