Texas Instruments rides chips to huge profits

The chip business is being very kind to Texas Instruments. The company saw their revenues grow by 23% in the first quarter of 2006 over the same quarter last year. That led to an income before tax of $767 million for the quarter, which is up more than 59% from the $482 million of 2005. The improved results come from diversified sources – demand for 3G mobile phone handsets is up and lower-end handsets are selling fast in developing countries.

Pointing to lower-end sales for revenue growth is contrary to what many of the makers of those phones are reporting. The margins for the chips in the phones are much better than the margins for the phones themselves are. In fact, TI’s gross margin was up for the year. At 50.1% it was better than the 46% of 2005, and up slightly than the last quarter of last year.


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