Nalini Muppala

Analysis, observations, perspectives on mobile space

TI Wireless: Lagging Smartphone Growth

leave a comment »

At the end of 2008, TI announced leaving merchant cellular baseband business. After failing to find a buyer, TI ran this unit as a end of life business. To allay concerns of the loss of significant revenue that baseband was contributing, TI began providing baseband revenue information separately. I have used this data to gain some insight. The long term plan was that TI would put its weight behind its OMAP line of application processors and connectivity solutions; these were projected to be growth engines that would make up for revenue lost from leaving baseband business. According to data available from company reports this plan is not working out as well as TI would have liked.

The question is, with baseband revenue expected to come to naught by end of 2012, will the rest of wireless segment make up for the revenue lost from leaving baseband?

Consider the entire wireless segment. The chart below shows progression of revenue of wireless segment.

Although overall revenue at TI has been growing, wireless segment has been contributing less. The next chart illustrates this better.

Wireless segment at TI was retooled to position the company for the strong growth anticipated in smartphones. While smartphone market grew at an astonishing rate, TI wireless segment did not ride the smartphone wave as well as some competitors such as Qualcomm have. The following chart helps understand the contrast. From 2007 to 2010, cumulative worldwide smartphone shipments have grown over 1500%. In the same period, TI’s cumulative revenue from application processors + connectivity solutions has grown over 1300%. At first sight it does not look bad, but this growth is not fast enough to make up for leaving baseband. In 2008, 2009 revenue from application processors and connectivity solutions exceeded or kept pace with worldwide smartphone unit shipments. In 2010, the parts of wireless segment focused on smartphone market slacked the overall smartphone unit growth.

If baseband is discounted, revenue generated by wireless segment has not kept pace with smartphone growth. From this chart, it is clear that TI lost market share in 2010. I will return to the quantitative aspects of market share later.

Consider the revenue split between baseband and the rest of wireless segment.

Revenue from baseband has not declined drastically since 2009. Baseband continues to be a significant contributor to wireless segment’s revenue. Revenue from application processors and connectivity solutions is not ramping up fast.

The question then becomes, with baseband revenue expected to come to naught by end of 2012, will what is left of the wireless segment grow much faster than the market to make up for the revenue lost from leaving baseband?

The wireless segment has been underperforming both within and without. Competitors are breathing on TI’s neck and are gaining ground. More on this later. Given this background, It will be a tough task and will take a big turn around in its performance to bring in the necessary growth.


Written by Nalini Kumar Muppala

February 3, 2011 at 6:14 am

Posted in Texas Instruments

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google+ photo

You are commenting using your Google+ account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s