What changed in this filing

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Item 1. Business

2022-02-04 compared with 2021-02-05 · 43 added, 40 removed, 172 unchanged (33% of the section changed)

12 unchanged sentences

And third, we will be a company that we are personally proud to be a part of and that we would want as our neighbor.

Our ambitions are foundational to ensuring that we operate in a sustainable, socially thoughtful and environmentally responsible manner.

When we are successful in achieving these ambitions, our employees, customers, communities and shareholders all win.

12 unchanged sentences

The largest allocation over this period was to drive organic growth, which includes investments in R&D, sales and marketing, capital expenditures and working capital for inventory.

In this period we allocated just over $8 billion to capital expenditures, and in the years ahead this amount will increase, as we expect it to be the largest driver of long-term free cash flow growth.

Beyond that, we also allocated capital to dividends and share repurchases.

Dividends are designed to appeal to a broad set of investors, and share repurchases are made with the goal of the accretive capture of future free cash flow for long-term investors.

Lastly, we allocate to acquisitions for inorganic growth, which we last did in 2011 when we acquired National Semiconductor.

Lastly, for inorganic growth, we allocate to acquisitions that meet our financial and strategic objectives.

The third element of our strategy is efficiency, which we think of as constantly striving for more output for every dollar spent.

20 unchanged sentences

Power and Signal Chain.

Power includes products that help customers manage power in electronic systems in all end markets.

Our broad portfolio is designed to manage power requirements across different voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage supervisors, voltage references and lighting products.

Power includes products that help customers manage power in electronic systems.

Signal Chain includes products that sense, condition and measure real-world signals to allow information to be transferred or converted for further processing and control.

Our Signal Chain products, which serve a variety of end markets, include amplifiers, data converters, interface products, motor drives, clocks, logic and sensing products.

Our Signal Chain products include amplifiers, data converters, interface products, motor drives, clocks, logic and sensing products.

Embedded Processing

14 unchanged sentences

In Other, we also include items that are not used in evaluating the results of or in allocating resources to our segments.

Examples of these items include acquisition charges, restructuring charges and certain corporate-level items, such as litigation expenses, environmental costs and gains and losses from other activities, including asset dispositions.

Examples of these items include acquisition, integration and restructuring charges, as well as certain corporate-level items, such as litigation expenses, environmental costs and gains and losses from other activities, including asset dispositions.

Markets for our products

3 unchanged sentences

Industrial Factory automation & control

(37% of TI revenue) Medical

Building automation

(41% of TI revenue) Building automation

Grid infrastructure

1 unchanged sentence

Test & measurement

Power delivery

Pro audio, video & signage

Power delivery

Retail automation & payment

2 unchanged sentences

(21% of TI revenue) Advanced driver assistance systems (ADAS)

Hybrid, electric & powertrain systems

Passive safety

Hybrid, electric & powertrain systems

Body electronics & lighting

Personal electronics Mobile phones

(27% of TI revenue) PC & notebooks

Portable electronics

(24% of TI revenue) Portable electronics

PC & notebooks

Connected peripherals & printers

20 unchanged sentences

These are typically referred to as upturns and downturns in the semiconductor cycle.

A semiconductor cycle could be affected by the significant time and money required to build and maintain semiconductor manufacturing facilities.

We employ several strategies which have many benefits, including dampening the effect of the semiconductor cycle on TI.

As an example, we are focused on building closer direct relationships with customers.

When it comes to market cycles, these relationships provide improved insight into customer demand and allow us to more accurately and efficiently manage factory loadings and inventory levels, which lead to more stable lead times and higher product availability.

Finally, we focus our resources on analog and embedded processing products and industrial and automotive markets.

Generally, our products serve a large and diverse customer base, which reduces our dependence on the performance of any single product, market or customer.

In addition, they typically have long shelf lives and low risk of obsolescence.

Industrial and automotive markets also benefit from long product life cycles, with revenue often lasting 10 years or more, which help to smooth the impact of cyclicality.

Semiconductor cycles are affected by the significant time and money required to build and maintain semiconductor manufacturing facilities.

Our revenue is subject to some seasonal variation.

2 unchanged sentences

We sell our products to over 100,000 customers.

Our customer base is diverse, with more than one-third of our revenue derived from customers outside our largest 100.

We market and sell our products through direct sales channels, including our website and broad sales and applications team, and through distributors.

Over the past several years, we have been investing in new capabilities and evolving our distribution network to better align with our strategy to establish closer direct relationships with our customers.

With less business flowing through the distribution channel, we require fewer distributors.

During 2020, we completed our transition to a single worldwide distributor, coupled with a few region-specific distributors, for order fulfillment.

Building closer direct customer relationships strengthens our reach of market channel advantage, which gives us access to more customers and more of their design projects, leading to the opportunity to sell more of our products into each design.

Our customer base is diverse, with more than 40% of our revenue derived from customers outside our largest 100.

We market and sell our products through direct sales channels, including our website and broad sales and applications team, and, to a lesser extent, through distributors.

Over the past several years, we have been investing in new capabilities to build closer direct customer relationships.

For example, in 2021 about two-thirds of our revenue was direct, and transactions on TI.com grew to about 10% of our revenue, as customers valued the convenience of purchasing online.

Closer direct relationships with our customers help to strengthen our reach of market channel advantage and give us access to more customers and more of their design projects, leading to opportunities to sell more of our products into each design.

Additionally, broader and deeper access gives us better insight and knowledge of customer needs.

Our investments in new and improved capabilities to directly support our customers include website and e-commerce enhancements as well as inventory consignment programs and order fulfillment services.

We expanded the reach of our TI.com e-commerce channel by offering a localized online experience in many countries, with convenience features such as immediate availability, local currency, payment methods, invoicing and importer of record.

In addition to doing business directly with TI, we offer customers the option of using a single worldwide distributor and a few region-specific distributors for order fulfillment.

Manufacturing

5 unchanged sentences

We invest in manufacturing technologies and do most of our manufacturing in-house.

This strategic decision to make manufacturing and technology a core competitive advantage delivers tangible benefits of lower manufacturing costs and greater control of our supply chain.

We have focused on creating a competitive manufacturing structural cost advantage by investing in our advanced analog 300-millimeter capacity.

An unpackaged chip built on 300-millimeter wafers costs about 40% less than an unpackaged chip built on 200-millimeter wafers.

To strengthen this advantage, construction is underway on our new 300-millimeter wafer fabrication facility in Richardson, Texas, as 300-millimeter wafers will continue to support the majority of our Analog growth.

This strategic decision to make manufacturing and technology a core competitive advantage provides us with tangible benefits of lower manufacturing costs and greater control of our supply chain.

We have focused on creating a competitive manufacturing structural cost advantage by investing in our advanced 300-millimeter capacity.

An unpackaged chip built on a 300-millimeter wafer costs about 40% less than an unpackaged chip built on a 200-millimeter wafer.

We continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning.

Progress and investments include:

• continuing construction of RFAB2 (Richardson, Texas), our next 300-millimeter wafer fabrication facility, to begin production in the second half of 2022;

• purchasing a 300-millimeter wafer fabrication facility in Lehi, Utah, to support analog and embedded processing manufacturing, which is expected to begin production in early 2023;

• planning construction on our next two 300-millimeter wafer fabrication facilities in Sherman, Texas, to begin in 2022.

This North Texas site has the potential for up to four fabrication facilities to meet demand over time, as semiconductor growth in electronics, particularly in industrial and automotive markets, is expected to continue well into the future.

Production is expected to begin in 2025.

Together, these investments are designed to strengthen our manufacturing and technology competitive advantage, provide us with lower costs and greater control of our supply chain, and support growth over the next 10 to 15 years.

We assess and are careful to address potential health, safety, and environmental risks presented by our operations, including our manufacturing operations.

4 unchanged sentences

Our objectives for inventory are to maintain high levels of customer service, maintain stable and competitive lead times, minimize inventory obsolescence and improve manufacturing asset utilization.

To meet these objectives and to allow greater flexibility in periods of high demand, we build ahead of demand our broad-based products that are used across a diverse set of applications and customers and have low risk of obsolescence.

To meet these objectives and to allow greater flexibility in periods of high demand, our strategy is to build ahead of demand our broad-based products that are used across a diverse set of applications and customers and have low risk of obsolescence.

Inventory levels will vary based on market conditions and seasonality.

8 unchanged sentences

We do not consider our business materially dependent upon any one patent or patent license.

Executive officers of the Registrant

Information about our executive officers

The following is an alphabetical list of the names and ages of the executive officers of the company and the positions or offices with the company held by each person named:

3 unchanged sentences

Gary 47 Senior Vice President

Haviv Ilan 52 Executive Vice President and Chief Operating Officer

Haviv Ilan 53 Director, Executive Vice President and Chief Operating Officer

Kozanian 39 Senior Vice President

Lizardi 48 Senior Vice President, Chief Financial Officer and Chief Accounting Officer

Lizardi 49 Senior Vice President and Chief Financial Officer

Roberts 46 Senior Vice President

Amichai Ron 44 Senior Vice President

1 unchanged sentence

Cynthia Hoff Trochu 58 Senior Vice President, Secretary and General Counsel

Van Haren 51 Senior Vice President

Whitaker 56 Senior Vice President

Witzsche 37 Senior Vice President

The term of office of these officers is from the date of their election until their successor shall have been elected and qualified.

All have been employees of the company for more than five years.

Templeton and Mses.

Templeton, Ilan and Lizardi and Mses.

Trochu and Whitaker have served as executive officers of the company for more than five years.

Ilan and Lizardi and Ms.

Van Haren became executive officers of the company in 2017.

Bahai, Flessner and Kozanian became executive officers of the company in 2018.

1 unchanged sentence

Gary became an executive officer in 2020.

Roberts and Ms.

Witzsche became executive officers in 2021.

Human capital management

7 unchanged sentences

Inclusion is one of our core values, and we have programs in place to promote diversity and inclusion.

To learn more, review our Corporate Citizenship Report.

Information in our Corporate Citizenship Report is not part of this report.

We encourage you to review our Corporate Citizenship Report for more information.

Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report.

Available information

1 unchanged sentence

Information on our website is not part of this report.

We make available free of charge through our Investor Relations website our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as soon as reasonably practicable after they are filed with the SEC.

Also available through the TI Investor Relations website are reports filed by our directors and executive officers on Forms 3, 4 and 5, and amendments to those reports.

8 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business