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Monday, November 13, 2006

TI Goes Down Market (TXN)(NOK)

The shares in Texas Instruments have hit a down draft over the last several days. The shares hit $30.19 in November 7 intraday trading. Three days later, they hit $28.38.

TI did announce that it was coming out with a new chip that targets cheap phones, the Ecosto chip. It will be made for phones that sell around $100, which should make it popular in the fast-growing Chinese market.

TI customers like Nokia are pushing less expensive phones in China (at least less expensive than most phones sold in the US) in an attempt to get more of the cell phone replacement market there which is subscribers who are moving on to a newer phone.

But, cheap phones need cheap chips, and Wall St. may not be in love with the idea that TI will be selling lower priced chips to keep driving its revenue.

According to the Wall Street Journal, Nokia is targeting the Chinese market as well. Ironically, the big Finnish company claims that it is going after more expensive phone buyers. Replacement phones are about 55% of the total market now. And, Nokia is quick to point out that most replacements are actually upgrades.

Less expensive chips targeted to $100 phones. Is the TI plan out of step with Nokia? Or, does TI know something about China that Nokia does not?

Either way, Texas Instrument’s shares did not have a good week.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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