Texas Instruments Incorporated (TI)

Date Founded: 1930

Industry: Technology

Corporate Headquarters: Dallas, Texas

Type: Public

Overview

Texas Instruments Incorporated (TI) is an international technology company. Its roots lie in the petroleum industry of the early twentieth century. John Karcher and Eugene McDermott were using reflection seismography to look for oil by setting off explosions, then recording the waves to read what was below the surface. They formed a new company, Geophysical Service (GSI), in 1930 and continued looking for oil. The company grew through mergers and by creating new divisions. World War II brought even greater opportunity, and the company refocused its attention. TI pursued and invented technology, with a keen interest in developing electronics.

TI innovators invented the bipolar integrated circuit (IC) in 1959. The compact IC was adopted by manufacturers of electric appliances and opened new doors for technology companies. TI leaders were forward-thinking enough to allow employees with ideas to devote time and resources to following them to innovative solutions. An idea for a simple toy, for example, opened the door to personal computers, an industry TI continued to develop in the twenty-first century.

The global company’s name was synonymous with calculators in the late twentieth century, thanks to TIs development of the electronic desktop calculator in 1967. The calculator itself sped up the development of new ideas and products, as engineers could quickly compute calculations and forge ahead. TIs work in developing the silicon chip ushered in the era of personal computing.

History

When Karcher and McDermott launched Geophysical Service (GSI), the Great Depression had just begun. They took a chance by launching an independent firm during an unsettled economic era. They rented space for a laboratory and filed the documents to incorporate GSI on May 16, 1930, in Newark, New Jersey. The pair owned a combined 50 percent of the company. Their investor, geologist Everette Lee DeGolyer, was a secret partner. Karcher was the inventor, and McDermott was the designer.

They enlisted H. Bates Peacock, Erik Jonsson, and Cecil Green to join the endeavor. Peacock liked to be in the field. Jonsson was both an engineer and an experienced salesperson. He was working for an aluminum company with which GSI was doing business when Karcher hired him to manage the machine shop. Green was hired away from a job in a vacuum tube laboratory to travel to potential oil fields across the Southwest.

The international business was booming. GSI soon began to transition from finding oil for other companies to finding it for itself, but the oil companies it had worked for were unhappy. By 1938, the company needed to split up the oil and geophysical aspects of the business. In January 1939, Karcher and McDermott changed the company’s name to Coronado Corporation, and made GSI a subsidiary. McDermott was the president of Coronado, the oil development business.

Oil companies still viewed Coronado with suspicion, so Karcher decided to break up the company. He sold Coronado to Stanolind Oil & Gas Company (later Amoco). Stanolind allowed McDermott, Jonsson, Green, and Peacock to buy GSI. The four had a combination of cash and personal collateral, which they rushed to put in place. Just as the sale was being completed, Japan attacked the US Naval Station at Pearl Harbor, Hawaii. World War II dashed any hope of continuing to rely on international revenue; GSI needed a new plan.

The war brought GSI business from the military. Through his contacts at the Naval Bureau of Aeronautics, including Lieutenant Patrick E. Haggerty, Jonsson soon saw the value of developing electronics. When the war ended in 1945, Jonsson invited Haggerty to join GSI. Haggerty suggested GSI create a subsidiary devoted to electronics. He became general manager of the new Laboratory and Manufacturing (L&M) division and hired a number of US Navy veteran engineers. Haggerty moved his division from being a second-source supplier of military electronics to a major producer. L&M supplied electronics to the public sector while supporting the geophysical equipment arm of GSI. GSI provided radar systems to the defense industry.

GSI was closely associated with the oil industry, so the parent company name officially became Texas Instruments Incorporated (TI) on January 1, 1952. McDermott was the chairman, and Jonsson was the president. GSI became a wholly owned subsidiary of TI under Green as president. TI purchased a transistor license and entered the semiconductor business. TI did not have enough investors to be listed on the New York Stock Exchange (NYSE), so it merged with Intercontinental Rubber Co. and became a publicly owned company listed on the NYSE. Jonsson purchased the first one hundred shares on October 1, 1953.

Under Haggerty's direction, TI's semiconductor business grew quickly as transistor technology was applied to a wide range of consumer products. The company developed the world's first transistor radio, which was much more portable than existing tube radios and proved highly popular. TI soon bought Houston Technical Laboratories, which manufactured scientific instruments. The company cemented its positions as a leading electronics company, and from the mid- to late-1950s was the sole mass producer of silicon transistors, realizing significant profits.

TI's next major innovation was the integrated circuit (IC). Company engineer Jack Kilby came up with the design in 1958, quickly followed by researchers working independently at competitor Fairchild Semiconductor. By then president of TI, Haggerty realized that the company did not have the resources or funds to fully develop IC technology, and looked to its already established relationship with the US military for support. In the midst of an arms race with the Soviet Union, the US government funded TI's research and development of ICs for ballistic missiles. By the early 1960s, critical US weapons systems such as the Minuteman ballistic missile incorporated TI's ICs. The company also brought the technology to the consumer market, collaborating with the Zenith Radio Corporation to release the first consumer IC product, a hearing aid, in 1964.

Through the 1960s, Haggerty sought to further bring IC technology to the general public. One idea was a portable, affordable electronic calculator, which Kilby began working on in 1965. Two years later he had developed the general design for a groundbreaking pocket calculator. The design of TI's scientific calculators was subsequently refined, with the low-cost TI Datamath—employing a single IC—released in 1972 to wide success. TI would become the best-known maker of scientific calculators and an important player in the consumer electronics industry.

Meanwhile, the company also continued its military technology development. Notably, it developed solid-state radar by 1967, earning a patent the next year. This breakthrough enabled smaller and more reliable radar assemblies, including for airplane radar and ground-based portable systems. TI also provided many semiconductor elements used in the historic Apollo space missions, including the 1969 Moon landing. The company continued to grow into the 1970s, having built or acquired semiconductor factories around the world. In 1973 TI began producing dynamic random-access memory (RAM), helping to fuel the growing computer industry.

TI set up IDEA, an idea-testing program, in the 1970s. To realize one speech recognition idea, the team needed to create an IC to quickly compute four hundred thousand functions. The group invented a 4-bit microcontroller, read-only memories (ROMs), and an innovative speech synthesis chip for the device, called a Speak & Spell, which debuted in 1978. This product was the first commercial use of a digital signal processor (DSP). TI greatly expanded its production of DSPs in the 1980s, debuting the first DSP on a single chip in 1982. Other work by TI researchers led to the development of digital light processing (DLP) technology by engineer Larry Hornbeck in 1987, though the developers did not initially have a purpose for it. In the early 1990s, the company formed a division to develop commercial applications for DLP, eventually focusing on digital network printing and digital video display and creating a new projector and television market. Eventually, TI developed high-definition televisions and digital cinema with DLP.

In the late 1990s TI started to sell off various business units and subsidiaries in a move toward consolidation of its semiconductor and DSP businesses. In 1997 it sold its defense operations to Raytheon, and its software business was bought by Sterling Software. It also sold its memory chip branch to Micron Technologies. Along with this divestment, TI purchased several semiconductor and DSP companies, and in 1999 it established major new manufacturing and design operations in Denmark, China, and Israel. In 2006 the company sold off its sensors and control business, slimming it down to just its semiconductor division and its educational technology division. In 2009 it opened Kilby Labs Dallas, an innovation center named after the most prominent engineer in company history.

In the 2010s, TI continued to focus on its analog and embedded processing technologies. Reflecting this focus, it acquired National Semiconductor in 2011 in a $6.5 billion dollar deal. The merger made TI the largest analog component manufacturer in the world. In 2012 the company moved its stock exchange listing to NASDAQ. Between 2015 and 2021, TI reduced greenhouse gas emissions by 18.6 percent, respectable progress on their 25 percent goal.

Impact

Texas Instruments' development of the integrated circuit revolutionized technology, and the company's influence continues to be felt in countless consumer electronics. While perhaps still best known to the public for its innovative calculators, TI historically shaped everything from critical military defense systems to aerospace systems, and it maintains a presence on the cutting edge of technological research. A long-time Fortune 500 company, in 2022 TI employed over 31,000 people, held over 40,000 patents, and sold more than 80,000 different products. It was listed 268th on the Forbes list of America's Best Large Employers in 2023, with $18.3 billion in revenue, assets totaling $24.7 billion, and profits of $7.7 billion. In both economic and social terms, TI has had and continues to have a significant impact in the United States and worldwide.

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