Texas Instruments confirms it is moving away from phones, will slash 1,700 jobs

Texas Instruments, or TI, has finally officially confirmed that it is moving focus away from its OMAP mobile chips business and will instead focus on “embedded markets.” We have seen the first hints a couple of months ago, but this time TI is taking some definitive measures cutting some 1,700 jobs, all related to OMAP.

While TI OMAP chips are still found in some of the most popular on the market like the Amazon Kindle Fire, the Motorola Droid and last year's Samsung Galaxy Nexus, most recently competition has gotten really aggressive with Qualcomm and Samsung now powering most modern devices. Nvidia is also expected to catch up next year. All of that forced TI out of the business.

Slashing 1,700 jobs means a 5% reduction in workforce, but also savings of $450 million per year. The change will initially be tough and TI will immediately take a $325 writedown this quarter.

source: Texas Instruments

Press Release

TI to reduce costs in Wireless business; OMAP™ processors and wireless connectivity solutions will focus on embedded markets
DALLAS, Nov. 14, 2012 /PRNewswire/ — Consistent with previously stated strategic plans, Texas Instruments (TI) (TXN) announced today it will reduce costs and focus investments in its Wireless business on embedded markets with greater potential for sustainable growth. Cost reductions include the elimination of about 1,700 jobs worldwide.

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 are increasingly developing their own custom chips. These changes require fewer resources and less investment.

“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. “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.”
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.