SAN FRANCISCO—Texas Instruments Inc. Monday (Jan. 23) reported better than expected sales for the fourth quarter of 2011 and announced plans to close two older chip fabs in the next 18 months.
"Revenue in the fourth quarter was higher than expected across all our major product lines, reinforcing our belief that we're at the bottom of this downturn," said Rich Templeton, TI's chairman, president and CEO, in a statement.
TI (Dallas) said it would close one fab in Hiji, Japan and another in Houston. Both fabs are 150-mm facilities that produce analog and embedded processors. The two are the last two remaining 150-mm fabs in TI's fleet. The company has 11 other fabs, nine of which are 200-mm fabs and two of which are 300-mm fabs.
Production from these fabs will be moved to other, more advanced TI fabs, the company said. The two fabs accounted for about 4 percent of TI's 2011 revenue and each employ about 500 people, TI said.
"These sites have made
strong, high-quality contributions over the 30-plus years each has
operated," said Templeton. But, he added, both fabs are in need of
significant upgrades and the company felt it make more financial sense
to shift production to its larger, more advanced facilities.
In recent years, TI has been expanding its production capacity significantly. In 2009, TI began ramping production at its RFAB 300-mm analog fab in Richardson, Texas. In 2010, the company acquired three existing fabs, two in Japan and one in China. Last year, TI further expanded its production capacity by acquiring National Semiconductor Corp., which brought with it three analog fabs.
Many in the semiconductor industry suspected that TI might close one or more of its fabs following the National acquisition, which closed last September.
TI said it would take a total charge of about $215 million associated with the fab closures, $112 million of which was incurred in the fourth quarter, with the remainder to come over the next seven quarters. The company said it expects to save about $100 million per year from closing the fabs.
TI reported fourth quarter sales of $3.42 billion, down 1 percent from the previous quarter and down 3 percent compared to the year-ago quarter. The company reported a net income for the quarter of $298 million, down 50 percent from the previous quarter and down 68 percent from the year-ago quarter.
TI's fourth quarter sales exceeded consensus analysts' expectations, which called for revenue of about $3.25 billion, according to Yahoo Finance.
For the full year 2011, TI reported sales of $13.74 billion, down 2 percent from $13.97 billion in 2010.
TI generated analog sales of $1.7 billion in the fourth quarter, up 9 percent from the previous quarter and up 12 percent from the fourth quarter of 2010. The increases were due to the inclusion of National's sales.
Revenue from embedded processors declined to $442 million in the fourth quarter, down 18 percent from both the previous and year-ago quarters. Wireless revenue was $722 million in the quarter, up 24 percent from the previous quarter but down 6 percent from the year-ago quarter, TI said.
TI said it generated $2.86 billion worth of orders in the fourth quarter, down 9 percent from the year-ago quarter and down 7 percent from the prior quarter. Inventory was $1.79 billion at the end of the quarter, up $268 million from a year ago and down $177 million from the prior quarter, TI said.
Capital expenditures for the quarter totaled $152 million, down from $193 million in the third quarter of 2011 and down from $301 million in the year-ago quarter. TI said it expects capital expenditures for 2012 to be about $700 million. The company said it expects to spend about $2 billion on R&D.
For the current quarter, TI expects sales to decline to between $3.02 billion and $3.28 billion. Consensus analysts' expectations have pegged TI's first quarter sales at about $3.22 billion, according to Yahoo Finance.