Texas Instruments said today on its third-quarter earnings call that it plans to sell its merchant baseband processor business, the division that makes off-the-shelf wireless chips for handsets. The company plans to keeps its OMAP applications processor business (the brains inside mobile phones), and will continue to make custom radios for certain clients.

To be sure, making radio chips for wireless handsets is becoming more of a commodity business, and one where scale is increasingly important. Many of TI’s customers have seen demand fall for their handsets and have reduced orders with the chipmaker. Freescale, the former chip division of Motorola, made a similar move at the beginning of this month when it said it would explore options for its wireless handset chips business, including its possible sale.

Texas Instruments hasn’t been pushing merchant chipsets for current third-generation wireless protocols, something fellow blogger Vijay Nagarajan has pointed out in a series of thoughtful posts. Essentially, TI is getting out of an increasingly competitive business, and one in which it hadn’t really invested. In the process it estimates it will save $200 million on an annualized basis.