It was a big deal when Texas Instruments announced plans in 2003 for a massive chip factory in a suburb of Dallas, its home town. Six years later, the company is finally preparing for production there–under a strategy that has changed dramatically.
There’s been buzz about Apple’s interest in microprocessor designers ever since the company bought the Silicon Valley startup P.A. Semi last year. But there’s ample evidence that the company’s hiring of chip-heads started much earlier, and is continuing. The question: what is Apple going to do with these guys?
Shares of companies in the mobile phone sector are staging a furious rally today, with many companies up by 10 percent or more, on some hints from the industry that demand might be bottoming. Here are a few factors contributing to the more bullish tone…
Texas Instruments this afternoon said it will cut its staff by 12 percent, including 1,800 layoffs and 1,600 voluntary retirements and departures. The company will take about $300 million in related charges. TI said total saving from the latest cuts and the restructuring of its wireless business late last year will total about $700 million after all reductions are completed in Q3.
Texas Instruments, in line with what seems like every other chipmaker in existence, reduced its guidance for Q4 today. The slash in outlook was expected, but no one thought it would be as bad as $1 billion (roughly 30 percent).
There’s a dire outlook for PC chip production–most key chip companies are predicting a production drop of at least 13 percent. Taiwan Semi, the leading contract chip manufacturer, is forecasting a 29 percent drop in revenue for Q4. Accordingly, semiconductor companies are drastically reducing their output.
Texas Instruments is actively pursuing the sale of portions of its wireless chip business. President and CEO Rich Templeton is also looking to cut costs by drastically reducing inventory and cutting expenses and capital spending. In the face of declining demand and likewise declining overall performance, these are certainly measures that Texans everywhere might describe as “prudent.”
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