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Texas Instruments Inc (NYSE: TXN), the wireless chip giant, reported strong results last night, citing the wireless semiconductor inventory overhang as being over. Most impressive was the level of profitability during this downturn with TI exiting a semiconductor trough with 51% gross margins and over 20% operating margins.Since 25% of revenue in semiconductor orders is from consignment or EDI systems, the information is pretty good that an upswing is beginning. Also, along with book-to-bill hitting 0.99, March sales increased 20% versus sales in February. Further, April's numbers remain strong.
TI said the biggest factor for the upswing is the inventory overhang being over, which is having more of an impact than specific product wins. However, its high-end analog products' compound annual growth rate is 19% versus 8% for its primary competitors.
Also, look at National Semiconductor Corporation (NYSE: NSM), which has followed a similar patten during this inventory correction. National will most likely give investors more bang for the buck. Further, it is time to start looking at Motorola. If there was a true inventory overhang, with its stock down big, investors need to start chipping away at the RAZR manufacturer.
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