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TI Semiconductor Group:

Providing Digital Solutions for the Networked Society

Personalized electronics -- speaking a common language, all able to talk with one another anywhere in the world -- is what the networked society is all about. And it will profoundly change the way we live, learn, work and play.

The fundamental strategy of Texas Instruments (TI) and its Semiconductor Group (SCG) is to create the digital solutions that capitalize on three trends that are driving the markets for semiconductors and electronics. These trends are: the continuing personalization of electronics across computing, communication and entertainment; connectivity; and digitalization.

The convergence of the computer, communications and consumer electronics markets in the 1990s is creating a new wave of growth opportunities for TI's semiconductor products. For example, semiconductor content in network applications grew from about 30 percent in 1994 to almost 40 percent in 1996 and should approach 50 percent by the year 2000. TI believes the semiconductor market will double over the next five years to $300 billion.

Capitalizing on Converging Markets with Digital Signal Processing Solutions

One of the enabling technologies 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 home entertainment.

Digital signal processors (DSPs), unique microprocessors that can handle sound and image, and control information in real time -- often 10 times faster than the most powerful general-purpose microprocessors -- continue to be an integral part of many products used by more people as the networked society unfolds in the 1990s.

TI, one of the world's leading semiconductor manufacturers, is by far the leader in the digital signal processing solutions market segment, according to industry analyst firm Forward Concepts. TI projects overall DSP market growth to exceed 30 percent in 1996, and is committed to making investments to strengthen its market position.

For years, TI has been one of the leading providers of analog 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, DSP and mixed-signal products form the foundation of the company's digital signal processing solutions strategy -- with estimated market potential of $12 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.

TI's recent acquisition of Silicon Systems Inc. (SSi), a leader in the mixed-signal and analog market, strengthens its position as a leading supplier of DSP solutions to the hard-disk drive and removable data storage markets. The result is more cost-effective solutions for customers.

An industry pioneer and the world leader in DSP for more than 14 years, TI provides innovative solutions to more than 20,000 customers worldwide in the computer, communications, consumer, automotive, military and industrial markets. In these growing markets, TI has helped its customers develop and refine innovative design solutions in more than 15,000 end products worldwide.

TI is the first company to be recognized by the Institute of Electrical and Electronics Engineers (IEEE) for technical excellence in the design and application of DSPs by receiving the 1996 IEEE Corporate Innovation Recognition Award.

A Multi-Pronged Strategy

The majority of TI's $2.3 billion capital expenditures this year are planned for semiconductors. And more than 90 percent of that is dedicated to support DSP, mixed-signal/analog, and advanced logic products.

In addition to its focus on DSP solutions, TI is a major supplier of standard products, including memory and standard logic, which are used in PCs, consumer electronics and communications systems.

To strengthen its position in DSP, TI in 1996 acquired Tartan, Inc., an independent provider of software tools for developers of DSP applications. Also, the acquisition of SSi helps TI meet the needs of the mass-storage industry, which requires high-volume, semiconductor technology partners to provide greater levels of density, integration and performance.

Leading-Edge Technology

TI's recently announced 0.18 micron, 125 million transistor TImeline Technology is another example of TI's technology leadership. This breakthrough technology integrates memory, microprocessors and special functions onto a single chip, reducing the number of chips required for consumer electronics by as much as 90 percent.

For the consumer, this translates into longer battery life for cellular phones and mobile computers, plus lighter, more powerful devices at a lower cost.

The introduction of TImeline Technology, along with the construction of a $2 billion wafer fabrication complex in Dallas, demonstrates TI's commitment to being first to market with leading-edge, integrated solutions for its customers, which helps them get their products to market quicker.

TI's Global Reach

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 29 manufacturing plants in 11 different countries, giving TI a physical presence in all major business centers around the

world -- wherever its customers are. As a result, TI's sales are diversified globally, insulating the company from regional economic fluctuations. In fact, according to market research 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.

World-Class Manufacturing

TI has benefited from six new semiconductor fabrication facilities (fabs), which have been built since 1989, beginning with TI's Avezzano, Italy, wafer fab constructed with the support of the Italian government. Other fabs include joint ventures in Taiwan with Acer Computer, in Japan with Kobe Steel, in Singapore with Hewlett Packard, Canon and the Singapore Economic Development Board, and in Richardson, Texas (USA) with Hitachi.

Phase II of Dallas wafer fab DMOS 5 is complete and will be operational in 1997. Another Dallas wafer fab (DMOS 6), primarily dedicated to DSP production, is under construction, as is Alpha-TI, a joint venture in Thailand. Also available to TI, under a long-term cooperative agreement, will be a percentage of the output from a new semiconductor wafer fabrication facility being built in Korea by Anam Industrial Co., Ltd. of Korea and U.S.-based Amkor Electronics, Incorporated.

As TI makes investments in semiconductor capacity, it also is focused on realizing manufacturing efficiencies in existing wafer fabs. The company has dramatically reduced order fulfillment cycle times -- almost cutting them in half on some custom products, and delivering increased value to customers. With an on-time delivery record of 97 percent, TI is recognized worldwide as the industry benchmark for high-quality, reliable customer service.

Since 1991, SCG has reduced overall cycle times by 60 percent and increased throughput by 35 percent, generating enough additional capacity equal to an entire new fab for two years in a row.

TI's "fast fab" approach for building new manufacturing facilities provides increased flexibility to react to changes and upsides in the market. The benefit of this approach is that it allows TI to cost-effectively complete buildings, fine-tune equipment delivery schedules for optimum equipment use, minimize depreciation and quickly ramp up new fabs.

A Leader in the Worldwide Semiconductor Industry

Even though the DRAM market is likely to remain volatile, TI is accelerating investments in key technologies fundamental to the digital revolution. These include data compression and transmission, signal processing and digital display technologies. Together, these strategic initiatives will strengthen TI's position as the leader in differentiated solutions.