TI Eyes Video to Drive Semiconductor Sales

Texas Instruments Vice President Greg Delagi holds a video micro chip board, in Dallas, Wednesday, May 17, 2006. TI Inc. has ridden the wireless wave ever since cellular phones were used only for talking to somebody else. The engineers who run Texas Instruments are trying to anticipate where the phone market is headed next, and they think they know. "Video is the next big thing," says Delagi. (AP Photo/LM Otero) (Lm Otero - AP)

DALLAS -- Chip-maker Texas Instruments Inc. has ridden the wireless wave since the dawn of the cellular age, with its sales and profits growing along with the popularity of games, cameras and other fancy mobile phone features that require more computing horsepower.

Now, as the market for basic cell phones appears to be growing saturated in some parts of the world, the Dallas-based company _ whose chips are in about half of all mobile handsets _ is hunting for ways to expand its existing business and find new ones for its semiconductors.

The key, executives believe, is video. It's not only going to be a factor in high-end cell phones but also other gadgets, from portable media players to surveillance systems.

"Video is the next big thing," says Greg Delagi, TI's general manager for so-called digital signal processors. "As video and images go digital, it's a billion-dollar opportunity in the next five years."

For more than two decades, TI engineers designed components that could receive, store and transmit voice signals for cell phones.

Video requires changes to hardware and software, though Delagi said the underlying core of the signal-processing technology is the same.

Naturally, other chip companies _ including Broadcom Corp., Pixelworks Inc. and Philips Semiconductors _ also see dollar signs in making semiconductors for video devices. New digital video chips can sell for hundreds of dollars instead of the few bucks fetched by older chips.

"Everybody is trying to get into that market," said Will Strauss, a semiconductor analyst with research firm Forward Concepts. "It's the moths circling the candle."

Texas Instruments is betting big on a technology package it calls DaVinci. The company says DaVinci chips and software transmit video faster and provide clearer pictures.

The company began shipping DaVinci development systems in December and claims to have sent 500 kits to manufacturers who are using them to design products that would rely on TI chips.

Strauss said DaVinci's complicated design "isn't very elegant, but hey, it works and it works now."

A more elegant design, Strauss said, would be to integrate all of DaVinci's functions on a single chip. TI is trying to do that, and so are several of its competitors with their own technology.