* Quarterly dividend raised to $0.28
* Share buyback program increased by $5 bln to $8.4 bln
* TI shares up 2 pct in after-market trade
Feb 21 (Reuters) - Chipmaker Texas Instruments Inc raised its quarterly dividend by a third and said it will buy back an additional $5 billion in stock.
The company, which makes chips for everything from industrial equipment to cars, increased its quarterly dividend to 28 cents per share from 21 cents per share.
The additional buyback brings the total outstanding repurchase authorization to $8.4 billion.
"These increases reflect the company's ability to generate cash and management's commitment to return it to shareholders," TI said in a statement on Thursday.
TI said it can consistently convert 20 to 25 percent of its revenue into free cash flow and return all of that free cash flow, less debt repayment, to its shareholders.
TI had $1.42 billion of cash and cash equivalents as of Dec. 31, 2012.
The increases comes a month after the company warned of uncertain demand and a widespread customer reluctance to order until the last minute due to economic worries.
TI said last year it was eliminating 1,700 jobs as it is winding down its smartphone and tablet chip business due to stiff competition from rivals such as Qualcomm Inc.
It now focuses on analog and embedded chips that are used in a wide range of products.
TI shares rose 2 percent in after-market trading after closing at $32.48 on the Nasdaq.
The stock has risen about 10 percent since the beginning of 2012 but is still nearly 70 percent lower than its 2000 highs.