), or "TI", recently acquired a building in the Chengdu Hi-Tech
Zone from UTAC Chengdu Ltd. to open an assembly and test (A/T)
operation plant in Chengdu, China.
Earlier in June, TI announced the expansion of its existing
wafer fabrication factory in the same complex. The company stated
that it will invest $1.69 billion over the next 15 years, which
will include funds for facilities, manufacturing equipment and
The new 358,000 square-foot building will become TI's seventh
A/T operation. As both TI's existing wafer fab and the new
building for A/T operation plant are located on the same
property, the Chengdu site will become the only integrated wafer
production, A/T center.
TI has started hiring people to refurbish the building and
will simultaneously run a small production line in the new
building. Management expects the site to be fully equipped and
start production by the fourth quarter of 2014.
Texas Instruments has been investing in the Chengdu site since
it started its fab in 2010. Overall, the company employs about
14,500 people in Asia which is about 43% of its worldwide
TI's growing investments in China make sense as it has been
operating in the market for close to three decades now. The
company has 18 offices for sales and applications support in the
country, including a product distribution center in Shanghai and
the wafer fab facility in Chengdu. TI's long association with the
Chinese government may provide it with cost benefits and cheap
labor, among other things.
TI's capital spending forecast remains unchanged for 2013. The
company expects its capital spending levels to remain about 4% of
revenues until the latter exceeds $18 billion and over the long
run should range between 4%-7%.
In the third quarter of fiscal 2013, TI's earnings were up
both sequentially and year over year, beating the Zacks Consensus
Estimate by 8 cents. Results were helped by an improving mix of
business, good cost control and a lower tax rate. Also, revenues
of $3.24 billion were up 6.5% sequentially butdown 4.3% year over
year (at the higher end of the recently narrowed guidance range
of $3.15 billion to $3.25 billion).
Texas Instruments has a Zacks Rank #3 (Hold). Other stocks
that are performing well at current levels include
). All these stocks carry a Zacks Rank #2 (Buy).
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