Why Texas Instruments Is Expanding Its 300-mm Analog Capacity

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Semiconductor bellwether Texas Instruments (NYSE: TXN) has been steadily ramping up its production of 300 mm wafers for its analog processors, as it looks to cut costs and boost production efficiency. While the company’s existing 300-mm facilities still have room to scale up production, TI will be investing in the next phase of its 300-millimeter analog output, likely to be available by around 2022. While the chip market is likely to see a temporary slowdown after years of improvement, the company is continuing to push forward on these investments. In this note, we take a look at what the increasing output means for the company.

We have summarized our expectations for the company in our interactive dashboard, which outlines what to expect from TI’s full-year results .

Why The 300MM Process Is Important For TI’s Analog Business 

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Silicon wafers are available in a variety of diameters ranging from 25.4 mm (1 inch) to 300 mm (about 12 inches) and fabs are typically defined by the diameter of wafers that they produce. As diameters improve, they typically help to increase throughput and reduce costs. TI notes that output from 300 mm fab is 40% less expensive than chips produced using the 200 mm process, which is commonly used by its competitors. Moreover, according to the company, the returns on investment on 300 mm fab are likely to be higher for analog use cases, as it could be operated for as long as 20 to 30 years, something that the company noted would not be possible for digital chips.

Where Does TI Stand On The 300-MM Front?

While TI typically outsources production for logic and embedded ICs from foundries in Asia, it produces its analog products in-house. The company currently has two fabs, called RFAB and DMO56, which produce 300mm wafers and noted that its 300mm analog production stood at just 40% of overall analog production as of 2017. While these fabs still have significant capacity, with the company noting that utilization stood at just about 50% as of last year, it could have good reason to expand, considering that the new facilities could come online at a time when technologies such as 5G, IoT, and Cloud computing are scaling up meaningfully, driving demand.

While the details of the new fab don’t appear to have been finalized, there were reports that the company was considering building the fab in Richardson, Texas. Construction on the property is expected to begin in 2019, with commercial operations likely to commence the first quarter of 2022. The company has noted that the new fab could cost between $3 billion to $4 billion.

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