TI retirees received encouraging news about the economy and TI’s performance at the Nov. 12 Thanksgiving-themed Big Event, which attracted about 1,200 people to Market Hall in Dallas. But Tom Engibous, TI chairman, president and CEO, voiced his concern about rapidly rising health benefits costs —TI’s fastest growing expense.
“TI is outperforming its competitors right now,” Tom said. “People are beginning to see there is a recovery. Companies are starting to hire again, including TI.” The 2001 downturn was the worst in semiconductor industry history by at least a factor of two. However, because TI played offense and didn’t cut research and development expenditures, the company is gaining market share in the upturn. “Signal processing is the sweet spot in the SC industry — where we want to be,” Tom said. Demand for advanced cell phones has made wireless a big growth driver again for TI. “We’re also getting a good boost from broadband modems as well as consumer electronics and our analog business,” Tom added.
TI must continue with strategic investments in manufacturing and R&D. And to do that, TI must maintain a solid financial position, whether the market is in growth mode or recession. This brought Tom to the issue of health benefits costs — a topic he said he frankly would rather not have to address. Health care costs In 2004, for the first time, TI is asking all retired employees to pay a portion of their own healthcare premiums, and the premiums for spouses and dependents will increase. To keep premiums as low as possible, deductibles and out-of-pocket caps have been raised. The share that active TIers pay for premiums also will increase. “I know it’s a hard pill. And very honestly, I’m sorry TI had to do it. But the fact is, the company had to do it,” Tom said. “We want to continue offering retiree benefits, but TI must ask you and employees to share more of the costs with the company.”
Tom said TI’s revenue has increased about 16 percent this year from 1998. Meanwhile, health care costs for active TIers have increased more than 55 percent. And retiree benefits costs have more than doubled. “No company can sustain that kind of imbalance without eroding its ability to compete,” Tom said. He pointed out that most TI competitors don’t offer retiree health benefits. But, unlike these companies, TI believes that retirees are important stakeholders, together with customers, employees, communities and shareholders.
“Because we feel a genuine sense of responsibility to ALL stakeholders, we will use R&D and capital expenditures to create a dynamic roadmap for future success. In going down that road, we do not intend to forget our past or the people who built this company and made it great,” he declared.
Looking ahead, Tom thinks signal processing represents the biggest growth opportunity in the electronics industry. “It certainly represents the future of TI,” he said. “Signal processing enables us to convert from analog to digital code — ones and zeroes — and convert back to analog. A very important point is that digital signal processors (DSPs) can do this while consuming just a trickle of electricity.” The most significant market for signal processing today is for cell phones. But TI has steadily expanded the reach of signal processing far beyond wireless. “Our products empower many consumer electronics devices on store shelves now, including handheld digital video players, portable digital audio players and very tiny digital video recorders."