TI Changing Wireless-Chip Investing Strategy

Features Reuters

Texas Instruments is changing how it invests in wireless chips because of difficulties it is having in competing in that market, but a top executive declined to say how such a shift is expected to affect the company financially.

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TI has been under pressure from investors to pull back from wireless, where it has lost ground to rivals like Qualcomm Inc and to smartphone makers Apple Inc and Samsung Electronics Co Ltd, which are developing their own chips.

"We believe that opportunity is less attractive as we go forward," Greg Delagi, senior vice president for embedded processing, said during a webcast of an investor meeting.

TI has already kicked off efforts to expand sales of its OMAP wireless chips beyond smartphone and tablet customers to customers of its embedded chip business, which include industrial users such as carmakers. {ID:nL2E8J9HIV]

As part of this effort TI is "reprofiling" its investment in wireless for embedded customers, according to Delagi, who said that the company's research and development profile for OMAP "needs to look different."

The executive said OMAP's growth in the embedded product market will be slower than in the fast changing wireless business. But he declined to reveal specifics as to how this would affect TI's financials as the company is still working on changing its business.

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He said that TI expects to "generate a more stable, profitable long-term business" than wireless.

Delagi said he expects TI's embedded processor and wireless chips to generate gross margins in a range of 55 percent to 60 percent and operating margins of about 30 percent, but he declined to give a time frame.

TI shares were down 11 cents or at $28.56 in morning trade on the Nasdaq after the presentation.