Texas Instruments (TXN) BofA Securities 2024 Global Technology Conference summary

Investment and capacity expansion plans

• Focused on secular growth in analog and embedded semiconductors, especially in automotive and industrial sectors, which now make up 75% of revenue.

• Major investments include RFAB2, LFAB1, LFAB2, and Sherman (SM1/SM2) facilities, with a $5 billion annual CapEx plan through 2025, possibly decreasing in 2026.

• RFAB2 and LFAB1 benefit from a 25% ITC credit expiring in 2026, driving accelerated equipment installation.

• CapEx intensity post-2025 will depend on revenue growth, with flexibility to adjust spending as needed.

• U.S. manufacturing is prioritized for geopolitical dependability, with Texas highlighted for cost and talent advantages.

Financial outlook and capital allocation

• CapEx for 2024 and 2025 is set at $5 billion per year, with potential to reduce total investment by $1–2 billion over the cycle.

• Depreciation guidance for 2024 is $1.5–1.8 billion (lower end), and $2–2.5 billion for 2025 (lower end); future grants could lower depreciation from 2026 onward.

• Free cash flow per share targets are modeled on historical peak-to-peak growth and margin flow-through, aiming for healthy growth even with lower CapEx.

• Buybacks have decreased due to the CapEx cycle but are expected to resume as investments wind down.

Market trends and demand environment

• Automotive and industrial markets are driving growth, with a strategic R&D bias toward these sectors.

• Inventory correction cycles are playing out differently across end markets; automotive is experiencing a shallow dip, while industrial remains mixed.

• June quarter guidance reflects stabilization, with sequential growth at the midpoint.

• China accounts for 17% of revenue; competition is managed through portfolio breadth, cost leadership, and customer relationships.