Texas Instruments is planning to pull out of the smartphone and tablet sector with ambitions to reach a broader market that they believe will be more profitable and stable. The announcement was made by senior vice president for embedded processing Greg Delagi during an investor meeting earlier this week.
Delagi said Texas Instruments wants to focus on embedded systems like those found inside automobiles. The company currently supplies processing solutions for some well known products like Amazon's Kindle Fire and the just-announced Nook HD. The problem, however, is that they've been facing increasing pressure from rival Qualcomm. It also doesn't help that industry giants Apple and Samsung have been developing their own chips instead of using ready-made solutions from TI.
Share value dropped nearly three percent following the admission but has since rebounded to less than one percent lower than pre-news pricing. The executive didn't outline how the new direction would affect financial results which likely led to the fluctuation in share value. Delagi said it was too early to detail how the move would impact financials as they are still working on a strategy internally.
This uncertainty has left some analysts unsure as to how long TI will continue to support existing customers. Investors are also left scratching their heads trying to determine when revenue from smartphones and tablets will disappear and how long it will take before the new strategy starts to pay off.