Companies Can Be Reborn Time and Time Again

—The Transformation of Texas Instruments—
Are there any companies in the semiconductor industry that continue to succeed indefinitely?
The answer to this question is,
likely "no."
However, there are companies that continue to survive while changing their form.
A prime example of this is
Texas Instruments (hereafter referred to as TI).
As we saw in the fourth installment, this company started in oil exploration,
and possessed a unique evolutionary model centered on shifting its core business and cultivating talent internally.
And in 1958,
it produced the invention of the integrated circuit by Jack Kilby.
However, its subsequent journey was by no means smooth.
I joined the Japanese subsidiary of TI in 1981.
At the time, it was the world's largest semiconductor company by sales.
However, in the 1980s, in DRAM, which was the main battlefield of the semiconductor industry,
Japanese companies began to possess overwhelming competitiveness.
TI was no exception, facing fierce competition and falling into a crisis of deficit.

In this situation, TI made a choice.
It was to bring its own technical rights to the forefront.
This was a licensing strategy based on the so-called "Kilby Patent."
This strategy had a major impact on the entire semiconductor industry.
Many companies signed licensing agreements,
and as a result, TI was somehow able to avoid the crisis of bankruptcy.
It also ended up in a legal battle with Fujitsu, and the result was a victory for Fujitsu.
This process was also a case that showed that technology functions as an "asset."
However, what is important here is
not the patent strategy itself.
It is the subsequent decision-making.
TI, in an attempt to somehow keep the DRAM business, explored collaboration with
many companies, including Kobe Steel,
but ultimately withdrew from DRAM in 1998.
This was a decision to let go of a past core business, just like Intel, which we saw in the sixth installment.
Intel withdrew from DRAM in 1985.
TI withdrew in 1998.
Both companies reached the same conclusion, but
there was a 13-year difference in their timing.
What is different from Intel here is that
after TI made efforts to somehow keep the DRAM business,
it sold it to Micron Technology, which had emerged as an up-and-coming DRAM manufacturer.

So, what did TI choose after that?
The company shifted its focus to digital signal processing, or DSP.
With the background of signal processing technology originally cultivated in oil exploration,
and based on the single-chip DSP product developed at a Japanese factory in 1982,
it began to demonstrate competitiveness in this field.
Especially with the expansion of the mobile phone market,
DSP for communications grew rapidly.
Global mobile phone manufacturers such as Nokia and Ericsson adopted TI's DSP,
and for a time, it became an entity that held the heart of mobile phones.
TI achieved great success in this field,
and returned to the core of the semiconductor industry once again.
However, this success was not permanent either.
As mobile phones evolved into smartphones,
the structure of the market changed significantly.
Integrated chipsets, the fusion of communication and processing.
In this flow,
Qualcomm emerged.
As a result, TI began to lose its leadership in this market.

Here, a choice is forced upon them again.
And TI makes another change in direction.
What was chosen next was analog semiconductors.
Interfaces with sensors, signal conversion, power supply.
These are not as flashy as digital,
but they are essential areas for all electronic devices,
and it is necessary for them to always exist around digital signal processing.
In this field, TI
has proceeded with the expansion of its product lineup and the strengthening of its manufacturing base,
and is now one of the world's leading analog semiconductor companies.
Furthermore, TI has also continued to cultivate a unique MEMS technology called DMD.
This technology took 10 years from prototyping to commercialization,
but it is widely used in fields such as projectors,
and still possesses global competitiveness today.

Looking at it this far, one characteristic emerges.
TI does not depend on a single success.
DRAM, DSP, analog, MEMS.
In each era,
it has survived while changing its main business.
This is not just simple business diversification.
Rather, it is the result of repeatedly redefining "what we consider our strengths."
And for analog and MEMS, manufacturing technology and elemental technology are the differentiating factors,
TI continues to take the position of an IDM,
and is still actively building its own factories.

And, another thing, when you ask Americans,
"Do you know TI?"
the answer that comes back is, "Oh, that's the calculator company."
TI is known for its educational scientific calculators,
and although sales are small within the whole company,
they are keeping this business as a brand strategy.

What made TI a sustainable company in the form it is today?
It is neither technology nor capital.
It is the accumulation of decision-making.
Texas Instruments (TI),
while having a culture of internal cultivation,
had the flexibility to switch businesses when necessary.
Here too, we return to the words from the first installment.
"Decision-making as a personal matter"
For this company, semiconductors were always a personal matter.
That is precisely why, in response to changes in the environment,
it was able to continue changing its own form.
In the semiconductor industry,
success is not a one-time victory.
It is the ability to keep changing itself.

Next time, we will discuss "manufacturing-specialized" foundries, which are at the opposite pole from IDMs.
And, in fact, their origin also lies with TI.

Reference: Engineering the World (TI 75th Anniversary Commemorative Magazine ISBN 087074502-6)
"Science and Technology Nation" (2) Yukio Sakamoto, former President of Elpida Memory 2022.4.19 - YouTube