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Not All That and a Bag of Chips

September 27, 2012

Ah, the world of cell phones. It’s a paradise for profit, it’s a mecca for margin, it’s a… wait, what?

Greg Delagi senior vice president for embedded processing at Texas Instruments announced that his company was winding down its investment in smartphone and tab chips, and instead concentrating on making chips for cars, white goods and robotics.

White goods, if you’re not familiar with the term, means things like dishwashers, refrigerators, and other traditionally “dumb” devices.  I’ll note that TI is not giving up on the Internet, it’s just deciding that the future of machine-to-machine communications is probably a better place to lay down money in comparison to the mercurial desires of the phone and tablet markets.  As the article notes, this is a pretty broad area:

So Texas will be ditching smartphones for dishwashers and cars by betting its biz on the rise of the Internet of Things. The chip-maker intends to ramp up investment in its “embedded processing” division – which makes chips for cars, appliances, industrial machines, and a whole range of other consumer goods including wearable tech, tele-health devices and sports equipment.

So it’s a move from Kindle to kitchen.  I can’t say it’s a popular one, since the market sees the volume of cell phones and tablets out there and drools.  But it’s also a cut-throat market, and TI has an option to try to recapture that volume in an area where not a lot of people are really focusing.  Trust me when I say that the product requirements for an embedded processor vs. a communications processor are very different.  I’ll be interested to see how this works for TI over time.  I don’t expect we’ll see results anytime soon, since the design cycles are pretty long, but I’d bet that it ends up being positive for them if they stick to the strategy.

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