Investor Presentaiton
FORM 10-K
Market characteristics
Competitive landscape
Despite recent consolidation, the analog and embedded processing markets remain highly fragmented. As a result, we face
significant global competition from dozens of large and small companies, including both broad-based suppliers and niche
suppliers. Our competitors also include emerging companies, particularly in Asia, that sell products into the same markets in
which we operate.
We believe that competitive performance in the semiconductor market generally depends on several factors, including the breadth
of a company's product line, the strength and depth of its channels to market, technological innovation, product development
execution, technical support, customer service, quality, reliability, price and scale. The primary competitive factors for our Analog
products include design proficiency, a diverse product portfolio to meet wide-ranging customer needs, manufacturing process
technologies that provide differentiated levels of performance, applications and sales support, and manufacturing expertise and
capacity. The primary competitive factors for our Embedded Processing products are the ability to design and cost-effectively
manufacture products, system-level knowledge about targeted end markets, the installed base of software, software expertise,
applications and sales support, and a product's performance, integration and power characteristics.
Product cycle
The global semiconductor market is characterized by constant, though generally incremental, advances in product designs and
manufacturing processes. Semiconductor prices and manufacturing costs tend to decline over time as manufacturing processes
and product life cycles mature.
Market cycle
The "semiconductor cycle" refers to the ebb and flow of supply and demand and the building and depleting of inventories. The
semiconductor market historically has been characterized by periods of tight supply caused by strengthening demand and/or
insufficient manufacturing capacity, followed by periods of surplus inventory caused by weakening demand and/or excess
manufacturing capacity. These are typically referred to as upturns and downturns in the semiconductor cycle. The semiconductor
cycle could be affected by the significant time and money required to build and maintain semiconductor manufacturing facilities.
We employ several strategies to dampen the effect of the semiconductor cycle on TI. We acquire our manufacturing facilities
and equipment ahead of demand, which usually allows us to acquire this capacity at lower costs. We focus our resources on our
Analog and Embedded Processing segments, which serve diverse markets and diverse customers. This diversity reduces our
dependence on the performance of a single market or small group of customers. Additionally, we utilize consignment inventory
programs with our customers and distributors that give us improved insight into customer demand.
Seasonality
Our revenue is subject to some seasonal variation. Historically, our sequential revenue growth rate tends to be weaker in the first
and fourth quarters when compared to the second and third quarters.
Manufacturing
Semiconductor manufacturing begins with a sequence of photolithographic and chemical processing steps that fabricate a number
of semiconductor devices on a thin silicon wafer. Each device on the wafer is packaged and tested. The entire process takes place
in highly specialized facilities and requires an average of 12 weeks, with most products completing within 7 to 15 weeks.
The cost and lifespan of the equipment and processes we use to manufacture semiconductors vary by technology. Our Analog
products and most of our Embedded Processing products can be manufactured using mature and stable, and therefore less
expensive, equipment than is needed for manufacturing advanced logic products, such as some of our processor products.
TEXAS INSTRUMENTS . 2016 FORM 10-K
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