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TI’s Japan Factories to Recover Fully

DALLAS, Texas — Just over two weeks after a major earthquake in Japan, Texas Instruments Incorporated (TI) (NYSE: TXN) reports that recovery at its manufacturing sites in Miho and Aizu is progressing well and is on schedule to return to full production.

The site in Miho, about 40 miles northeast of Tokyo, achieved a significant milestone this past Sunday as repairs were completed on the infrastructure systems that deliver water, gases, chemicals and air, and recertified the cleanroom. Additionally, more than 90 percent of the equipment has been electrically checked out.

TI now estimates that initial production lines at Miho will resume in mid-April, and full production will resume in mid-July. This translates to full shipment capability in September. In the first few days after the earthquake, TI had identified alternate manufacturing sites for about 60 percent of Miho's work in process, and has since increased that to more than 80 percent. Alternate sites include TI factories in Dallas and Richardson, Texas, and Freising, Germany.

TI's fab in Aizu, about 150 miles north of Tokyo, has resumed initial production and is on track for full production by mid-April or earlier. Production recovery schedules at both Miho and Aizu assume a stable source of electrical power.

The state of supply for raw materials remains dynamic, particularly for the components used in rigid substrates and for 300-millimeter wafers. Operations of some existing suppliers are just beginning to recover, and TI is working closely with them to define and avoid potential supply chain disruptions. We also are working in parallel to ensure an independent supply of raw materials. While information is improving each day, TI believes the full scope of supply challenges is still unknown and will remain cautious until sources fully return to normal.

As previously stated on March 14, TI expects some loss of revenue in the first quarter and more lost revenue in the second quarter. Multiple factors may affect revenue loss, including TI's ability to move production to other factories, existing inventory from which to meet customers' needs, the level of demand from customers taking delivery of products in Japan, availability of raw materials, and the ability to incrementally increase production each month at Miho. TI expects to describe the financial impact in detail at the time of its first-quarter earnings report on April 18.

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