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TI Holds 2003 Financial Analyst Meeting

May 6, 2003

Highlights Strengths in Real-Time Signal Processing and Process Technology

Live Webcast at 8 a.m. Central Time, May 7
www.ti.com/corp/docs/investor/analyst/

DALLAS (May 6, 2003) – Texas Instruments Incorporated (NYSE: TXN) executives will tell a record-size audience at its 2003 Financial Analyst Meeting that its strengths in real-time signal processing and process technology place the company in its strongest competitive position ever, citing gains in market share, leadership products, process technology and balance sheet fitness.

TI gained market share in DSP, Analog and total semiconductor in 2002. The company is focused on high-growth markets that require high-performance signal processing, including wireless, broadband and digital consumer. Real-time signal processing, composed of DSP and Analog technologies, is the common denominator at the core of a myriad of applications and services that are becoming increasingly popular – cell phones, wireless networking, broadband services, digital still cameras, music jukeboxes and more. In addition, TI is now among only a handful of companies with the advanced manufacturing process technologies capable of cost-effectively producing the complex semiconductor products in the high volumes required by these markets.

“Communications will drive the electronics industry, as businesses and consumers demand solutions that are personal, portable and stay connected all the time,” said TI Chairman, President and CEO Tom Engibous. “The advent of the mobile Internet and ubiquitous broadband are two of the major trends that are driving this demand for more personal and more portable platforms. People don’t want to be tethered to a desk in order to access information. The market is demanding technology on the go, which requires real-time signal processing. No other company has the breadth and depth of signal processing that TI does.”

Increasingly, TI is also being called upon to provide not just chips, but entire system solutions. Whether it’s a cell-phone-on-a-chip, or a DSL-modem-on-a-chip, TI’s customers increasingly rely on TI to deliver a total package. The unique combination of strength in manufacturing technology and systems know-how are key to TI’s ability to deliver such system-on-chip value to its diverse base of customers.

TI’s analyst meeting on May 7 will include presentations by the company’s senior executives, and will be webcast live on the Internet at http://www.ti.com/corp/docs/investor/analyst/ .

Specific areas to be discussed include:

Financial Update – Chief Financial Officer Bill Aylesworth will discuss the company’s financial fitness. Since the market trough in the fourth quarter of 2001, revenue has increased 23 percent, operating profit has increased by 22 percentage points, and TI’s total cash position has increased by 24 percent to $4.1 billion. Since the beginning of 2002, TI’s semiconductor revenue growth has outpaced almost all of its competitors. The company’s strong balance sheet has enabled TI to make process technology and systems investments that have helped fuel new product development and market share gains. Moving forward, the company expects margins to improve as revenue increases, depreciation declines and the mix of higher-margin products increases.

Semiconductor Strategy – TI Chief Operating Officer Rich Templeton will review the key roles DSP and Analog play in an increasingly connected world, and TI’s growing lead in the technology required to successfully serve large vertical markets. He will describe how TI strengths in real-time signal processing – its technology, software, systems know-how, integration and manufacturing – ideally position the company to take advantage of today’s opportunities in wireless, broadband and digital consumer markets.

DSP – TI has invested significant resources to build a DSP franchise over the years, enabling TI to lead in the fastest-growing major segment of the semiconductor market. TI’s 130-nanometer copper technology enables the company to produce highly integrated solutions for wireless handsets and basestations, broadband and digital consumer markets. TI has set new benchmarks in DSP performance, as evidenced by the recent TI demonstration of a 1 GHz DSP, the highest performance DSP in the world.

High-Performance Analog – TI is building a leading High-Performance Analog position through ongoing investments and several strategic acquisitions made over the last several years. As a result, TI is now introducing almost 500 new High-Performance Analog products a year. More than 40 percent of revenue in this business in 2002 came from new products introduced in the last three years. In addition, TI has developed unique process technologies optimized for high-performance analog that allow the company to make products that outperform its competitors. As TI continues to release leadership products to market, the result will be an increasing mix of high-margin revenue.

Mixed-Signal Analog – By definition, the mixed-signal market demands expertise in digital and analog, a requirement that plays to TI’s strengths in DSP, Analog and integration. The business is an important component of TI’s overall analog strategy, and focuses on targeted, high-volume end-equipment markets that offer opportunity for profitable growth, such as automotive, printers, hard disk drives, PC connectivity and displays. TI’s size allows it to invest in proprietary process technologies for these markets, thereby enabling it to provide its customers with solutions that are more highly integrated, offer better performance and cost less.

Digital Consumer – Consumer electronics products are becoming increasingly digital, personal and connected, and in the process accelerating innovation across a range of traditional consumer products such as digital still camera, VCRs, jukeboxes and home theater systems. TI’s expertise in signal processing helps customers differentiate their products, resulting in another high-growth opportunity for TI.

Broadband – The demand for high-speed, always-on data service is driving broadband growth around the world. TI believes the use of broadband at home will be one of the major electronics and lifestyle trends of the decade, with wireless LAN becoming the dominant home networking technology. TI is well positioned with a series of leadership products across the breadth of broadband. TI just recently announced its AR7, the first single-chip DSL modem. The increasing integration of chips for broadband devices requires suppliers like TI that have the systems, silicon, software and process expertise required for full-scale system-on-chip integration.

Wireless – Customers from all regions of the world are selecting TI for their wireless needs – from custom to turnkey solutions, and from chipsets to OMAPTM processors. TI’s wireless revenue grew 7x faster than the industry’s handset units in 2002 as the company’s semiconductor content per handset continued to increase. The biggest factor in this content growth was higher shipments of products for 2.5G phones. More than 55 percent of TI’s wireless revenue in the first quarter of 2003 came from 2.5G products.

TI will expand its presence in the cdma2000 market with products expected to be offered to a broad base of customers beginning next quarter. TI’s internal high-volume manufacturing expertise allows the company to provide its customers with more cost-effective solutions that perform better and consume less power.

As functions are increasingly integrated, TI believes fewer companies possess the wireless expertise, system-on-chip integration skills, manufacturing know-how and advanced process technologies required to build tomorrow’s cell phones. TI is on a path to produce a single-chip cell phone, with all of a cell phone’s key functions integrated onto one chip by the end of 2004.

Manufacturing and Process Technology – Fundamental to TI’s success in integrated solutions and leadership products is its ability to consistently ramp next generations of advanced process technologies in a timely manner. TI’s capital expenditures and investments in silicon process technology enable it to be among a handful of premier companies with the resources and capabilities to manufacture in volume today 300mm wafers with 130-nanometer copper process technology. In addition, TI’s use of foundries increases its operational flexibility while allowing the company to reduce its capital intensity, thereby boosting margins.

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Safe Harbor Statement
“Safe Harbor” Statements under the Private Securities Litigation Reform Act of 1995: This release includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, such statements in this release that describe the company’s business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of the company or its management:

  • Market demand for semiconductors, particularly for digital signal processors and analog chips in key markets, such as telecommunications and computers;
  • TI’s ability to maintain or improve profit margins, including its ability to utilize its manufacturing facilities at sufficient levels to cover its fixed operating costs, in an intensely competitive and cyclical industry;
  • TI’s ability to develop, manufacture and market innovative products in a rapidly changing technological environment;
  • TI’s ability to compete in products and prices in an intensely competitive industry;
  • TI’s ability to maintain and enforce a strong intellectual property portfolio and obtain needed licenses from third parties;
  • Consolidation of TI’s patent licensees and market conditions reducing royalty payments to TI;
  • Timely completion and successful integration of announced acquisitions;
  • Economic, social and political conditions in the countries in which TI, its customers or its suppliers operate, including security risks, possible disruptions in transportation networks and fluctuations in foreign currency exchange rates;
  • Losses or curtailments of purchases from key customers or the timing of customer inventory adjustments;
  • Availability of raw materials and critical manufacturing equipment;
  • TI’s ability to recruit and retain skilled personnel;
  • Fluctuations in the market value of TI’s investments and in interest rates; and
  • Timely implementation of new manufacturing technologies and installation of manufacturing equipment.

For a more detailed discussion of these factors, see the text under the heading “Cautionary Statements Regarding Future Results of Operations” in Item 1 of the company’s most recent Form 10-K. The forward-looking statements included in this report are made only as of the date of publication, and the company undertakes no obligation to update the forward-looking statements to reflect subsequent events or circumstances.

Texas Instruments Incorporated provides innovative DSP and Analog technologies to meet our customers’ real world signal processing requirements. In addition to Semiconductor, the company’s businesses include Sensors & Controls and Education Technology. TI is headquartered in Dallas, Texas, and has manufacturing, design or sales operations in more than 25 countries.

Texas Instruments is traded on the New York Stock Exchange under the symbol TXN. More information is located on the World Wide Web at www.ti.com.