DSPs spell profits for Texas Instruments

Texas Instruments said the strong sales of its digital signal processors

boosted fourth-quarter net income by 71 per cent to $433 million (from $253

million a year ago). Sales rose 26 per cent to $2.55 billion from $2.03 billion,

including a 30 per cent rise in semiconductor revenues to $2.20 billion from

$1.7 billion. Profits from operations rose to $538 million from $323 million.

"Moving forward, our focus is on the technologies that will enable a

communications-driven Internet era," said Tom Engibous, TI chairman,

resident and chief executive. The strong results were driven by booming demand

for its chips for use in mobile phones, with two-thirds of cellular phones

worldwide being built around TI’s ICs including sets from Nokia Motorola and

Ericsson. "Wireless will be a major growth driver,'' said TI Chief

Financial Officer Bill Aylesworth.

About 250 million cellular handsets were sold in 1999. That will increase to

around 700 million by the end of 2002, according to Dataquest. The cell

phone-related business will be augmented by sales of new devices that use Texas

Instruments' digital signal processors, such as digital cameras, Internet audio

and cable modems. "We also expects sequential growth in its semiconductor

business in the first quarter, despite the traditional seasonal pressures,"

said Engibous. TI plans to increase capital expenditures for 2000 by 40 per cent

to $2.0 billion from $1.4 billion last year, mostly on technology and expanded

manufacturing capacity for its core DSP and analog products. R&D costs for

2000 are expected to be $1.5 billion versus $1.3 billion in 1999. The main focus

areas of TI’s R&D will be DSP and analog.