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Texas Instruments Bets Sales Army Can Spur National’s Growth

Texas Instruments Inc. Chief Executive Officer Rich Templeton is paying $6.5 billion for National Semiconductor Corp. in a wager that he can reverse its sales slump while profiting from the company’s higher margins.


To ensure a payback, Texas Instruments aims to use its army of salespeople to stoke demand for National’s products. The Dallas-based company has a bigger sales force than any other chipmaker, Templeton says, with more representatives in China alone than National has in total. He has vowed to increase revenue at more than twice the industry rate, a feat National hasn’t pulled off in years.

“They think they can take National Semiconductor’s business and execute better,” said Daniel Berenbaum, a New York-based analyst at Auriga USA who recommends selling Texas Instruments’ stock. “They are buying customers.”


The deal reaffirms Templeton’s commitment to analog chips -- National’s specialty. Analog semiconductors, which go into everything from military hardware to washing machines, perform functions such as power regulation and the conversion of real- world inputs, such as touch or sound, into electronic signals.

Texas Instruments is the biggest maker of analog chips, and they account for 43 percent of its revenue -- up from 35 percent five years ago. Meanwhile, the company is exiting the market for mobile-phone radio semiconductors, an area it once dominated. With National, Texas Instruments can add new analog products faster than it could on its own, Templeton said
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