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TI announces 2021 revenue, with automotive and industrial accounting for more than 60%, and promises to expand production capacity

01/28/2022 Texas Instruments, TI 2021 revenue, chips, automotive, industrial

Texas-Instruments-forecasts-upbeat-revenue-on-strong-chip-demand

  Texas Instruments (TI) said revenue rose 19% in the fourth quarter of 2021 from a year earlier, thanks to strong demand for its chip products in the industrial and automotive markets. Total revenue for the full year 2021 will reach $18.3 billion, an increase of 27%.


  TI executives said revenue was generally rising across all markets. On Tuesday's earnings call, they described how TI delivered a strong response to customers by providing quality service to customers despite a general shortage of chips in the industry during the pandemic, especially when it hurt the auto industry.


  "Our team has done a great job of customer support across all end markets," said Dave Pahl, TI's vice president, director of investor relations. He noted that revenue in the first quarter of 2021 was up 40% from the pre-pandemic fourth quarter of 2019. "TI's strategic plans in the automotive and industrial sectors will be instrumental for growth in the coming years."


  TI's fourth-quarter 2021 revenue was $4.83 billion, with a 20% increase in analog revenue and a 6% increase in embedded processor revenue, and is expected to reach $4.9 billion in the first quarter of 2022.


  For the full year 2021, TI's industrial business accounted for 41% of that year's revenue; automotive 21%; personal electronics 24%; communications equipment 6%; enterprise systems 6%; and others 2%. Total industrial and automotive revenue already accounts for 62% of TI's revenue in 2021, 57% in 2020, and 42% in 2013.


  In terms of products, TI's full-year 2021 analog revenue is $14.1 billion, embedded is $3 billion, and others are about $1.2 billion.


  “We see good opportunities in all markets, but we have a strategic focus on industrial and automotive. Our industrial and automotive customers are expected to embrace more analog and embedded technologies to make their end products smarter, More secure, more connected and more efficient. These trends have and will continue to lead to increased demand for chips, which will drive faster growth compared to other markets,” Pahl said.


  TI Chief Financial Officer Rafael Lizardi forecasts capital expenditures of $1.2 billion in the fourth quarter of 2021, which will continue to grow with investments currently underway to expand the fab business. Those investments, he said, "will further boost TI's growth potential and have good results over a long period of time." TI's facilities in various countries are expanding and "will always stay ahead of demand." "We have and will gradually increase capacity in relatively small steps, but this has an impact like a cumulative tax base," Lizardi said.


  TI is expected to complete a fab, called RFAB2, in Richardson, Texas, in late 2022, and a 300mm fab in Lehi, Utah, in early 2023 (TI's fourth 300mm fab) , then its manufacturing capacity will be greatly improved. In October 2021, Lizardi had said that RFAB2 would cost about $6 billion, and that Lehi's fab would cost $900 million to buy from Micron, plus another $3 billion in capital expenditures.


  Clearly, owning and controlling manufacturing and technology will allow TI to both reduce costs and better control the supply chain. A U.S. Commerce Department official said on Tuesday that wafer production is considered the main bottleneck for chip shortages and that the overall chip supply chain remains "fragile."


  Lizardi said that TI is very excited about large-scale capacity expansions "because they enhance our manufacturing and technology competitive advantage." Lizardi said, first, RFAB2 and LFAB will be built this year and next. The second is the planning of four fabs in Sherman, Texas, to support market demand from 2025 to 2035. The third is optimization around embedded and analog process technologies from 45nm to 130nm and will support development for decades to come.


  “Obviously, having the manufacturing technology will allow us to both reduce costs and have better control over our supply chain,” Lizardi said.


  It is also worth noting that when TI acquired the Lehi fab from Micron, it said it would develop 65- to 45-nanometer analog and embedded products at the fab. Pahl said: "The 300mm fab will bring analog products in addition to In addition to the cost advantage, the same is true for embedded. But in the future, TI will still use both in-house manufacturing and outsourcing for chip production.”


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