|PUBLIC POLICY PRIORITIES
TI’s global public policy priorities are aligned carefully with the company’s strategic business priorities and our ethical values. This alignment not only ensures our continued growth and profitability – and our customers’ success – but also supports our commitment to corporate citizenship.Much of TI’s public policy advocacy is focused within the United States, but there are many issues which transcend national boundaries and on which we advocate in various geographies. Among them are open trade policies, sound environmental laws and regulations, fair and competitive tax policies, and thoughtful initiatives to deploy clean energy and energy efficiency. Below are issues currently being advanced in the United States.
Open trade policies
TI derives approximately 90 percent of our revenues from sales in overseas markets. Open trade policies make it possible for TI to manufacture and design in the U.S. and still have access to key markets in other countries. TI continues to benefit from U.S. leadership in removing tariffs on information technology through agreements such as the Information Technology Agreement and the agreement on multichip packages.
TI supports advancing bilateral and multilateral trade agreements currently under negotiation or awaiting Congressional approval, such as the expansion of World Trade Organization commitments through the Doha Round of negotiations. TI also supports seeking liberalization through sector specific initiatives such as the multi-component agreement being developed under the auspices of the World Semiconductor Council.
TI, like most other U.S. semiconductor companies, is subject to a set of U.S. government regulations that govern the export of semiconductors, equipment and technology to particular countries and to citizens of certain countries. TI has a strong compliance function that ensures we do our part to protect national security. In conjunction with compliance activities, TI also makes an important contribution to revising existing regulations and shaping new regulations. U.S. regulations can become outdated or may need to be streamlined.
The Obama Administration has proposed significant changes to the current export control regime with the goal of developing a system more attuned to the commercial realities of today’s global high tech marketplace. TI is advising key governmental agencies and lawmakers about the impact of such changes that enable companies to be competitive while protecting U.S. national security. Among top priorities are encryption reform, intra-company transfer rules and the treatment of dual use products.
Maintaining the competitiveness of the U.S. semiconductor industry is a top public policy priority for TI and the semiconductor industry in general. Critical components of this objective are robust investments in science research, improvements in math/science education, and access to and retention of the world’s brightest minds.
Basic science research funding
Science research at U.S. universities is key to addressing national challenges such as energy, security and medical advances. In the United States, TI supports robust federal funding for basic science research, especially in the physical sciences and engineering. Universities need sufficient funding to attract the best and brightest professors and students in the fields of engineering, physics, chemistry and other technology areas.
Just as companies continue to invest in research and development, even in tough financial times, so must the government. Research professors and graduate students depend on predictable funding to support breakthrough research. History has demonstrated that investments in R&D yield strong returns over time.
In particular, TI advocates for strong funding levels for the National Science Foundation, the National Institute of Standards and Technology, DARPA and the Department of Energy Office of Science. TI was an active proponent of the reauthorization of the America Competes Act passed in 2010 which provides a blueprint for federal support for innovation. TI also has initiatives that focus on areas of national importance, such as nanoelectronics, and participates in public private consortia to advance work in this area. TI believes that investments in nanoelectronics and related laboratory infrastructure are critical to maintaining U.S. technological leadership and essential to increasing the pool of highly educated individuals in U.S. technical fields.
In Texas, home to TI’s Headquarters and a concentration of advanced manufacturing and R&D activity, TI advocates on behalf of funding for the state’s Emerging Technology Fund (ETF) which, among other things, provides matching grants for research superiority investments at public universities. It also supports funds for the Texas Research Incentive Program (TRIP) which matches non-state dollars for Emerging Research Universities with the objective of expanding the base of nationally-ranked Tier One institutions in Texas.
Science and engineering professionals are essential to TI’s growth and success everywhere we operate. In the United States, we actively engage with federal, state and local governments to promote educational excellence at all grade levels. For example, at the K-12 level, TI supports initiatives to increase focus on math and science proficiency. This support is consistent with our support of federal, state and local programs and policies designed to improve math and science teaching and student performance. TI is a corporate sponsor for Change the Equation, a nonpartisan program which advocates for the need and urgency for better STEM education programs nationwide and seeks to replicate proven STEM education programs across our nation to improve teacher effectiveness and student achievement.
In addition, in Texas, TI advocates on behalf of continued higher standards, accountability and measurement of student, teacher and district performance in public schools; and 4th year science, math and career development requirements for high school seniors to have them better prepared to succeed in college and the work place.
At the university level, TI actively supports numerous programs designed to increase the pipeline of scientists and engineers. Most graduates from U.S. advanced degree programs in technical fields are foreign nationals. TI supports reforming immigration policy to facilitate the transition from student to permanent resident and to reduce backlogs for permanent resident visas. Individuals with advanced degrees in science, technology, engineering and mathematics are critical to U.S. competitiveness and should be given priority for permanent resident status. TI opposes legislation that would restrict our use of H-1B visa programs, the primary mechanism for employing these graduate students. These students often face multi-year waits for permanent resident visas.
In a global economy having a fair and consistent tax policy is critical if U.S. multinational companies like TI are going to compete effectively and not be disadvantaged vis-à-vis our foreign competitors.
Fundamental tax reform in the U.S. was last addressed in major legislation in 1986. Recently, government and business leaders have been calling for a comprehensive overhaul of the U.S. tax system that would lower rates and broaden the base. Our nation’s 39 percent combined federal and state corporate tax rate is the now the highest among Organization for Economic and Cooperative Development countries. This puts the U.S. at a clear disadvantage in global competition with other countries where rates are lower and incentives like research tax credits are higher. TI believes that comprehensive reform could help place U.S. companies on a more even footing. TI will closely monitor the issue and participate in public policy debates where appropriate.
TI believes the tax structure in the State of Texas, as of the end of 2010, generally provides a competitive economic climate for capital-intensive companies. The sales tax exemption for semiconductor manufacturing equipment as well as other exemptions that reduce the cost of operations for manufacturers is an essential component of that environment. TI also supports a low margins tax that is fairly applied to a broad business base; and equal property tax treatment for business and residential payers.
U.S. tax treatment of international income
Related to the comprehensive reform discussions is TI’s support for international tax policies that reflect the reality of companies operating in global markets. TI has semiconductor design, manufacturing or sales operations in more than 30 countries. While more than half of TI’s wafer fabrication and the vast majority of our R&D are in the U.S., almost 90 percent of our 2010 revenues came from overseas sales.
TI has formidable competitors from other countries with similar international operations. In many cases, they locate operations in the same countries we do. From time to time, proposals are made to apply U.S. tax to the earnings of foreign subsidiaries of U.S. companies. This proposal would not apply to our international competitors. No other developed country in the world imposes a tax on the active earnings of foreign subsidiaries. If there are changes to current law, they should be undertaken in a manner that will make U.S. companies more competitive.
R&D Tax Credit
TI supports federal and state tax policies that encourage research and development (R&D). Securing a permanent extension of the U.S. federal R&D tax credit has been and continues to be a top priority. We have been working through our associations and the R&D Tax Credit Coalition to improve the credit and make it permanent. Currently, U.S. R&D incentives rank 24th out of 38 countries.
In Texas, TI supports an expansion of the sales tax exemption for manufacturing equipment to equipment used for research and development. This would serve not only as an important economic development tool, but also improve reporting requirements for companies that often use the same tools for both manufacturing and R&D activities.
Environment, safety and health
TI has a strong record of commitment to worker safety, ensuring a safe workplace and being a responsible steward of the environment. In the legislative and regulatory area, we work to promote laws and regulations at the federal and state levels that are well-informed and responsible, discouraging those that place undue burdens on the company’s operations.
Numerous new initiatives are in place or under consideration in various countries around the world. Some examples include: mandatory reporting requirements on emissions of greenhouse gasses, new regulations on greenhouse gas emissions, regulation of product content and of various chemicals involved in the manufacturing of semiconductors. TI monitors and, as appropriate, works with government agencies to ensure that such regulations do not impose undue costs, create onerous administrative and operation burdens on the company or place TI at an unfair disadvantage while TI complies with sound environmental policies.
TI supports responsible initiatives to promote the deployment of energy efficient and clean energy technologies. Incentives to advance deployment of energy efficient technologies such as LED lighting, smart meters, variable speed motors, power management, and renewable energy, such as solar and wind programs, are consistent with TI’s growth priorities and can reduce worldwide energy consumption considerably. Electronics are the key driver behind energy efficiency. At the same time, semiconductor manufacturing is energy intensive. TI strives to balance its efforts to drive energy efficiency while implementing a sound, measured and cost-effective strategy to reduce its own energy needs in a way that will not undercut its ability to serve its customers’ demands for low power technologies. TI generally does not support mandates that would impose significant cost increases on electricity customers.
The overall goal is to help TI offer policies that provide us with the greatest flexibility in health and retirement benefits and offer the best, most cost-effective protection for our employees. TI’s particular focus involves promoting greater consumerism in health care; managing burdensome regulations and high costs associated with retiree health care; and promoting health information technology to drive increased safety, efficiency, accountability and quality of care.
TI supports flexible policies in the work force to ensure effective deployment of resources, encourage diversity, and offer employees stimulating and rewarding career opportunities.
TI has a strong patent portfolio resulting from significant investments in R&D. TI works to advance legislation that protects the value of TI’s intellectual property.
For TI, strong ethics are part of the company’s everyday business strategy. TI’s founders set an early example of high ethical standards by formalizing a code of ethics for its executives and employees. Today, those principles and values still influence TI’s activities and decisions.
To help employees understand and adhere to ethical business practices, TI created three guidance documents that are updated as needed: the TI Standard Policies and Procedures; The TI Commitment and the TI Ethics Booklet. These documents set clear expectations, and their messages are firmly and credibly supported by the company’s highest levels of management and its board of directors. In 2008, TI added gender identity and expression to its equal employment opportunity policy.
Recently, TI was recognized as one of the world’s most ethical companies by the Ethisphere Institute, out of a record number of nominees. TI has been included on the list of top ethical companies for three consecutive years.
The “World’s Most Ethical Companies” (WME) list is developed annually by this New York-based think tank that is dedicated to the creation, advancement and sharing of best practices in business ethics, corporate social responsibility, anti-corruption and sustainability. Through in-depth research and a multi-step analysis, Ethisphere reviewed thousands of nominations from companies in over 100 countries and 36 industries in order to determine the 100 winners in various categories. TI is one of only two firms named in the category “Electronics and Semiconductors.”
TI’s continued inclusion on the list in an increasingly competitive environment is evidence of the dedication of each and every employee to help TI operate as a responsible corporate citizen.
TI provides a detailed annual report of its ethics and citizenship activities.
TI is a member of the following trade associations:
American Council on International Personnel
Consumer Electronics Association
Dallas Black Chamber of Commerce
Dallas Regional Chamber
Emergency Committee for American Trade (ECAT)
ERISA Industry Committee
European American Business Council
Greater Dallas Asian American Chamber of Commerce
Greater Dallas Hispanic Chamber of Commerce
HR Policy Association
Information Technology Industry Council
National Association of Manufacturers
North Dallas Chamber of Commerce
North Texas Commission
Semiconductor Industry Association
Software & Information Industry Association
Texans for Lawsuit Reform
Texas Association of Business
Texas Association of Manufacturers
Texas Civil Justice League
Texas Taxpayers and Research Association
The Tax Council
US-China Business Council
US-India Business Council