Texas Instruments is arguably the most nimble vendor in the IC business. TI focused on DRAMs when that market was hot, then exited the business when it went south. After DRAMs, the company's mantra was DSPs. It has recently focused on analog and taken the lead in that sector's revenue rankings. Now chairman, president and CEO Rich Templeton is doing what in today's outsourcing-obsessed world is seemingly unthinkable: He's expanding the company's fab capacity.
TI says its recent analog capacity additions will amount to more than $4.5 billion of additional analog revenue per year when the fab lines are fully operational. Last year, the company began ramping up the industry's first 300-mm analog fab, in Richardson, Texas. In July, it purchased two Spansion fabs, capable of 200- and 300-mm production, in Aizu-Wakamatsu, Japan. And in October, TI acquired a 200-mm fab in Chengdu, China, from Cension Semiconductor Manufacturing Co. that had been operated by Semiconductor Manufacturing International Corp.
The added fabs in China and Japan are targeted for analog. Analysts said TI could be challenged to fill them during slow periods, but Templeton believes TI's fab strategy will bring added market share and lower costs. That worries many of its analog rivals, which use older fabs or have outsourced their production to foundries.
Under Templeton, "TI continues to execute its strategy of exploiting low-cost manufacturing advantages and growing embedded processing and analog faster than its peers," said analyst Doug Freedman of Gleacher & Co.
TI's earnings for 2010 are projected to come in at $2.52 a share on sales of $13.9 billion, compared with $1.16 per share on sales of $10.4 billion in 2009, according to FBR.