PHILADELPHIA — Texas Instruments Inc. wants to sharply increase its analog IC market share, but achieving that goal would require the company to again gamble on a significant acquisition similar to a strategic move it made nine years ago that helped cement its leading position in the segment.

TI certainly has the means to pursue a large acquisition even in today's challenging financial market. It has more than $2.5 billion in cash, zero long-term debt, strong corporate credit ratings, solid market capitalization despite turbulence in equity markets and a well-known desire to drive its future growth through the analog IC market.

The Dallas-based company already leads the analog semiconductor market with a modest 14 percent share—versus its more than 60 percent stake in the DSP segment. It also could benefit from making a large acquisition in the analog market to add scarce, highly-skilled analog engineering expertise while gaining additional technology leadership.

Such a move would also help accelerate consolidation in the highly fragmented $36 billion market, which is dominated by a handful of companies at the top but littered with dozens of smaller players that are unlikely to build up a respectable market share anytime soon.

Most analysts don't expect TI to launch a bid for any of its major rivals in the analog IC market, however, arguing that big competitors like STMicroelectronics, Infineon Technologies, Analog Devices and NXP Semiconductors offer limited upside in terms of product and technology gains. They also note that these companies are simply too large or costly to digest.

The top tier also include formidable players that have specialized in major analog segments although they may lack the product breadth that has distinguished TI in the area. "I would be surprised to see an acquisition by TI or ST of any of the bigger players because there are no incentives for companies like National Semiconductor, Maxim or Linear Technology to merge with a bigger analog house," said Susie Inouye, research director and principal analyst at Databeans Inc.

"Texas Instruments and STMicroelectronics would be the companies to look at in terms of being the ones that could acquire any of bigger rivals, but I do not see that happening."

TI already has a broad analog IC portfolio and would most likely continue to make bite-size acquisitions to gain technology and engineering expertise, added Will Strauss, president and principal analyst at Forward Concepts (Tempe, Ariz.). "They should go for smaller analog specialty houses that are developing new technologies," Strauss said. "Buying a big rival would be duplicating too much of what they already have."

Gregg Lowe, senior vice president and manager of TI's analog IC division, agreed, pointing out in an interview that TI has been making what he described as "tuck-in" acquisitions designed to add expertise in various areas to its analog operation. Lowe said TI would continue to build up its stake in the market through internal growth and by making small but strategic acquisitions that would help fill up any sectional gaps, including power management, converters, controllers and amplifiers.

TI, he said, is exploring opportunities for helping customers satisfy rising demand for cost-efficient applications in solar and environmentally-friendly applications. Future market share gains will come through such endeavors, according to Lowe.

"When you are the No. 1 player with a 13 percent market share there is a strong opportunity to continue to gain share without structural impedance in the way," he said. "Our view right now is that the portfolio we have is extensive and we don't have large gaps. While we don't rule out doing a big acquisition, the concentration of acquisition activities, as demonstrated by our actions, is really more in the smaller space."

Dominance built on acquisitions

TI is no stranger to large acquisitions. In fact, the company's No. 1 position in the analog IC market was built on what is still touted as the largest acquisition in the history of the semiconductor industry, aside from the private equity buyout of Freescale Semiconductor.