10-KPeriod: FY2007

TEXAS INSTRUMENTS INC Annual Report, Year Ended Dec 31, 2007

Filed February 26, 2008For Securities:TXN

Summary

Texas Instruments Inc. (TXN) in its 2007 10-K filing, reported that its Semiconductor segment, which comprised 96% of its revenue, is the primary driver of its business. The company holds strong market positions as the world's largest supplier of analog semiconductors and the world's largest DSP supplier. Analog semiconductors are expected to be the main growth engine for the company going forward, accounting for approximately 40% of Semiconductor revenue in 2007. The company's strategy involves a mix of internal manufacturing for analog products and a hybrid approach for digital products, utilizing internal capacity supplemented by external foundries to optimize costs and responsiveness. TI is also focused on integrated solutions, leveraging its system-level knowledge to combine analog and digital functionalities onto single chips, particularly for the communications and computing markets. The filing also highlights ongoing investments in research and development, with R&D expenses totaling $2.15 billion in 2007, underscoring the company's commitment to innovation in a rapidly evolving technological landscape.

Financial Highlights

30 data points
Beta

Revenue

$13.84B

53.3% Gross Margin

Net Income

$2.66B

19.2% Net Margin

EPS (Diluted)

$1.83

Cash & Equivalents

$1.33B

Free Cash Flow

$3.72B

Financial Statements
Beta
Revenue$13.84B
Cost of Revenue$6.47B
Gross Profit$7.37B
R&D Expenses$2.14B
SG&A Expenses$1.68B
Operating Income$3.50B
Net Income$2.66B
EPS (Basic)$1.87
EPS (Diluted)$1.83
Shares Outstanding (Basic)1.42B
Shares Outstanding (Diluted)1.44B

Key Highlights

  • 1Texas Instruments is a leading semiconductor company, with its Semiconductor segment generating 96% of its 2007 revenue.
  • 2The company is the world's largest supplier of analog semiconductors and digital signal processors (DSPs), which are core to its business.
  • 3Analog semiconductors are identified as the primary growth driver for the company in the coming years.
  • 4TI's manufacturing strategy for digital chips involves collaboration with foundries for advanced process technology development, while retaining in-house development for analog processes.
  • 5The company reported significant R&D spending of $2.15 billion in 2007, emphasizing its focus on innovation and new product development.
  • 6The Communications market represented the largest end market for TI's semiconductor products, accounting for 50% of its Semiconductor revenue.
  • 7Backlog orders stood at $1.50 billion at the end of 2007, a slight decrease from $1.64 billion at the end of 2006.

Frequently Asked Questions

Texas Instruments operated with two primary business segments in 2007: Semiconductor, which accounted for 96% of its revenue, and Education Technology, which comprised the remaining 4%. The Semiconductor segment is clearly the dominant contributor to the company's financial performance.

The majority of TI's Semiconductor revenue comes from its core products: analog semiconductors and digital signal processors (DSPs). According to the filing, analog semiconductors are expected to be the primary growth driver for the company in the years ahead, representing about 40% of Semiconductor revenue in 2007.

TI employs a mixed strategy. For analog products, it aims to meet substantially all production needs internally. For advanced digital chips, it maintains internal fabrication capacity for expected full utilization and outsources additional needs to external foundries. The company also collaborates with foundry suppliers for the development of future digital wafer fabrication process technologies.

Key risks include the cyclical nature of the semiconductor market, intense competition, rapid technological change requiring continuous innovation, reliance on key customers (like Nokia, which represented over 15% of revenue), potential intellectual property disputes, and global economic and political uncertainties. The company also notes risks related to inventory management, raw material availability, and foreign currency fluctuations.