While the market was disappointed with Texas Instruments' performance (shares dropped just over 3% on Tuesday), some analysts believe there is room for additional growth for the leading mobile chip manufacturer in the wireless sector. CIBC's Allan Mishan commented in a note to clients that "we continue to believe that investors underestimate TI's long-term margin potential and the growth in wireless (3G, app. processors, single-chip integration, the NTT win, etc.)."
In a conference call with analysts, Ron Slaymaker, Vice President and Manager of Investor Relations at TI outlined the company's performance in the wireless segement.
3G Revenue Drives Wireless Growth: TI’s overall wireless revenue grew 4% sequentially and was up 12% from a year ago. 3G revenue was the biggest factor driving our year-on-year growth. Sequentially, in addition to 3G, we had strong growth in a range of 2.5G products, including chipsets sold to ODM customers for low priced handsets to address emerging market opportunities and OMAP application processors for smart phones. Market Leadership in OMAP Processors and WCDMA modems: Next, I believe we performed well on wireless in 2005 with revenue growth of 14% we entered the year with many predicting that TI would lose market share in the fast growing 3G WCDMA market. We’re exiting the year having done the opposite. .. TI doubled our shipments of OMAP application processors and almost tripled our shipments of WCDMA modems in 2005. In both areas, TI holds strong market leadership. Leadership in WCDMA and Low End Handsets: We solidly accomplished our goal to exceed $1 billion of semiconductor revenue in WCDMA in the year. As we enter 2006 a year in which, most expect that WCDMA handsets will double again in terms of shipments, we are confident that we will maintain our market share, if not expand it further. At the same time, we’ve cornered an undisputed leadership position, supplying chips to the rapidly growing emerging market for low priced handsets. In 2006, we expect to extend this lead even further as we ramp volume production of our single-chip cell phone product.