Texas Instruments 2014 Annual Report Download - page 15

 9
FORM 10-K
We face substantial competition that requires us to respond rapidly to product development and
pricing pressures.
We face intense technological and pricing competition in the markets in which we operate. We expect this competition will continue to
increase from large competitors and from smaller competitors serving niche markets, and also from emerging companies, particularly
in฀Asia,฀that฀sell฀products฀into฀the฀same฀markets฀in฀which฀we฀operate.฀For฀example,฀the฀China฀market฀is฀highly฀competitive,฀and฀both฀
international and domestic competitors are aggressively seeking to increase their market share. Additionally, we may face increased
competition as a result of China’s adoption of policies designed to promote its domestic semiconductor industry. Certain of our
competitors possess sufficient financial, technical and management resources to develop and market products that may compete
favorably฀against฀our฀products.฀The฀price฀and฀product฀development฀pressures฀that฀result฀from฀competition฀may฀lead฀to฀reduced฀profit฀
margins฀and฀lost฀business฀opportunities฀in฀the฀event฀that฀we฀are฀unable฀to฀match฀the฀price฀declines฀or฀cost฀efficiencies,฀or฀meet฀the฀
technological, product, support, software or manufacturing advancements of our competitors.

and license new intellectual property.
Access฀to฀worldwide฀markets฀depends฀in฀part฀on฀the฀continued฀strength฀of฀our฀intellectual฀property฀portfolio.฀There฀can฀be฀no฀assurance฀
that,฀as฀our฀business฀expands฀into฀new฀areas,฀we฀will฀be฀able฀to฀independently฀develop฀the฀technology,฀software฀or฀know-how฀
necessary฀to฀conduct฀our฀business฀or฀that฀we฀can฀do฀so฀without฀infringing฀the฀intellectual฀property฀rights฀of฀others.฀To฀the฀extent฀that฀we฀
have฀to฀rely฀on฀licensed฀technology฀from฀others,฀there฀can฀be฀no฀assurance฀that฀we฀will฀be฀able฀to฀obtain฀licenses฀at฀all฀or฀on฀terms฀we฀
consider฀reasonable.฀The฀lack฀of฀a฀necessary฀license฀could฀expose฀us฀to฀claims฀for฀damages฀and/or฀injunction฀from฀third฀parties,฀as฀well฀
as฀claims฀for฀indemnification฀by฀our฀customers฀in฀instances฀where฀we฀have฀a฀contractual฀or฀other฀legal฀obligation฀to฀indemnify฀them฀
against damages resulting from infringement claims.
With฀regard฀to฀our฀own฀intellectual฀property,฀we฀actively฀enforce฀and฀protect฀our฀rights.฀However,฀there฀can฀be฀no฀assurance฀that฀our฀
efforts฀will฀be฀adequate฀to฀prevent฀the฀misappropriation฀or฀improper฀use฀of฀our฀protected฀technology.
We฀benefit฀from฀royalty฀revenue฀generated฀from฀various฀patent฀license฀agreements.฀The฀amount฀of฀such฀revenue฀depends฀in฀part฀on฀
negotiations with new licensees, and with existing licensees in connection with renewals of their licenses. There is no guarantee that
such฀negotiations฀will฀be฀successful.฀Future฀royalty฀revenue฀also฀depends฀on฀the฀strength฀and฀enforceability฀of฀our฀patent฀portfolio฀
and฀our฀enforcement฀efforts,฀and฀on฀the฀sales฀and฀financial฀stability฀of฀our฀licensees.฀Additionally,฀consolidation฀of฀our฀licensees฀
may฀negatively฀affect฀our฀royalty฀revenue.฀Royalty฀revenue฀from฀licensees฀is฀not฀always฀uniform฀or฀predictable,฀in฀part฀due฀to฀the฀
performance of our licensees and in part due to the timing of new license agreements or the expiration and renewal of existing
agreements.
A decline in demand in certain markets or sectors could have a material adverse effect on the demand
for our products and results of operations.
Our฀customer฀base฀includes฀companies฀in฀a฀wide฀range฀of฀markets฀and฀sectors฀within฀those฀markets,฀but฀we฀generate฀a฀significant฀
amount of revenue from sales to customers in the personal electronics and communications equipment markets. Decline in one or more
sectors within these markets could have a material adverse effect on the demand for our products and our results of operations and
financial condition.

conditions.
We฀have฀facilities฀in฀35฀countries.฀About฀85฀percent฀of฀our฀revenue฀comes฀from฀shipments฀to฀locations฀outside฀the฀United฀States;฀in฀
particular, shipments of products into China typically represent a large portion of our revenue. Operating internationally exposes us
to฀political฀and฀economic฀conditions,฀security฀risks,฀health฀conditions฀and฀possible฀disruptions฀in฀transportation,฀communications฀and฀
information technology networks of the various countries in which we operate. Any of these could result in an adverse effect on our
business฀operations฀and฀our฀financial฀results.฀Additionally,฀in฀periods฀when฀the฀U.S.฀dollar฀significantly฀fluctuates฀in฀relation฀to฀the฀
non-U.S.฀currencies฀in฀which฀we฀transact฀business,฀the฀remeasurement฀of฀non-U.S.฀dollar฀transactions฀can฀have฀an฀adverse฀effect฀on฀
our results of operations and financial condition.