How Much Will Analog Segment Contribute To Texas Instruments’ Top Line Growth?
Texas Instruments (NYSE: TXN) has performed strongly over the past couple of years. The company saw its revenue grow by just over 7%, while its stock soared by 17% between 2015-2017. The Analog segment contributes to nearly 66% of the company’s overall revenue and grew at under 9% annually between 2015-2017. The strong growth was largely due to robust performance in the automotive and industrials market.
Based on recent market trends and the near-term outlook provided by the company’s management, we forecast TXN to report 4-5% revenue growth in the next two years, from $16 billion in FY 2018 to about $17.5 billion in FY 2020. Of the estimated $1.5 billion added to net revenues, we estimate that the Analog segment will contribute around $1.2 billion, or about 79% of the incremental revenues. We have summarized our expectations on our interactive dashboard platform. If you disagree with our forecasts, you can change the key drivers for Analog segment to gauge how changes will impact its expected revenue.
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Estimates for Key Growth Drivers
The Analog segment contributes nearly 66% of the company’s overall revenue and grew at under 9% annually between 2015-2017. This was largely driven by robust performance in the automotive & industrials market. Texas Instruments, with a 19% market share, is the leader in the Analog semiconductors market and is well positioned to increase its share over time. The Analog segment holds substantial growth potential for TI, as a result of the increasing demand for chips from automakers, driven by autonomous and semi-autonomous vehicles and other technological advancements, coupled with strong demand in the industrial segment. Both markets are increasing the use of semiconductors, which should provide significant growth opportunities for TI. In addition, the planned installations of 5G wireless networks later this year, and eventual further expansion across the U.S., should result in strong demand for Texas Instruments equipment, leading to significant growth over the next few years .
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