BillyG, TI blows its horn for the next 10 yrs?
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TI Looks To Overtake Intel
(03/03/00, 5:39 p.m. ET) By Darrell Dunn, Electronic Buyers' News
The shift in the electronics industry from PC-centric to onedriven by communications and Internet-related applianceshas set the stage for Texas Instruments to supplant Intel in the next decade as the dominant force in the semiconductor industry, said TI executives at the company's annual analyst briefing in Dallas this week.
"I wouldn't trade TI's position for anyone else's in the industry," said chairman, president, and chief executive Tom Engibous. "TI is in the best position of any semiconductor company in the world for the era we're now in...The PC is not going away, but we believe that DSP and analog are the two most important semiconductor technologies of the next decade."
TI's two principal businesses, DSP and analog, rank eighth and second in the industry, respectively, on the World Semiconductor Trade Statistics (WSTS) list of total available market leaders. Engibous believes these two product segments could rank No. 1 and No. 2 by 2010, with DSPs overtaking the current leader, microprocessors, in total revenue.
Analysts agree that DSP could well become the key technology of the decade, particularly if all the products that incorporate DSP functionality are factored into the WSTS' calculations.
"There will be no microprocessor shipping in 2010 without DSP capabilities," said Will Strauss, an analyst at Forward Concepts, Tempe, Ariz. "If you look at the processing budget of whatever is shipping then, the bulk of the mips will be devoted to DSP functions. It becomes a question of definition. Is it a DSP? Is it a microprocessor? What is known is that DSP has become the technology driver for the whole semiconductor industry."
TI last year expanded its dominant position in general-purpose programmable DSPs, where the company controls nearly half of the $4.4 billion market, according to Forward Concepts.
But general-purpose DSPs represent only a portion of the total DSP market, which also includes nonprogrammable and application-specific devices, microcontrollers and processors that include DSP functions, and emerging system-on-a-chip implementations. TI must also ultimately control these sectors to become the "new Intel."
"DSPs must be defined broadly today," said Vadim Zlotnikov, an analyst at Sanford C. Bernstein & Co., New York. "It's all about the shift to high-end signal processing, which includes ASIC cores, modified microprocessors, and fixed-function devices.
"TI's trying to position itself as a dominant force in a new environment that's different from the one Intel has been so successful in," Zlotnikov said.
In the future, TI and Intel may increasingly butt heads, as the Santa Clara, Calif., chip manufacturer has embarked on an effort to expand its DSP capabilities through acquisitions of such companies as DSP Communications, and a joint DSP development program with Analog Devices.
But going up against TI in this arena will be no easy task for Intel. "It's very difficult to pull off a strategy where one business is aimed at the ultra high-value, low-volume market like Zeon and Itanium, and at the same time carry through with a high-volume, low-margin DSP strategy," Zlotnikov said. "All of TI's marketing is aimed at proliferating its architecture across all potential uses, irrespective of the value-added."
TI's efforts of late "are off the chart," said Jonathan Joseph, an analyst at Salomon Smith Barney in San Francisco. "They're doing very well. Their manufacturing gains are going to continue to drive costs down and profits up. Intel's a long way away from being a force in DSP. You can't rule them out because of their resources, but Intel still has a lot of work in front of it."
TI's improved manufacturing capabilities will help give the company a continued technological edge, according to Engibous. About 90 percent of TI's silicon is produced in its own fabs, which it sees as an advantage over DSP competitors like Analog Devices and Motorola, which have increasingly moved production to foundries.
TI is pushing production to a 0.15-micron process technology. Geometry shrinks and other process improvements will enable the company to ship 30 percent more devices this year than in 1999 to its highest-volume market, wireless communications, while using fewer wafers than last year, Engibous said.
The company also plans to have its first 300-mm-wafer fab in production next year.
"Seven years ago, I dreamed that all wireless phone calls would go through a DSP," Engibous said. "We realized that dream a couple of years ago...We can now dream of every Internet connection going through a DSP; and with voice-over-packet, DSL, and cable, we can dream of a time when every phone call goes through a DSP."
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