Chipping Away
In a digital world, Texas Instruments finds profit in analog
Scattered around some sections of Texas Instruments are meeting places commonly known as "beer check" rooms. No beer gets consumed there, at least that engineers are willing to admit. The suds instead are an incentive-engineers win a case of their choice, root beer if they must, when they pinpoint a fatal flaw in the blueprint for a new semiconductor. "A design gets put up on the wall, engineers are summoned, and they have at it," says Bill Klein, a TI engineer who has long made a living in a little-understood corner of semiconductors known as analog chips.
In a world gone digital, analog chips are a surprising champion. They are the semiconductors that handle power, light, and sound-turning those real-world phenomena into virtual reality, into the numbers where digital chips work their math magic. They're also where Texas Instruments, a venerable name in semiconductors (where the integrated circuit itself was invented nearly a half century ago), has bet much of its future. The Dallas-based company was for a quarter century the largest maker of semiconductors but found itself stumbling in the early 1990s. So it underwent a transformation, shedding all sorts of business lines to focus on two-digital signal processors and analog chips. The two products accounted for less than 20 percent of TI's sales in 1996 but now make up about 80 percent. And of the two, the future could increasingly rest on analog, says TI CEO Richard Templeton: "Despite the world going digital, the growth of analog is going to be very, very powerful."
Templeton looks the part of an engineering CEO, dressing stylishly in sport coat, jeans, and black sweater, clean-shaven with close-cropped hair. So it's all the more intriguing to know his company is betting on the likes of Klein, who offers a glimpse of silicon's wilder side, with a silver Stetson that's always with him and an ankle-length "Great Plains duster" nearby. This is not the staid world of digital semiconductors, where legions of young, buttoned-down engineers stare at computer screens as they assemble the next blockbuster microprocessor. At 65 years old, Klein with his full gray beard is a more common type in the analog world, where intensely independent, beer-betting designers often work alone in devising their circuits, where experience is golden and intuition the silver of a highly profitable high-tech business.
Turnaround. While digital can involve millions of circuits squeezed onto one sliver of silicon, analog might mean a few dozen carefully arranged to minimize interference or heat. "It's really kind of a black art," says Robert Burleson, an equity analyst at ThinkEquity Partners. "I envision guys in Led Zeppelin T-shirts and ponytails working on these chips in their basements." It's a valuable art as well, with Burleson and other analysts enthusiastic about TI's progress in analog, where the company has steadily been grabbing market share. Analog is key to a turnaround at the Dallas company, which in the 1980s had fallen behind its semiconductor competitors, notably Intel, which increasingly dominated the silicon used in personal computers.
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