Texas Instruments (TXN -2.85%) makes a wide variety of chips for multiple industries. In previous articles, I discussed how TI makes money, its main weaknesses, and how it compares to mobile chipmaker Qualcomm (QCOM -2.19%). Today, I'll discuss four bullish strengths which could boost its share price this year.

Source: Texas Instruments.

1. Its focus on more profitable chips
Texas Instruments once competed against Qualcomm in mobile application processors and baseband modems. But a few years ago, it exited both markets to produce more analog and embedded chips, which had higher margins and were less capital intensive. Last year, analog and embedded chip sales accounted for 86% of TI's top line.

TI has also transitioned from 200mm to 300mm wafers, which reduced the production cost of its chips by 40% and boosted its gross margin to a record high of 58.5% last quarter. Thanks to these strategies, TI's free cash flow rose 6% annually to $3.7 billion in 2015.

2. Shareholder-friendly moves
TI traditionally returns 100% of its free cash flow to its shareholders. The company has reduced its share count by 41% since 2004 and hiked its dividend annually for the past 12 years. Over the past 12 months, TI has returned over 100% of it FCF to shareholders, allocating 39% to dividends and 62% to buybacks. TI currently pays a forward annual dividend yield of 2.9%, which is higher than the S&P 500's yield of 2.2%.

TI's buyback strategy supports its earnings growth and keeps its valuations tight. The stock currently trades at 19 times earnings, which is considerably lower than the average P/E of 39 for the broadline semiconductor industry.

3. It's diversifying away from Apple
TI shares have recently been dragged down with other Apple (AAPL 0.86%) suppliers because of the tech giant's nearly flat growth in iPhone shipments last quarter. RBC Capital analyst Amit Daryanani forecast that TI's "Apple-centric revenue" could fall about 30% annually this year.

However, only 11% of TI's sales actually came from Apple last year, making it less exposed to the iDevice maker than many other suppliers. Daryanani believes that TI will likely offset any Apple softness with a "cost containment and mix" of its other business units.

TI also believes that higher investments in its industrial and automotive units, which generated nearly half of its revenue last year, will produce "stickier" higher-margin revenues over time. In other words, as global industrial markets recover and connected cars achieve mainstream adoption, TI's dependence on Apple should decline.

Source: Apple.

4. Its communications growth will return
TI's communications equipment revenue fell 20% in 2015 and accounted for 13% of its top line. TI blamed that decline on a 30% drop in wireless infrastructure sales. The key problem this business faces is that major telcos are delaying infrastructure upgrades to expand their ecosystems.

AT&T, for example, bought DirecTV for $49 billion last year to expand its pay TV business. Verizon spent $4 billion on AOL to bolster its presence in streaming video and online ads. Those deals leave AT&T and Verizon with less cash to build the wireless towers which use TI's chips.

However, that decline is cyclical -- "5G-ready" networks are expected to ramp up next year, which will force telcos to build more towers and boost TI's communications revenue again. In the meantime, Oppenheimer analyst Rick Schafer believes that 4G upgrades in Europe, China, and India will support the company's wireless infrastructure sales this year.

The road ahead
For 2016, analysts expect TI's sales to dip 2% annually and earnings to rise just 2%. But looking further ahead, TI's annual earnings are expected to grow 10% per year over the next five years. That figure might not satisfy growth-oriented investors, but it indicates that TI could be a stable low-risk play over the next few years.