Texas Instruments (TI) established an R&D centre in Bangalore in 1985 and, for the better part of its existence in the country, maintained a low profile. However, capitalising on India’s healthy wireless growth over the past few years, the $13.4 billion technology giant has formulated an ambitious gameplan for the market.
Commenting on the delay in the company’s strategy to address the Indian market, Dr Biswadip Mitra, managing director, Texas Instruments India, says, “India is still a small market, but we are addressing it at the right time. There was the right amount of focus earlier; we are just upping the focus now and building the foundation for the future.”
The numbers back the company’s fresh focus on the Indian market. According to a report by the Indian Semiconductor Association and Frost & Sullivan, India’s electronic equipment consumption, estimated at $28.2 billion in 2005, is expected to reach $126.7 billion by 2010 and $363 billion by 2015, a CAGR of 29.8 per cent.
Similarly, In-Stat’s research pegs the semiconductor market in India to grow from $1.2 billion in 2005 to $3.1 billion by 2010, making it the fastest growing market in the world.
TI currently has two R&D centres and employs approximately 1,500 people in the country. Its R&D centre in Bangalore continues to be one of the company’s largest design centres outside the US.
In July 2006, it opened another R&D centre in Chennai to focus on 3G and the wireless arena. Its product portfolio includes digital signal processors, ultralow power microcontrollers, analog and radio frequency designs, and embedded systems/software.
Headquartered in Dallas, Texas, the company has manufacturing, design or sales operations in more than 25 countries.Its key clients include telecom behemoths Nokia, Motorola, Samsung and Ericsson.
With a rising number of global semiconductor companies setting up design centres in India or expanding existing ones, the company has its work cut out for it. It faces stiff competition from companies like Intel, Advanced Micro Devices, NXP Semiconductors, Renesas Technology, Freescale Semiconductor and STMicroelectronics.
In fact, both Freescale and TI are developing single-chip mobile phone solutions that are expected to be introduced in 2008.
The company was instrumental in bringing down the cost of GSM handsets to as little as Rs 1,000. In August 2005, TI launched the world’s first single-chip solution for cellular phones which was developed by the Bangalore team.
This cost-effective single chip for handsets increased the production of ultra-lowcost mobile phones in emerging markets like India, China and Latin America.
“The operations of a mobile phone, which were performed by several chips, were packed in a single chip. This enabled GSM and GPRS phone manufacturers to cut production costs by up to 30 per cent,” says K.S. Narahari, director, communications and internet marketing.
However, despite being developed in Bangalore, the chip was manufactured in Dallas and China since TI does not have a chip manufacturing plant in the country.Narahari rules out the possibility of setting up a chip manufacturing plant in India and stresses that the company’s investment focus will remain on research and product development.
It may, however, subcontract work to chip foundries that come up in India.”Given that the semiconductor industry in India is poised to take off, there will also be an increased focus on sales in India now,” says Narahari.
In 2006, the company launched the LoCosto, ultra LoCosto, eCosto and OMAP chips for cellphones aimed at emerging markets, to address the spurt of feature-rich cost-effective phones.
The LoCosto line of low-cost chips is aimed at phones priced between $40 and $100 while the OMAP advanced chips will cater to high-end phones with video playback facilities.
Globally, while the company performed exceedingly well in the wireless semiconductor market in the April-June 2007 quarter (according to research firm iSuppli), its position slipped during the following quarter. Its revenue, at $3.66 billion for the quarter, was up 7 per cent sequentially, but down 3 per cent year-over-year.
According to analysts, although the revenue from partnerships with Nokia and Ericsson will begin to flow in from the second half of 2007, the supplier diversification strategy used by mobile phone makers such as Nokia, Samsung and Ericsson is expected to result in a decline of TI’s share in the mobile phone chip market.
But its financial position is bound to improve with Motorola announcing that it intends to use customised chips from TI for upcoming 3G high speed wireless handsets. These are likely to be available as early as 2008.
Analysts say this development is very significant given Motorola’s size and market share and it will increase TI’s revenue.But while the Motorola deal is positive, the fact remains that the revenue boost will not come until 2008.
The company is also jockeying for an early lead in the fledgling Wi-Max communications market and will supply chips for handsets based on Wi-Max, which will be available in 2008.
TI is looking at continuing with its growth momentum over the next few years. Given the potential offered by the Indian telecom sector and the company’s renewed interest in the country, it seems set to ride the telecom wave.
