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)

Strauss said DaVinci currently draws too much power to use it on cell phones, but it could be deployed elsewhere _ from surveillance systems to personal media players.

Delagi acknowledged that DaVinci's early versions aren't intended for portable, battery-powered devices and are more likely to wind up in digital video recorders and other plugged-in gadgets. But he said there is no reason why DaVinci can't be refined for portable devices in the future.

It isn't easy to predict who will develop the next must-have electronics item. It's not always the big consumer product manufacturers.

TI officials cite the example of Sling Media Inc., a California startup that came up with a product that lets users watch regular TV on any Internet-connected device, including laptops, mobile phones and PDAs. Its Slingbox uses TI's digital media processor.

TI also sees a growth market in making processors for medical devices, from portable ultrasound machines to high-tech prosthetics. It supplies a technology called digital light processing, or DLP, for high-definition television sets. And it still makes handheld calculators.

But cell phones remain a key market for TI.

The company says it sells chips to the 10 largest cell phone makers and six of the seven largest manufacturers of advanced phones. Nokia Corp. is its biggest single customer.

According to the research firm Forward Concepts, Texas Instruments accounted for 42 percent of chips in advanced or so-called 3G (third-generation) cell phones, far outpacing Qualcomm Inc.'s 14 percent.

TI also is counting on affluent shoppers in developed countries to buy phones with video, still-photo, gaming and other fancy applications. It is building more powerful chips for that market, too.

In February, for instance, the company announced it had developed a processor capable of taking 12-megapixel photos or letting users download high-quality video to their phones for replay on a TV screen.

But TI still sees a burgeoning market in basic handsets for the new consumer classes of China, India and the rest of the developing world.

Entry-level phones contain fewer or cheaper semiconductor parts, but TI believes they can be profitable because the company doesn't have to spend new money on the technology _ it has already been developed for Western consumers.