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Texas Instruments (TI), one of the world's leading semiconductor manufacturers, has transformed to meet the competitive challenges of the 1990s. These efforts, begun in 1987, include significant investments in process technology, new product development and capacity expansion. The company also initiated internal restructuring efforts, both in the U.S. and worldwide, to increase its focus on value-added design. The results of all these efforts are evident in the major improvements in TI's operating and financial performance in the past few years. This performance trend dramatically took off in 1994 and is continuing in 1995. TI's semiconductor revenues grew faster than the market for the third consecutive year, and were at record levels for 1994. In addition, as a result of improved operating efficiencies, the company generated additional wafer output equivalent to one additional wafer-fabrication facility. TI also continues to improve on-time delivery performance, at a time when semiconductor capacity remains tight.
The convergence of the computer, communications and consumer electronics markets in the 1990s is creating a new wave of growth opportunities for semiconductor products and for TI. The key to success in these emerging markets is digital signal processing-processing information in its digital form-in applications ranging from wireless communications to personal computer multimedia to digital cellular and home entertainment.
TI predicts that digital signal processors (DSPs) -- super-fast computer chips that can process data up to 10 times faster than the most powerful PC microprocessor chip-will be as important in the next decade as microprocessors were in the 1980s.
TI is the world's leading provider of digital signal processors, and according to industry analysts, has estimated market share that far exceeds that of its nearest competitor. In 1994, the DSP market reached the $1 billion level, up about 50 percent from 1993, and it is expected to continue growing to approximately $4 billion by 1999, according to industry analysts. This could make DSPs one of the fastest growth areas in the semiconductor market during the next five years. TI is uniquely poised to capitalize on this market opportunity.
In addition, the company continues to set the industry standard for DSP performance. For example, in 1994 TI introduced the TMS320C80 DSP, the fastest digital signal processor ever produced, which can process a record two billion operations per second. The chip offers the first single-schip solution to implement the H.320 and H.324 internationally recognized standards for videoconferencing. TI also is expected to introduce more than 40 new DSP products in 1995.
TI also has for years been the leading provider of analog, linear and mixed signal circuit building blocks that work around the DSP to convert and control "real-world" signals that are then processed by the DSP. Together, TI's DSP and mixed signal products form the foundation of the company's digital signal processing solutions strategy-with estimated market potential of $10 billion by the year 2000. And TI is one of the best-positioned semiconductor companies to provide virtually every technology to meet the needs of existing and emerging DSP applications.
One of TI's key advantages is its global presence, with facilities in approximately 175 locations in more than 30 countries, including operations throughout North America and in Europe, Asia-Pacific, Japan and Latin America. This includes 42 manufacturing plants in 18 different countries, giving TI a physical presence in all major business centers around the world. As a result, TI's sales are diversified globally, helping to insulate the company from regional economic fluctuations. In fact, according to data from industry analyst firm Dataquest, TI's worldwide semiconductor revenue by region tracks the regional distribution of the semiconductor industry as a whole, more closely than any of TI's competitors.
In early 1994, TI Europe announced that it will move from a country-by-country approach to an organization in which business centers have European-wide product responsibility. This will allow TI to reduce costs, increase its competitiveness and strengthen its market position in Europe. The new structure with local marketing and sales organizations is designed to assure closeness to the customer, an improved local technical support, a focused strategy, and a stronger distribution network.
To meet continued customer demand, TI has built five new semiconductor fabrication facilities (fabs) since 1989, beginning with its Avezzano, Italy wafer fab built with the support of the Italian government. Other fabs include joint ventures in Taiwan with Acer Computer, in Japan with Kobe Steel and in Singapore with Hewlett Packard, Canon and the Singapore Economic Development Board.
In 1994, TI and Hitachi announced plans for a joint fab in Richardson, Texas (USA), named TwinStar, for dynamic random-access memories. Initial construction of this facility will begin in 1996. In addition, TI's new wholly owned submicron CMOS facility in Dallas was completed ahead of schedule in December 1994, and began initial production of advanced semiconductor products during the second quarter of 1995.
According to the World Semiconductor Trade Statistics, the global semiconductor industry will continue its trend of double-digit growth with more stability, reflecting the proliferation of semiconductors in all facets of consumers' lives. Based on the strength thus far in 1995, TI is raising its estimate of worldwide semiconductor market growth to 28 percent from the 21 percent originally projected for 1995. The Asia-Pacific region continues to be the fastest growing semiconductor market in the world. TI is well positioned in the Asia-Pacific market, and the company is increasing its resources in the region to serve a rapidly expanding customer base.
As TI continues to realize improvements in operating performance, the company will have the flexibility to accelerate investments in key technologies fundamental to the digital revolution. These include data compression and transmission, signal processing and digital display technologies. Management will also continue efforts to improve TI's competitive position by ongoing reengineering and streamlining of worldwide operations. With these strategies, TI intends to continue strengthening its position as a leading global semiconductor provider.
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