The company is slashing 3,400 positions, 12 percent of its workforce. The numbers include 1,800 layoffs and 1,600 voluntary departures and retirements.
More than half of the cuts will happen at the company's North Texas headquarters and will include people in support positions such as human resources.
Texas Instruments suffered a 25 percent decline in revenue in the fourth quarter of 2008 as well as a 60 percent loss in operating profits.
The layoffs should be finalized by the end of the week. The company says the cuts will save it $700 million annually.
"These are the types of actions we have to take to position the company for future growth," spokeswoman Kim Morgan said.
She said the company will offer benefits to help affected workers transition and improve their skills.
The layoffs at T.I. were among many announced on a day when American companies cut more than 40,000 jobs.
Mike Davis, a professor at the SMU-Cox School of business said the situation is dramatic, but not unexpected.
"Even a strong company like T.I. has to worry about the cash flow, and the biggest expense is pretty much people," he said.
Texas Instruments makes chips for cell phones and other electronic gadgets, items that consumers are buying less in the midst of a global economic decline.