TI Adds Another Platform To Its Low-Cost MCU Portfolio
Texas Instruments (NASDAQ:TXN) just launched its MSP432 microcontroller (MCU) platform, the industry’s lowest power 32-bit ARM Cortex-M4F MCUs. MSP432 MCUs enable designers to develop ultra-low-power embedded applications such as industrial and building automation, industrial sensing, industrial security panels, asset tracking and consumer electronics, where both efficient data processing and enhanced low-power operation are essential. (Read Press Release)
Since its exit from the smartphone and tablet market in September 2012, TI has transitioned its operations to become a pure analog and embedded processing company. Its embedded division includes processors, microcontrollers and connectivity products, which account for approximately 50%, 40% and 10% of its embedded revenue, respectively. While TI has a leading market share in processors, the company is still relatively under-represented (~6% market share) in the microcontroller space. Since the last 3-4 years, TI has increased its focus on microcontrollers, with significant and repeated product enhancements.
Microcontrollers are general purpose, low-cost integrated circuits which are used in a wide range of applications. According to Grand View Research, the global microcontroller market is expected to reach $27 billion by 2020, driven by growing demand from industries, such as automotive and consumer electronics, and the advent of the Internet of Things (IoT) coupled with declining microcontroller prices. In unit terms, the global microcontroller market is estimated to grow at a CAGR of 12.3% through 2020, from 17 billion units in 2013 to 39 billion units in 2020.
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Our price estimate of $50 for TI is at an approximate 15% discount to the current market price.
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An Expanding Product Portfolio Will Increase TI’s Footprint In Micocontrollers
Over the last few years, TI has expended its investment to broaden its microcontrollers portfolio and increase its application support for the devices, which has helped the company increase its market share over the past several years. As already mentioned above, TI accounts for 6% of the global microcontroller market at present. The company now has a wider product portfolio with microcontrollers ranging from $0.25 up to a couple of dollars using all different combinations of its connectivity products.
TI marked its ninth consecutive quarter of year-on-year growth in the embedded business in Q4 2014, and a big part of that was driven by growth in microcontrollers. The company intends to continue investing in this area, expanding its product offering of controllers and increasing the number of dedicated field application engineers positions to better serve its customers. Such actions should help it to grow its market share in the future.
There is a lot of scope for TI to expand its presence in the microcontrollers space, and given the growth potential in the market, an expanding footprint in this domain will augur well for TI’s growth potential.
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