TI’s Enhanced Product Portfolio Supports Our $45 Valuation
Despite witnessing a decline in its overall revenues in 2011, Texas Instruments (NYSE:TXN) managed to retain its position as one of the top four semiconductor vendors (in terms of revenue) with a 3.8% market share. [1] Product performance and excellent support service is what sets its apart from competitors such as Renesas-NEC, Microchip and Atmel. With a number of product releases in the last month, the company continues to focus on investments to enhance its product line. Our price estimate for TI stands at $45.29, a premium of above 60% to the current market price.
Having launched a development platform for real-time analytics applications and a fully integrated ultrasonic signal conditioner for automotive parking distance applications last month, TI recently added to its existing industrial portfolio with new product development in the LED division. (See: Enhanced Product Line to Boost TI’s Embedded Processor Business)
See our complete analysis of Texas Instruments here
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1. Industry’s First Demonstration Of ZigBee Light Link Featuring TI Chips
Last week, TI announced the industry’s first demonstration of the new ZigBee Light Link standard on TI’s CC2530 ZigBee system-on-chip (SOC). The ZigBee Light Link has been developed by leading lighting and technology companies within the ZigBee alliance to standardize wireless networked LED lighting systems making them easier to install, manage and operate.
TI’s CC2530 is an industry leading solution and a certified Golden Unit for ZigBee Light Link. It enables manufacturers to build and test ZigBee products for interoperability. With a complete LED light management system, ZigBee Light Link is expected to transform the lighting industry making it easier to network and control LED lighting from smartphones, tablets, gateways and more.
TI’s CC2530 enables after-market devices to connect to ZigBee Lighting, delivering another path for manufacturers and consumers to embrace the LED lighting. With an integrated RF transceiver, micro-controller, in-system programmable flash and RAM, the CC2530 enables robust wireless network nodes to be built with very low total bill-of-material costs.
Where Does TI Stand in Wireless Communications ?
TI’s market share in wireless semiconductors has been 2nd/3rd historically. In the wireless segment, its market share in three different categories viz. cellular baseband, application processors and connectivity solutions has been, 13%, 11% and 12%, respectively. With the complete exit of TI from the cellular baseband market in 2012, we expect its market share in wireless to decline significantly, as baseband revenue was almost 60% of wireless. For the rest of the forecast period, we estimate the share to remain stable at around 7%.
2. TI Reduces LED Designs Complexity With Fast, Easy & Compact LED Lighting Designs
Last week, TI introduced two fully integrated LED driver micro-modules that eliminate the need of external components and complex layout placement; challenges that are typical of LED driver designs. The two modules are industry’s first to incorporate all the required power and passive circuitry into a single Integrated Chip (IC) package to deliver up to 23W of power to the LED.
Additionally, the drivers simplify the procurement with just one module replacing four or more components. Together with TI’s LED architect, a lighting developer can design a power management circuit with minimum components needed to drive a string of up to 18 LEDs at up to 96% power efficiency.
TI’s Valuation To Be Most Sensitive To Analog Semiconductor Products
With a 55% contribution to our price estimate, the analog product division remains the most important in TI’s portfolio and even a small variation in our estimates can significantly impact our price estimate.
TI has remained the market leader in analog semiconductors in the past based on its superior products, strong sales and field application staff as well as its global marketing and distribution facilities. We do not foresee the situation being any different for the period under review and estimate its market share to be in the range of 17-19% through our forecast period.
Understand How a Company’s Products Impact its Stock Price at Trefis
- Worldwide semiconductor Revenue Reached $307 Billion in 2011, Gartner Press Release, April 17, 2012 [↩]