DALLAS (CNNMoney.com) - Texas Instruments CEO Rich Templeton said Tuesday that despite growing competition in the market for cell phone chips worldwide his company stands to boost its sales and earnings in the sector more rapidly as the market matures.

Texas Instruments (down $0.19 to $34.34, Research), which is holding its annual meeting with financial analysts Tuesday and Wednesday in Dallas, is the biggest maker of chips for cell phones, with Finnish cell phone giant Nokia (up $0.09 to $23.10, Research) its biggest customer. More than half of all the cell phones shipped contain TI chips, the company estimates.

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But as the world's cell phone networks get upgraded to the third-generation, or 3G, Texas Instruments will go head- to-head with its No. 2 rival, Qualcomm (up $0.08 to $52.74, Research). Both TI and Qualcomm will make chips for faster 3G phones.

Newer phones will be able to send voice and data at much higher speeds, which should be important as consumers send more images, video and other types data over their phones.

"We believe we are going to have good, tough competitors in that market, and Qualcomm is certainly one of them," Templeton said in an interview, adding though that the competition sometimes gets exaggerated in the news media.

He said the company's push years ago to get top cell phone makers, including Nokia, to use its chips helped TI win a big chunk of the cell phone market, and he said the company has done the same thing with the newest generation of phones.

"The size of the companies involved makes for good drama but if you take a look out into the marketplace you have to get past that pretty quickly and look at who's won Nokia and who's positioned to win Motorola (up $0.32 to $22.86, Research)," Templeton said. "That's where the scoreboard will really be determined."

Texas Instruments, once known for its calculators, now gets 96 percent of its revenues from semiconductors, and about 30 percent of its revenues come from chips that go into cell phones. In 2005, $4 billion of the company's $13.4 billion in revenues came from wireless.

Templeton estimates that about 90 percent of the world's cell phones run on GSM networks. Early on, TI adopted the GSM standard for its phones while rival Qualcomm adopted the CDMA standard, which is proprietary. But CDMA is more widely used in the United States than in Europe.

Both Sprint (down $0.13 to $25.01, Research) and Verizon (down $0.07 to $32.85, Research) operate CDMA-based networks. Because of these different standards, Qualcomm and TI have not competed head-to-head on the same type of chips. But that will change with the advent of 3G wireless networks.

The company's other big growth opportunity, selling low end cell phones to emerging markets, represents the opposite end of the technology spectrum. TI execs say that 3G and emerging markets represent the company's two largest growth opportunities.

TI is the No. 3 chipmaker worldwide measured by sales, behind Intel and Samsung. But Templeton, who headed the company's semiconductor unit before becoming CEO two years ago, thinks the company is in the proverbial sweet spot when it comes to the fast growing wireless market.

Templeton said the company's aim is to grow revenues faster than the market and to grow earnings faster than revenues.

TI appears to be on the right track to achieving that goal. In its most recent quarter, the company posted a 23 percent jump in revenue and a 57 percent earnings increase, with gross profit margins, a key measure of profitability, coming in at 50.1 percent - a number that pleasantly surprised some analysts.

For the current quarter the company is expecting revenues of $3.46 billion to $3.75 billion and earnings per share of 38 to 43 cents.

The company has undoubtedly come a long way in a decade. Ten years ago, TI was much more fragmented and unfocused with assets that ranged from a struggling memory chip business to defense systems.

But TI sold some of those businesses, selling the defense business to Raytheon and its memory business to Micron. The company just got even leaner selling its sensors and control business Bain Capital for $3 billion in a deal that closed last month.

These moves, along with more efficient manufacturing, helped TI to grow revenues from $8.2 billion in 2001 to $13.4 billion last year, while trimming capital expenditures and boosting margins.

The challenge for TI is to keep growing market share in the fastest growing cell phone markets while fending off competitors. In the fourth quarter, the company lost some sales due to a lack of inventory, though Templeton said the company made good progress catching up in the first quarter and inventories are more stable now.

For TI, hanging onto its big cell phone customers is critical, Templeton said. "In this world, the biggest competitive challenge is having the best customers," he said.

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