Explosion in Digital Electronics Plays to Core of Company's Strength
DALLAS (June 4) -- The worldwide market for digital signal processors and related mixed-signal/analog chips will grow to about $50 billion over the next 10 years, at a market growth rate well above that of the total semiconductor market, TI President and CEO Tom Engibous said Wednesday.
Citing these high-growth prospects and a diverse and pervasive set of growth opportunities for digital signal processing
solutions (DSPS), Tom outlined a future for the company during a presentation to financial analysts at the annual Bernstein
Strategic Decisions Conference in New York.
"We are moving toward a digital world where a large part of electronic equipment will be DSP-centric," Tom said. "A digital
signal processor is incredibly powerful and can handle signals in real time. That real-time capability makes a DSP perfect for
applications where we, as end users, won't tolerate any delays, for example, when we talk on a cellular phone, watch a satellite
TV broadcast or access a remote database."
While communications and entertainment markets will continue to drive demand for DSP solutions, he said that future
applications such as high-performance motor control, digital television, health care and intelligent safety systems, also will be
commonplace users of DSP solutions.
TI's Winning Formula Tom acknowledged the competitive DSP landscape, but also described how TI will maintain its
leadership position in the emerging "system-on-a-chip" era, when much of the electronics in end-equipment will be reduced to a
single chip.
The winner in the marketplace, he said, must have all of four key capabilities: ownership of the DSP central processing unit
core, the ability to integrate the central processor with other critical functions, great process technology, and systems-level
expertise.
"In the DSP-centric world, TI -- more than any other competitor -- possesses these four capabilities," Tom said. "Our
leadership position in DSP cores is supported by a large, installed base of customers, a disproportionate share of the software
programming resources, and a growing value web of third parties and universities."
He also noted that TI's application-specific integrated circuit (ASIC) capability is in line with the best in the industry. TI's ability
to use an ASIC design backplane to integrate DSP cores, mixed signal devices, memory and logic onto a single piece of silicon,
is critical to the development of innovative DSP solutions.
According to market research firm Forward Concepts, TI is the leader in the DSP market with about a 45 percent market
share. Dataquest shows TI is the number two supplier in the diverse mixed signal market with about a 12 percent share.
"TI is the only company with a strong leadership position in both the DSP and mixed signal/analog markets, and we are using
our economies of scale to create advantages in both process technology and systems know-how," Tom said.
Addressing the financial impact on TI of a DSP solutions-focused strategy, Tom said that DSP solutions today represent more
than 40 percent of TI's semiconductor revenues, up from about 15 percent only five years ago. The company has outgrown the
overall DSP solutions market, which is one of the fastest growing markets in the industry, in each of the past three years.
According to Tom, higher operating margins primarily from DSP solutions led to sharply improved profitability for TI in the first
quarter of 1997, when operating profit margins for all of the company reached 10 percent -- up from 5.5 percent in the first
quarter of 1996.
He said that the high-growth market opportunity and TI's strong position provide potential for continued improvement over the
long term.
"Digital signal processing solutions will play a major role in achieving TI's long-term financial goals of 20 percent revenue
growth and 20 percent return on invested capital." |
