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Texas Instruments OMAP Focus Shifting to Embedded

By - Source: Reuters | B 13 comments

Reuters reports that Texas Instruments (TI) revealed during an investor call a shift in focus to a broader market that will include industrial clients like car manufacturers. TI is reportedly hoping for a more profitable and stable business by taking this approach rather than continue to lose ground in the smartphone/tablet mobilw sector.

TI has reportedly fallen behind in the smartphone and tablet sectors as Qualcomm solutions have become more popular, and former clients like Apple and Samsung are producing their own chips. Despite the shift in focus, TI told investors that it does not plan to abandon its current customers like Amazon and Barnes & Noble. However its mobile application chip business doesn't have plans to support future products.

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

TI shares dropped more than 3-percent on Tuesday after the investor meeting due to worries about the company's revenue prospects, as the chip maker did not go into detail about how the change would affect its financial results. Investors were left wondering when revenue stemming from smartphones and tablets would start to disappear, and how it will be replaced.

"TI made it very clear they no longer want to be in the business of proving application processors for smartphones or tablets," said Longbow Research analyst JoAnne Feeney. "What remains uncertain is for how long they'll support customers."

The company recently branched out with its OMAP line by entering the embedded chip business which includes industrial customers. Delagi said growth in this sector will be slower than what the company experienced in the mobile sector, but it should generate "a more stable, profitable long-term business."

So far it's too early to reveal specifics as to how the move to embedded would affect TI's financials as the company is still working on changing its business, Delagi said.

Texas Instruments sent in the following statement regarding its position on the tablet and smartphone market:

"As communicated in last week’s investor event, the smartphone market has become a less attractive long-term opportunity for TI’s OMAP products, primarily due to vertical integration and market consolidation.  However, TI remains committed to the OMAP platform and its customers. The team is not “leaving the mobile industry for good,” and will not leave current mobile customers. Though TI is accelerating the expansion of OMAP processors into a broader set of embedded applications, the team remains dedicated to advancing current mobile customers’ OMAP processor-based product lines."

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  • 3 Hide
    dr1337 , September 26, 2012 11:04 PM
    : ( I love my 4460 and the OMAP 5 looks like a beast. I guess they can't fall back on selling calculators any more.
  • 3 Hide
    fball922 , September 26, 2012 11:10 PM
    Good call on their part. That market is so saturated with CPUs, they have the right idea trying to get a strong foothold in what will likely become the next major consumer of embedded processors, especially with "self-driving" cars on the horizon.
  • 5 Hide
    joytech22 , September 26, 2012 11:11 PM
    Well.. When considering smartphone performance, they aren't "too" bad when it comes to raw performance but they are certainly behind the likes of Qualcomm (everyone seems to be at the moment).

    In saying that, the performance certainly hasn't been bad on my Galaxy Nexus.
    Back on topic.. they should really push their technology out more instead of limiting itself to a specialized market.

    If your going to be producing CPU's and you've held a spot in a competitive market then stay there!
    The mobile market is GIMONGOUS. There are perhaps a couple billion mobile phones world-wide and each one will need replacing eventually. Having one of your chips in just 1% of them might not sound like much but that's a big slice.

    Wait.. Where the hell was I going with any of this..?
  • 2 Hide
    A Bad Day , September 26, 2012 11:12 PM
    Their calculators are still quite expensive, mostly because most schools' teachers are familiar with the TI-30s and 83/84, and thus recommend the TIs over others.
  • 0 Hide
    kronos_cornelius , September 26, 2012 11:50 PM
    Despite ARM being an open architecture, we may end up with just a couple of ARM producers. Why would Texas Instruments give up on this market ?
  • 0 Hide
    luciferano , September 27, 2012 12:38 AM
    Why not do what Apple does for the same problem (not that I'm suggesting that Apple is a good role model for anything else), use poorly binned units of their CPUs for their lower end systems such as Apple TV. TI could keep up in the mobile market while marketing any failed dies such as those that ca't hit the right frequency at the right power consumption or have faulty CPU/GPU cores elsewhere and really, there's aren't going to be a shortage of them.
  • 1 Hide
    the_brute , September 27, 2012 3:24 AM
    Again? I do agree to keep up and fight your bigger rivals is tough, the added manufacture was nice. But the embeded is a huge market and if you can dump your company into it soon you will bear the cost of new development but you will have a sligh lead. (I know embeded is already a big market but I also know where it is headed)
  • 1 Hide
    belardo , September 27, 2012 1:57 PM
    TI... doing stupid things again.

    There is a reason the company is pretty much the same size today as it was 20 years ago as I drive by them.
  • 0 Hide
    ddpruitt , September 27, 2012 2:46 PM
    TI just charges to much for outdated products (calculators, controllers, CPUs) that's why there losing ground. Same thing will happen in the automobile sector, most stuff is powered by Qualcomm/Motorola there too.
  • -1 Hide
    Anonymous , September 28, 2012 12:28 AM
    belardo, Is there a McDonalds by your drive route? Does it grow larger every other day/week/year? No? So they must be doing stupid things again aye?? Look in the mirror.............
  • 0 Hide
    luciferano , September 28, 2012 12:38 AM
    JTexbelardo, Is there a McDonalds by your drive route? Does it grow larger every other day/week/year? No? So they must be doing stupid things again aye?? Look in the mirror.............

    McDonalds constantly expands to get more and more fast-food * restaurants* all over the Earth every day. TI is supposedly abandoning one of the best emerging markets in the world for another one. Your analogy doesn't apply to this context. Besides, abandoning the smart phone and tablet market is stupid, so yes, TI is doing something stupid if this is true.
  • -1 Hide
    Anonymous , September 28, 2012 4:16 AM
    I guess you did not read Belardo' comment and my analogy thereof....... See if you can figure that one out..
  • 0 Hide
    luciferano , September 28, 2012 4:40 AM
    JTEX11I guess you did not read Belardo' comment and my analogy thereof....... See if you can figure that one out..

    I did read both comments. Yours was inaccurate, out of context, and your analogy isn't adequate.