Texas Instruments 2014 Annual Report Download - page 8

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FORM 10-K
P ART I
ITEM 1. Business.
We฀design฀and฀make฀semiconductors฀that฀we฀sell฀to฀electronics฀designers฀and฀manufacturers฀all฀over฀the฀world.฀We฀began฀operations฀
in 1930. We are incorporated in Delaware, headquartered in Dallas, Texas, and have design, manufacturing or sales operations in
35฀countries.฀We฀have฀two฀reportable฀segments:฀Analog฀and฀Embedded฀Processing.฀We฀report฀the฀results฀of฀our฀remaining฀business฀
activities฀in฀Other.฀We฀expect฀Analog฀and฀Embedded฀Processing฀to฀be฀our฀primary฀growth฀engines฀in฀the฀years฀ahead,฀and฀we฀therefore฀
focus฀our฀resources฀on฀these฀segments.฀In฀2014,฀we฀generated฀$13.05฀billion฀of฀revenue.
Product information
Semiconductors฀are฀electronic฀components฀that฀serve฀as฀the฀building฀blocks฀inside฀modern฀electronic฀systems฀and฀equipment.฀
Semiconductors,฀generally฀known฀as฀“chips,”฀combine฀multiple฀transistors฀on฀a฀single฀piece฀of฀material฀to฀form฀a฀complete฀electronic฀
circuit. We have tens of thousands of products that are used to accomplish many different things, such as converting and amplifying
signals,฀interfacing฀with฀other฀devices,฀managing฀and฀distributing฀power,฀processing฀data,฀canceling฀noise฀and฀improving฀signal฀
resolution.฀This฀broad฀portfolio฀includes฀products฀that฀are฀integral฀to฀almost฀all฀electronic฀equipment.฀
We฀sell฀catalog฀and฀application-specific฀standard฀semiconductor฀products,฀both฀of฀which฀we฀market฀to฀multiple฀customers.฀Catalog฀
products฀are฀designed฀for฀use฀by฀many฀customers฀and/or฀many฀applications฀and฀are฀sold฀through฀both฀distribution฀and฀direct฀channels.฀
The life cycles of catalog products generally span multiple years, with some products continuing to sell for decades after their initial
release.฀Application-specific฀standard฀products฀(ASSPs)฀are฀designed฀for฀use฀by฀a฀smaller฀number฀of฀customers฀and฀are฀targeted฀to฀a฀
specific฀application.฀The฀life฀cycles฀of฀ASSPs฀are฀generally฀determined฀by฀end-equipment฀upgrade฀cycles฀and฀can฀be฀as฀short฀as฀12฀to฀
24฀months,฀although฀some฀can฀be฀used฀across฀multiple฀generations฀of฀customers’฀products.฀The฀vast฀majority฀of฀our฀revenue฀is฀derived฀
from products that are differentiated from competitors’ products.
Our฀segments฀represent฀groups฀of฀similar฀products฀that฀are฀combined฀on฀the฀basis฀of฀similar฀design฀and฀development฀requirements,฀
product฀characteristics,฀manufacturing฀processes฀and฀distribution฀channels.฀Our฀segments฀also฀reflect฀how฀management฀allocates฀
resources and measures results. Additional information regarding each segment follows.
Analog
Analog฀generated฀$8.1฀billion฀of฀revenue฀in฀2014.฀Analog฀semiconductors฀change฀real-world฀signals,฀such฀as฀sound,฀temperature,฀pressure฀
or฀images,฀by฀conditioning฀them,฀amplifying฀them฀and฀often฀converting฀them฀to฀a฀stream฀of฀digital฀data฀that฀can฀be฀processed฀by฀other฀
semiconductors,฀such฀as฀embedded฀processors.฀Analog฀semiconductors฀also฀are฀used฀to฀manage฀power฀in฀every฀electronic฀device,฀whether฀
plugged฀into฀a฀wall฀or฀running฀off฀a฀battery.฀Our฀Analog฀products฀are฀used฀in฀many฀markets,฀particularly฀personal฀electronics฀and฀industrial.
Sales of our Analog products generated 62 percent of our revenue in 2014. According to external sources, the market for analog
semiconductors฀was฀$44฀billion฀in฀2014.฀Our฀Analog฀segment’s฀revenue฀in฀2014฀was฀18฀percent฀of฀this฀fragmented฀market,฀the฀leading฀
position.฀We฀believe฀we฀are฀well฀positioned฀to฀increase฀our฀market฀share฀over฀time.฀
Our฀Analog฀segment฀includes฀the฀following฀product฀lines:฀High฀Volume฀Analog฀&฀Logic฀(HVAL),฀Power฀Management฀(Power),฀High฀
Performance฀Analog฀(HPA)฀and฀Silicon฀Valley฀Analog฀(SVA).
HVAL products
These฀include฀high-volume฀integrated฀analog฀products฀for฀specific฀applications฀and฀high-volume฀catalog฀products.฀HVAL฀products฀
support applications like automotive safety devices, touchscreen controllers, low-voltage motor drivers and integrated motor controllers.
Power products
These฀include฀both฀catalog฀products฀and฀ASSPs฀that฀help฀customers฀manage฀power฀in฀electronic฀systems.฀Our฀broad฀portfolio฀of฀Power฀
products฀is฀designed฀to฀enhance฀the฀efficiency฀of฀powered฀devices฀using฀battery฀management฀solutions,฀portable฀power฀conversion฀
devices, power supply controls and point-of-load products.
HPA products
These include catalog analog products that we market to many different customers who use them in manufacturing a wide range of products.
HPA฀products฀include฀high-speed฀data฀converters,฀amplifiers,฀sensors,฀high฀reliability฀products,฀interface฀products฀and฀precision฀analog฀products฀
that are typically used in systems that require high performance. HPA products generally have long life cycles, often more than 10 years.