Chipmaker Texas Instruments (TXN -1.23%) has been very successful because its products are utilized across a wide range of industries, including automotive, industrial, and communications equipment. The company holds a differentiated position that separates it from the competition because it has high-value assets and products, with long life cycles. This has created sustained revenue and free cash flow growth during the past several years.

Texas Instruments' results in recent periods has also been boosted by a business transition conducted during the past few years. Add it all up, and the company generates more-than-enough cash to simultaneously invest back in the company to secure future growth, as well as reward shareholders with real cash returns. Of those returns, the primary way Texas Instruments returns cash to investors is through billions of dollars in share repurchases every year.

Let's dig deeper to see if Texas Instruments' billions in buybacks is money well spent.

The key areas for Texas Instruments
Texas Instruments holds a very concentrated business. For the most part, its operations are focused in two major areas -- analog and embedded processing. In fact, more than 80% of Texas Instruments' revenue comes from these two business areas. This has paid off; the company generated 9% compound annual revenue growth in these two segments between 2009-2013.

Texas Instruments has been focusing on a few key industries within analog. First of these is power management. In addition, Texas Instruments got growth contributions from high-performance analog, and high-volume analog. Within embedded processing, Texas Instruments realized growth from processors, micro-controllers, and connectivity. These combined to help Texas Instruments produce its seventh-consecutive quarter of year-over-year growth. From an end-markets point of view, the best-performing industries for Texas Instruments last quarter were communications equipment, followed by automotive.

This focused and streamlined business model also included moving away from the wireless business, which used to be an important area for the company. Since 2009, Texas Instruments has greatly reduced its exposure to wireless, and is now essentially out of the business entirely. This was done because management felt that analog and processing were far more lucrative, higher-growth opportunities than its legacy wireless position. Judging by the results since the divestment process began, it's clear that Texas Instruments had it right.

Focus pays off
This puts Texas Instruments in a great position. Its industry leadership and focus are paying off. Texas Instruments produced 8% revenue growth last quarter, year over year, which was led by double-digit growth in both analog and embedded processing.

Texas Instruments generates a lot of cash. The company produced $3.2 billion of free cash flow during the past 12 months, up 10% from the previous 12-month period according to Capital IQ data. This allows the company to return a lot of cash to shareholders.

Texas Instruments maintains the goal of returning 100% of its free cash flow back to investors. It accomplishes this through share buybacks and dividends. The company returned $4.2 billion to investors through cash returns during the past year. This was an 18% increase over the previous trailing 12-month period.

The company holds a much higher allocation for share repurchases than it does dividends. For example, $2.9 billion of its cash returns during the past year came in the form of share repurchases. This represents 69% of the total during this time.

Based on this, it's clear that Texas Instruments is buying back enough of its stock. If anything, income investors may have a right to complain that they aren't getting their fair share of cash. But Texas Instruments is in the fortunate position of generating enough cash to accomplish all of its shareholder-friendly initiatives. Texas Instruments raised its dividend last month, by 13%, and the stock offers a hefty 3.2% yield.

It's true that Texas Instruments allocates a lot of its cash flow to share repurchases. This might be a dangerous red flag, but the company generates enough cash that its share buyback plans and dividend payout are acceptable.