What's happening with Texas Instruments?

13 November 2023

Texas Instruments aggressively lowered its chip prices in the China market back in May, responding to a slump in the market – but is this the full picture?

May price cuts response to market inventory correction

Texas Instruments offers fundamental foundational chips utilised in products spanning across various sectors of the economy, including automobiles, industrial equipment, and consumer electronics. The industry has been engaged in a more comprehensive inventory adjustment since the latter part of the third quarter last year. The most significant decreases in sales have been experienced by chip manufacturers serving the computer and smartphone sectors. Entities like Intel Corp. and Nvidia Corp. have documented substantial declines in revenue due to reduced customer purchases aimed at depleting accumulated surplus inventories.

Are the price cuts designed to put a strain on China’s lower end chip market?

The semiconductor industry in China has experienced a decline over the past year, influenced by shifts in the global economy and various additional factors. It’s thought the price cuts implemented across the board in China in May, would have the greatest impact on its Chinese analogue chip competitors who survive by targeting the lower end of the market. The impact of its price reduction is more significant on general-purpose analogue chips, especially in the areas of power management. However, with 10 out of the 31 integrated circuit (IC) designers listed on the mainland recently reporting financial losses, it shows numerous semiconductor manufacturers are struggling with this situation.

Texas Instruments has invested over 10 billion yuan ($1.45 billion) in constructing an integrated wafer manufacturing facility in Chengdu, located in China's Sichuan Province.

“The investments we’re making to expand our internal manufacturing operations, combined with our company’s in-house R&D expertise across packaging, product design and technology development, enable TI to innovate and scale across our product portfolio. This unique mix of expertise gives our customers the ability to differentiate their products through the thousands of products, packaging and configuration options TI has available.”

Mohammad Yunus, senior vice president, Manufacturing Operations.

Over the past year, Texas Instruments has announced significant strategic investments to expand its 300-mm wafer fab manufacturing capacity and back-end assembly and test operations in Kuala Lumpur and Melaka, Malaysia. Helping build capacity and supporting the continued growth of semiconductors in electronics for decades to come.

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