|Home||Internet of Things||Aerospace||Apparel||Energy||Defense||Health Care||Logistics||Manufacturing||Retail|
Julie England on Why Texas Instruments Kept RFID
RFID Update spoke with Julie England, general manager of TI's RFID business, about the significance of yesterday's Sensors & Controls sale announcement and TI's decision to keep RFID. This article recaps the discussion.
Jan 10, 2006—This article was originally published by RFID Update.
January 10, 2006—Yesterday's announcement from Texas Instruments that it has agreed to sell its Sensors & Controls business to Bain Capital for $3 billion in cash did not come as a surprise to anyone following the company. Rumors of a sale had been swirling for months, and Robert W. Baird analyst Tristan Gerra reported in late November that a deal had been reached. For those in the RFID industry, the speculation fueled questions about the future of TI's long-established role therein since the company's RFID division is part of Sensors & Controls. But those questions were laid to rest yesterday, when the announcement stated that RFID was excluded from the Sensors & Controls sale. RFID Update spoke with Julie England, general manager of TI's RFID business, about the significance of the sale and TI's decision to keep RFID.
The rationale is two-fold. First, the company decided to sell Sensor & Controls because its growth prospects and margins weighed down the company's overall financial averages. To take the business to the next level would require significant resources, resources the company would prefer to allocate to other opportunities like its high-growth, high-margin semiconductor business. Unlike the wider sensors business, RFID is also a high-growth opportunity whose financial prospects are more consistent with those of the businesses on which the company now wants to focus. "The growth rate of Sensors & Controls is relatively low," said England, whereas "RFID has a relatively high growth rate."
Second, from a technology perspective Texas Instruments' RFID is actually a semiconductor business, evidenced among other things by those companies it considers RFID competitors, like Philips Semiconductor, Infineon, STMicroelectronics, and Alien. Effective yesterday, the unit will become a division of the company's semiconductors business. So RFID's exclusion from the sale is also a matter of it not sharing core technology, manufacturing, and operations characteristics with sensors and controls, and therefore being kept and reclassified more fittingly within TI.
"I think it will benefit the TI RFID business," said England referring to the sale and the RFID division's reclassification to semiconductors. Under the semiconductors umbrella, "there is a lot of synergy to strengthen our RFID capabilities," she said. "[Our RFID business] will benefit from leveraging semiconductor technology and manufacturing." She also believes that the customer focus model of semiconductors is a good fit for RFID, noting that TI expects no supply disruptions from the change. "This is really less of a major change than some might see it from the outside," assured England, who herself worked in the semiconductor division before transferring to RFID.
Most believe that the capabilities of RFID will continue to converge with those of sensors, yielding technology that not only allows the identification of objects but also the measurement and tracking of environmental variables. Asked if TI's sale of the sensors business would preclude the company from playing to that trend, England said absolutely not. "We can participate in the vision of sensors plus RFID without having a sensor business in the company," she said, noting that TI is already active in the cold chain vertical.
Texas Instruments' RFID division had revenues of roughly $110 million in 2005, and it was profitable (the company didn't disclose how profitable). Like most firms in the industry, the adoption of RFID in 2005 didn't meet heightened expectations. England said that she "judged down" the optimism coming from analysts during the hype peak and still ended up overestimating near-term demand. That said, she remains confident about the long-term potential: "We feel like the RFID market is growing and will keep growing in 2006, and we want to be a major player."
Read the press release about the announcement
Login and post your comment!
Not a member?
Signup for an account now to access all of the features of RFIDJournal.com!
SEND IT YOUR WAY
RFID JOURNAL EVENTS
ASK THE EXPERTS
Simply enter a question for our experts.
TAKE THE POLL
|RFID Journal LIVE!||RFID in Health Care||LIVE! LatAm||LIVE! Brasil||LIVE! Europe||RFID Connect||Virtual Events||RFID Journal Awards||Webinars||Presentations|