The company that first brought you (in 1967) the hand-held calculator is now helping to make computers even smaller and faster. Seventy-five percent of Texas Instruments' sales come from computer chips, making it the seventh-largest manufacturer of chips in the world. Texas Instruments' latest achievements include a 0.18-micron transistor, which is so small that 125 million of them can fit onto a thumbnail-sized chip; a digital-signal processor (DSP) that processes information 10 times faster than current chips; and a DSP that requires one-sixth of the battery power required by current chips.

In the beginning

In 1951, Geophyscial Service, a company that manufactured submarine detectors during WWII, changed its name to Texas Instruments. Since then, the company has been a pioneer in technological innovation. It manufactured the first commercial pocket transistor radio in 1954; in 1958, engineer Jack Kilby (who later founded Intel) invented the integrated circuit in a Texas Instruments laboratory. In the 1970s, the company developed the single-chip microprocessor and the single-chip microcomputer. More recently, Texas Instruments' success in developing new and better chip technology has led to a number of joint ventures with electronics manufacturing giants such as Hewlett-Packard and Hitachi.

Sales woes

Unfortunately, a company that grows fat on silicon grows hungry when silicon prices fall. In the mid-1990s, fluctuations in chip prices led to industry-wide instability, but Texas Instruments refocused itself by selling its defense-electronics and notebook computer operations and concentrating on what it does best - its calculators, which had begun to set new sales records. Nevertheless, the steady fall in memory chip prices in 1998 hurt TI. By early 1998, TI's sales of memory chips were down 17 percent from the same time a year before, forcing the company to trim capital spending. In another area of industry dominance, cellular phone chips, TI faced pressure from industry gorilla IBM. In mid-1998, IBM announced that it had devised a way to create chip components, allowing customers to order custom made digital cell-phone chips.

In July of 1999 TI diversified its chip business by acquiring Unitrode for $1.2 billion in stock. Unitrode manufactures analog chips, which are frequently necessary to communicate real-word information to DSPs. Most of the electronic devices powered by TI chips use both digital and analog chips. This technological end run enabled TI to supply analog, as well as digital, chips.

A sunny forecast

TI's temporary struggles appear to be over, however; the company seems to have weathered the disappointing sales storm well. Total revenues have increased by 27% since the end of 1999; escalating demand for cellular telephones has boosted sales; and worldwide DSP sales are projected to rise 289 percent between 1999 and 2003. The company has decided to focus most of its energy on expanding and improving its DSP product line, for as DSP strategic marketing manager of TI Leon Adams claims: "The evolution of the digital world will be powered by DSP." Agreements with companies like Cisco Systems and Thomson Electronics will help the company secure its sizable (approximately 50 percent) DSP market share. TI plans to include DSP technology in its new line of Aptiva computers. TI will also continue to augment its share in the analog semiconductor market, a market that the company already leads.