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TI ramps production at three fabs: capital spending to fall in 2011
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Not something that happens every day and in the case of Texas Instruments – not something that happens every few years but the chip manufacturer actually ramped production at three new fabs in the last quarter of 2010. TI said that production had started for its own analog IC’s at its 300mm RFAB in Richardson, Texas as well as production at the recently acquired 300mm fab from Spansion in Aizu Japan. A fab that was previously operated by SMIC in Chengdu, China was also ramping. Both Spansion and SMIC are receiving IC’s from TI for a period of time, which executives claimed that the financial impact of these agreements should largely offset any carrying costs associated with those new factories ramping.
However, TI said that factory utilization was down in the fourth quarter, impacting gross margin and partly due to the new fabs coming on stream with TI products.
TI said that capital expenditures were US$301 million in the fourthe quarter compared with US$436 million a year ago and US$396 million in the prior quarter. Capital expenditures in the quarter were primarily for assembly/test manufacturing equipment, as well as for analog wafer manufacturing equipment.
Capital expenditures were US$1.20 billion in 2010, up US$446 million from 2009. TI expects to spend approximately US$0.9 billion on CapEx in 2011.