Eighty-year-old Texas Instruments (NSDQ: TXN) has a new lease on life thanks to refocusing on what it does best—analogue semiconductors. Last year, TI stopped making digital chips that power mobile phones and tablets. That’s an extremely competitive business with razor-thin profit margins, and TI just couldn’t keep up with nimble mobile specialists like Qualcomm (NSDQ: QCOM).

The good news: TI’s decision to refocus on its core business is a smart move that should lead to a rebound in both revenue and earnings starting in 2014.

Basic but ubiquitous. TI’s analogue chips convert real-world inputs—sound, temperature, pressure, etc.— into digital signals that can be processed. As such, analogue chips are in constant and growing demand as more products incorporate digital controls—not just calculators and clock radios, but also big-ticket items like cars, airplanes and cellular networks.

Analogue chips bring in some 78 percent of TI’s revenue, with about a third of this coming from the automotive and industrial sectors. TI’s chips, for example, control cars’ dashboard entertainment and navigation systems and process signals from rear-view cameras.

Competitive advantages. TI is the big fish in the analogue-chip pond. It has around 20 percent of the global market, with 32 smaller companies splitting up the rest. Because of its high production volumes, TI has relatively low production costs. And it has by far the biggest sales force worldwide.

Unlike smart-phone chips, analog chips are not expensive nor do they require cutting-edge manufacturing. Yet TI has been able to maintain healthy pricing because of its high-quality, proprietary designs. Additionally, TI’s size allows the firm to supply a wide variety of industries.

Due to its diverse client base, TI can quickly capitalize on market trends, such as the shift to 3G and 4G cellular networks in emerging markets. TI’s digital-signal processors and other components are critical to the development of such networks. And TI is also poised to benefit from emerging markets’ growing demand for consumer electronics.

At the same time, TI has been an aggressive acquirer of its competitors, having bought more than 30 companies since the mid-1990s, including the 2011 purchase of National Semiconductor. Not only did this merger improve TI’s pricing power, it also helped boost TI’s technology.

Earnings outlook. This year will be a transition period for TI, with revenue expected to be down again ($12.3 billion) and earnings at around $1.89 per share.

Come 2014, TI’s profit margins are expected to improve, boosting earnings per share by 21 percent, to $2.29, on a 6.5 percent climb in revenue. TI’s net margin, recently at around 17 percent, could hit 20 percent in the next several years, with gross margin approaching the 50 percent level of years past.

Shareholder rewards. During the past decade, TI’s annual dividend has gone from just 9 cents a share to today’s $1.05, while the share count has fallen by 35 percent to 1.1 billion.

TI has a strong balance sheet, with $3.3 billion in cash and short-term investments. Its debt-to-equity ratio is a very low 0.4 percent, and the company still churns out industry-beating returns on both assets and equity, at 10.7 percent and 18.7 percent, respectively.

TI’s valuation is also reasonable. If the 2014 earnings estimate is on target, TI is priced at 17 times next year’s earnings, a discount to tech industry averages.

With TI’s earnings growth likely to average at least 10 percent annually the next several years, plus a 2.85 percent dividend yield, TI offers a value proposition that’s hard to beat.