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The main challenges facing Texas instruments
Consumer demand for the latest features and applications is huge. Endless technological innovation addresses that demand to a point, but has led to consistently shorter product life cycles.
TXN’s Other segment includes smaller semiconductor operating segments. It also includes custom semiconductors known as application-specific integrated circuits (or ASICs).
Microcontrollers contributed ~45% to TXN’s embedded processing revenues. In 3Q14, TXN marked its eighth consecutive quarter with YoY growth in embedded processing revenues.
In 3Q14, the embedded processing division reported its eighth quarter of consecutive year-over-year (or YoY) growth. The embedded revenue was $711 million.
Texas Instrument’s Embedded Processing segment’s products can be referred to as the “brains” of many electronic devices. They’re designed to handle specific tasks.
HVAL includes high-volume analog products for specific applications. It also includes high-volume catalog products. The products span from automobiles to consumer electronics.
In 2013, the Analog segment contributed ~60% towards Texas Instruments’ (TXN) overall revenues. TXN’s Analog segment earned revenue of $7.2 billion in 2013.
The analog products usually have a long life cycle of more than ten years. The segment serves more than 100,000 customers in diverse industries and markets.
Texas Instruments (TXN) was founded in 1941. It’s headquartered in Dallas. TXN is known for designing and manufacturing semiconductors. It has operations in ~35 countries.
Qualcomm’s (QCOM) overall year-over-year revenue growth rate has clearly slowed down over the last few quarters. It’s declined from in excess of 20% in fiscal 2013 to single digits in fiscal 2014.
Qualcomm (QCOM) had a decent fiscal 2014 with regards to its chipsets (or QCT) business. Its revenues from this business increased by 12%.
Qualcomm’s (QCOM) stock performed poorly compared to the company’s peers in the semiconductor industry. As the chart below shows, Qualcomm’s stock has increased by only 2% year-to-date.
Earlier this year, Qualcomm (QCOM) had committed to returning 75% of its free cash flow to investors in the form of stock repurchases and dividends.
These devices include connected home devices such as air conditioners, washers, and refrigerators, security systems such as alarms and cameras, and energy devices such as thermostats.
Qualcomm (QCOM) recently acquired Wilocity to boost its portfolio of mobile chipsets. Wilocity operates high-speed wireless technology WiGig, which works at a higher frequency and promises faster data speeds.
Qualcomm’s spending on R&D has declined in the last year or so The cellular baseband market is quite R&D (research and development) intensive. According to Strategy Analytics, Qualcomm (QCOM) has spent…
Qualcomm charges a fixed royalty to smartphone vendors based on the total dollar sales of their mobile devices. So ASP becomes an important metric for Qualcomm.
Although Qualcomm derived only about 30% of its revenues from its QTL business in fiscal 2014, this business becomes more valuable for Qualcomm because of its high margins.
Qualcomm expects it to further decline between 3% to 5% in fiscal 2015. So why is Qualcomm expecting its chipsets average pricing to continue to decline? Let’s find out.
Earlier in this series, we’ve been discussing Qualcomm’s (QCOM) dominance in the mobile chipset business. Such is Qualcomm’s dominance that Texas Instruments (TXN) had to exit this business in 2012, while Broadcom (BRCM) exited earlier this year.