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Texas mainly provides analog and embedded chips for the automotive, industrial, consumer electronics, and communications markets. The pandemic generated headwinds for TI by disrupting its automotive and industrial markets, yet the headwinds are gradually disappearing.
TI will likely benefit from a growing appetite for more chips for autos, industrial markets (IIoT), and chips for digital apps as companies launch more connected vehicles and robots. Its gross margins should also continue to rise as it continues its shift from 200mm to 300mm wafers, which will cut its long-term production costs by about 40% but squeeze its near-term operating margins.
Texas Instruments is a highly reliable investment opportunity because it's well-diversified and therefore faces fewer direct competitors. Finally, we note that the TI chip segment is not as capital intensive as that of INTC, SMSN, or TSMC.
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