Earlier this week, Texas Instruments (NYSE:TXN) introduced its new SimpleLink Wi-Fi platforms (CC3100 and CC3200) for Internet-of-Things (IoT) applications. While one version comes with a programmable ARM-based microcontroller, the other offers Wi-Fi only. The new chip family enables customers to simply and securely add embedded Wi-Fi to a wide-range of home, industrial and consumer electronics using a phone or tablet application.
The IoT, which includes all other computing devices apart from PCs, tablets and smartphones, is considered to be the next big driver for the semiconductor industry. Gartner estimates the market will grow almost 30 times, from an installed base of 0.9 billion in 2009 to 26 billion by 2020. It will result in $1.9 trillion in global economic value-add through sales into diverse end markets. 
In the IoT space, minimal power consumption and the lowest possible cost are two key requirements. Microcontrollers (MCUs), which are purpose-dedicated, low-cost logic devices, currently dominate the market for Internet-of-things. TI's SimpleLink portfolio consists of low power wireless connectivity solutions - wireless MCUs, wireless network processors (WNPs), RF transceivers and range extenders for the broad embedded market - which help develop and connect anything to the IoT. The company claims that its connectivity solutions offer the industry's lowest power consumption for battery operated devices.
Since its exit from the smartphone and tablet market in September 2012, TI has been focusing on transitioning its operations to become a pure analog and embedded processing company, segments that it believes will offer long-term growth and less volatility compared to the past. With a market share of 17%, TI is one of the leading players in the analog semiconductor market and derives over 60% of its revenue from this division. On the other hand, the company derives only 22% of its revenue from the embedded division. However, the fast expanding embedded market offers significant growth opportunities for the company, and IoT is the fastest growing sub-segment.
In the last one year, TI expanded its embedded product portfolio by almost 20%. Last month, it launched two new variants (RM57Lx and TMS570LCx) of the Hercules microcontrollers (MCUs), which offer a 50% increase in computational performance over any of TI's current MCUs, for industrial, medical, automotive and transportation design applications. With increased investments in this growth area over the past few years and new product launches, TI continues to expand its embedded portfolio every quarter.
The IoT space offers immense growth opportunity for TI, but the company faces intense competition with players such as Qualcomm (COM) and Intel (NASDAQ:INTC) betting big on the market as well.
Disclosure: No positions.