December 11, 2008 / 5:25 PM / in 10 years

UPDATE 1-TI CEO sees analog margins holding as volume falls

NEW YORK, Dec 11 (Reuters) - Texas Instruments TXN.N, a maker of chips for everything from cell phones to industrial equipment, expects its profit margin levels for analog chips to hold steady even as sales volumes decline, chief executive Rich Templeton said on Thursday.

“The key difference is that you don’t have pricing moving down” for analog chips compared with other chip segments even as the entire chip industry sees volumes decline in the weak global economy, Templeton told investors in a conference webcast.

The comments come days after disappointing projections from TI for a revenue decline of as much as 30 percent in the current quarter and another significant drop in the first quarter as TI looks to cut inventory amid weak demand.

Templeton said it was difficult for TI to make predictions about results because of the uncertainty of end-user demand but he said it was basing its plans on the assumption that the downturn would not be over any time soon.

“It’s going to be a pretty significant downturn. It’s going to be a long one,” he said.

TI, whose biggest cellphone customer is Nokia NOK1V.HE, has been switching its focus in wireless from baseband chips, the brains of the phone, to application chips used for features such as mobile television and photography.

“The most important chip in the cell phone in the next three, four and five years is the application chip,” he said.

Templeton said he is working on winning new customers for its cellphone application chip business but that it was too soon to say if TI will win business with companies such as Apple Inc (AAPL.O) and Research In Motion Ltd RIM.TO.

“It’s not clear if we’ll ever win Apple but we’ll keep working with the RIM folks to see if there’s an opportunity there over time,” he said. (Reporting by Sinead Carew; Editing by Brian Moss)

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