TI announces 2021 revenue, with automotive and industrial accounting for more than 60%, and promises to expand production capacity

Texas Instruments (TI) said that thanks to strong demand for its chip products in the industrial and automotive markets, revenue in the fourth quarter of 2021 increased by 19% year-on-year. Total revenue for the full year 2021 reached US$18.3 billion, an increase of 27%.

TI executives said revenue was generally growing in all markets. In a conference call on Tuesday, they described how TI delivered a strong performance by providing quality services to customers despite the widespread chip shortages in the industry, especially the damage to the automotive industry, during the pandemic. 

“Our team is doing a great job supporting customers in all end markets,” said Dave Pahl, TI’s vice president of investor relations. He noted that revenue in the first quarter of 2021 was up 40% from the fourth quarter of 2019, before the pandemic. “TI’s strategic initiatives in automotive and industrial will help growth in the coming years.” 

TI's revenue in the fourth quarter of 2021 was US$4.83 billion, with analog revenue increasing by 20% and embedded processor revenue increasing by 6%. It is expected that revenue in the first quarter of 2022 will reach US$4.9 billion. 

In 2021, TI's industrial business accounted for 41% of its revenue; automotive accounted for 21%; personal electronics accounted for 24%; communications equipment accounted for 6%; enterprise systems accounted for 6%; and others accounted for 2%. In 2021, industrial and automotive revenues accounted for 62% of TI's revenue, compared with 57% in 2020 and 42% in 2013.

In terms of products, TI's analog product revenue in 2021 was US$14.1 billion, embedded was US$3 billion, and others was approximately US$1.2 billion.

“We see good opportunities in all markets, but we are strategically focusing on industrial and automotive. Our industrial and automotive customers are expected to adopt more analog and embedded technologies to make their end products smarter, safer, more connected and more efficient. These trends have and will continue to lead to increased demand for chips, which will drive faster growth compared to other markets,” Pahl said.

TI Chief Financial Officer Rafael Lizardi forecast capital expenditures of $1.2 billion in the fourth quarter of 2021, and that they will continue to grow as investments are underway to expand fab operations. He said the investments "will further increase TI's growth potential and have a very good effect for a long time." TI's factories in various countries and regions are expanding their business and "will always be ahead of demand." "We have and will gradually increase capacity in relatively small steps, but this has an impact like a cumulative tax base," Lizardi said.

TI is expected to build a wafer fab called RFAB2 in Richardson, Texas, in late 2022, and a 300mm wafer fab (TI's fourth 300mm wafer fab) in Lehi, Utah, in early 2023, which will significantly increase its manufacturing capacity. In October 2021, Lizardi said that RFAB2 would cost about $6 billion, and the Lehi wafer fab would cost $900 million to purchase from Micron, and another $3 billion in capital expenditures would be required.

It is clear that owning and controlling manufacturing and technology will allow TI to both reduce costs and better control the supply chain. U.S. Commerce Department officials said on Tuesday that wafer production is considered the main bottleneck of chip shortages and the chip supply chain as a whole remains in a "fragile" state. 

Lizardi said TI is very excited about the large-scale capacity expansion, "because they enhance our manufacturing and technology competitive advantage." Lizardi said that first, RFAB2 and LFAB will be built this year and next. Secondly, four wafer fabs are planned in Sherman, Texas to support market demand from 2025 to 2035. The third is to optimize embedded and analog process technologies from 45 nanometers to 130 nanometers, and will support development in the next few decades.

“It was clear that owning the manufacturing technology would allow us to both reduce costs and have greater control over our supply chain,” Lizardi said.

It is also worth noting that when TI acquired the Lehi fab from Micron, it said it would develop 65- to 45-nanometer analog and embedded products at the fab. Pahl said: "In addition to bringing cost advantages to analog products, the 300-mm fab is also true for embedded products. But in the future, TI will continue to use both internal manufacturing and outsourcing for chip production."