Consistent with previously announced strategic plans, Texas Instruments this week announced it would reduce costs and focus investments in its wireless business on embedded markets with greater potential for sustainable growth. As a result, TI ceases development of chips for smartphones and tablets. Cost reductions include the elimination of about 1700 jobs worldwide.
"We have a great opportunity to reshape our OMAP processor and wireless connectivity product lines to concentrate on embedded markets. Momentum is already building with new embedded applications and a broad set of customers, and we are accelerating our efforts in these areas," said Greg Delagi, senior vice president of embedded processing.
TI previously outlined intentions to focus its OMAP processors and wireless connectivity solutions on a broader set of embedded applications with long life cycles, instead of its historical focus on the mobile market where large customers, such as Apple, LG Electronics and Samsung Electronics are increasingly developing their own custom chips. These changes require fewer resources and less investment.
Previously it was reported that Amazon, which is one of the major customers of TI OMAP with its Kindle Fire lineup of media tablets, could acquire TI’s chip division either fully or partly along with a patent portfolio. Unfortunately, the two companies have not reached an agreement, which is why TI eliminates about 1700 jobs.
"These job reductions are something we do with a heavy heart because they impact people we care deeply about. We will work closely with all employees affected by these changes to provide a range of assistance related to compensation, benefits and job search,” added Mr. Delagi.
As a result of these actions, the company expects annualized savings of about $450 million by the end of 2013. Total charges will be about $325 million, most of which will be accounted for in the current quarter. TI's fourth-quarter outlook, published on October 22, did not comprehend these restructuring charges.