Texas Instruments shareholders ask for a pullback from the mobile chip business
Texas Instruments is one of the biggest manufacturers of mobile chips, competing against rivals such as Qualcomm, Nvidia, Broadcom, and Samsung to provide the silicon that powers our mobile devices. Among others, the Dallas-based company designs and manufactures baseband chips (for 3G and 4G communication), wireless connectivity chips (Wi-Fi, Bluetooth) and SoCs (integrated application processors, such as the OMAP 4 and OMAP 5 series).
However, Texas Instruments hasn’t been doing very well in the mobile business lately. It announced from back in 2008 that it will give up on making mobile baseband chips, and phase out existing products by the end of 2012. Market watchers state that the baseband exit was caused by TI’s inability to compete with rivals like Qualcomm. The demand for TI’s discrete baseband chips is waning, as integrated solutions that combine a CPU, a GPU, and a baseband module in one chip are increasingly favored by manufacturers. Qualcomm has scored some huge wins thanks to its Snapdragon S4 all-in-one solution. Nvidia is moving in the same direction with its Tegra 3+LTE chips slated to appear in products by the end of the year. In this context, Texas Instruments seems to have made the right decision to abandon a doomed market.
But as Reuters reports, TI investors are calling for an even more radical pullback from the mobile business, one that would entail a restructuring or even a full-on market exit. Some shareholders want TI to focus on its more stable and profitable analog chip business, and leave the cutthroat mobile market to the likes of Qualcomm and Nvidia.
Investors and analysts quoted by Reuters are worried that TI will face diminishing demand for its OMAP products, as big smartphone makers such as Samsung, Apple, and even Huawei are making or designing their own mobile chips. Moreover, the situation is made worse by the fading fortunes of some of TI’s biggest clients, the troubled Nokia and Research in Motion.
While TI hasn’t officially suggested that it considers exiting the mobile business, analysts say that the Texas-based company needs to reduce the investment in the OMAP line one way or another.