Dallas — Executives painted a picture of strong growth opportunities over the rest of this decade at Texas Instruments Inc.'s annual two-day meeting for stock analysts here last week. Growth, they predicted, would be propelled by adoption of third-generation cellular, high-definition television and voice-over-Internet Protocol technology, as well as a host of smaller-volume markets ranging from digital video phones to home security systems.
"The industry had a couple of years where a lot of companies were just trying to survive," said Mike Hames, the senior vice president in charge of application-specific products. "Now, I think we are in a period of innovation."
Rich Templeton, TI's CEO for the past year, said new markets are opening up as broadband — both in wired and wireless forms — proliferates around the world. "Someone once told me to follow the pipes. As broadband pipes are plumbed in around the world, that opens up new applications, which create demand for devices. Broadband is revolutionizing what shows up at the end of the wire or through the ether," Templeton said.
TI sees several ways to apply innovation to the cell phone space, at both the high end of 3G phones as well as phones aimed at developing nations, where growth rates are highest. The digital RF processor, or DRP, shipping later this year will allow cell phone vendors to offer much cheaper handsets that cost between $30 and $40. At $30 per handset and with subscriber fees at $10 to $15 per month, an additional 100 million subscribers would be able to afford cell phone service in countries such as India, where handset shipments doubled last year.
TI engineers also are working "in sideways fashion" to apply the DRP module to single-chip solutions that incorporate wireless-LAN and global-positioning system capabilities. Other design teams are working to extend the DRP capability to support the Edge standard, and at a later point the UMTS standard phones will incorporate digital RF circuitry as well, Templeton said.
In the 3G cellular market, TI saw semiconductor revenue — from both baseband and Omap applications processors — grow to $600 million last year, up from $100 million in 2003, said Gilles Delfassy, senior vice president of TI's worldwide wireless-terminals business unit. Video is spurring 3G adoption and is the most sought-after new feature for young cell phone users, said Alain Mutricy, general manager of cellular systems at TI. Mobile video is creating demand for TI's Omap processor as well as the so-called Hollywood digital video chip introduced earlier this year.
At one lunch during the meeting, Greg Delagi, vice president of digital signal processing systems, brought onstage executives from half a dozen companies that are applying DSP technology to new systems. The demonstrations ranged from a personal video phone from WorldGate Communications Inc. (Trevose, Pa.) to the SlingBox from Sling Media Inc. (San Mateo, Calif.), and spurred debate among the analysts about how quickly the new systems would reach volumes.
Hal Krisbergh, CEO of Worldgate, demonstrated the Ojo personal video phone. Worldgate (www.wgate.com) has added its own secret sauce to the UB Video's H.264 encoding standard."We expect today's $700 to $800 price to be very quickly cut in half," Krisbergh said.
The Sling Media presentation, by co-founder and CEO Blake Krikorian, showed the company's Slingbox Personal Broadcaster — a $249 unit about as large as a laptop battery that goes on sale in July. The Slingbox (www.slingmedia.com) connects to a television service cable and allows owners to watch whatever is on their home TV from a remote location, initially using a personal computer.
Andrew Hartsfield, the CEO of Wilife Inc. (Draper, Utah), demonstrated the LukWerks do-it-yourself video surveillance system. By using a new type of Wilife-patented suction cup, users can mount small motion-activated cameras on windows at their homes. The system, which connects to a personal computer via USB and stores video images on the hard-disk drive, is priced at $249.
To meet expected demand, TI is extending its relationships with foundries. It is also building a 300-mm fab at Richardson, a Dallas suburb, that is expected to handle 65-nanometer and 45-nm volume manufacturing.
Kevin Ritchie, senior vice president in charge of manufacturing, said TI has 136 products being made on 130-nm design rules, with some 60 million 130-nm chips shipped thus far. In the first half of 2004, TI outsourced about half of its 130-nm production to three foundries in Taiwan and China, but as the industry slowed in the third and fourth quarters TI cut back on its foundry-sourced wafers and kept its internal fabs in Dallas at higher utilization rates, he said.
90-nm ramp
Production at 130 nm will "begin to slow down as 90-nm production takes over," Ritchie said, with DMOS 6, the company's first 300-mm fab, carrying much of the load.
A pilot line for 65-nm production has been set up within DMOS 6, and Ritchie said the process should be qualified by the fourth quarter and ready for commercial shipments of cell phone chip sets.
The company's second 300-mm fab, dubbed the RFAB, will have a main ballroom-style clean room that is 220,000 square feet, roughly twice the size of the main ballroom at DMOS 6. "Richardson should be ready for equipment by June 2006," and will cost $3 billion when done, Ritchie said.
