Texas Instruments Eliminating 1,700 Jobs to Cut Expenses

Texas Instruments Inc. (TXN) is cutting 1,700 jobs to reduce expenses by about $450 million a year, part of a shift away from chips that run mobile electronics to focus on components for cars, industrial equipment and other devices.

The measures will result in costs of $325 million, incurred mostly in the current quarter, Texas Instruments said yesterday in a statement.

Under Chief Executive Officer Richard Templeton, Texas Instruments is no longer pursuing orders for chips that run tablets and phones, markets dominated by Apple Inc. (AAPL) and Samsung Electronics Co. The Dallas-based chipmaker instead is shifting toward semiconductors for so-called embedded applications such as those used in autos and industrial machinery.

“They’re accelerating an exit from a less profitable business,” Daniel Berenbaum, an analyst at MKM Partners LLC, said in an interview. “There are a lot of providers of application processors for smartphones and tablets. Texas Instruments made the decision that there’s a big investment to be made, and they think the market is too small for all the current players.”

Samsung and Apple, the leaders in smartphones, are increasingly developing their own chips. Texas Instruments had previously announced plans to focus 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,” the company said in yesterday’s statement.

The company’s shares slipped 2.1 percent to $28.76 at the close in New York, leaving them down 1.2 percent this year.

Texas Instruments forecast fourth-quarter profit last month that fell short of most analysts’ estimates as chip resellers cut inventory on concern about weak economic growth. The expenses related to the job cuts weren’t included in those forecasts, the chipmaker said yesterday.

To contact the reporters on this story: Ian King in San Francisco at ianking@bloomberg.net; Danielle Kucera in San Francisco at dkucera6@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net

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