Texas Instruments (TXN) Capital Management Update summary

Strategic Growth and Market Positioning

• Over 60% through a capital-intensive investment cycle, aiming to secure low-cost, scalable 300mm capacity and free cash flow per share growth for the next 10–15 years.

• Focused investments in industrial and automotive markets, now representing about 75% of revenue, with both segments showing double-digit growth through recent cycles.

• Product portfolio strengthened with over 80,000 analog and embedded products, and increased customer engagement, especially in factory automation and ADAS.

• Embedded business repositioned for growth, now expected to contribute alongside analog.

• Confident in regaining and growing market share as capacity and inventory constraints are resolved.

Capacity Expansion and Capital Allocation

• Three-phase 300mm wafer fab investment plan across Richardson, Lehi, and Sherman, with modular, scalable CapEx to match demand and phased execution to support organic growth and insourcing.

• CapEx to remain about $5B per year through 2025, then $2–$5B in 2026 depending on revenue scenarios; post-2026 CapEx will be highly flexible.

• By 2026, over 90% of wafers and 85% of assembly expected to be internal, providing cost and supply chain advantages.

• Investment Tax Credit (ITC) from the CHIPS Act ($6–$8B expected) incorporated into plans; direct funding not yet included due to pending final terms.

• CapEx intensity revised downward from 1.5x to 1.2x revenue growth due to improved equipment efficiency and throughput.

Financial Outlook and Scenario Planning

• Four revenue scenarios for 2026 presented, ranging from $20B to $26B, with associated CapEx and free cash flow per share outcomes.

• Free cash flow per share expected to return to long-term trend as CapEx moderates; 2026 guidance of $8–$12 per share.

• Depreciation expected at $2.3–$2.7B in 2026, with future levels dependent on revenue and CapEx.

• Free cash flow margin target remains 25–35%, with potential to exceed as CapEx normalizes.

• CapEx floor in 2026 is $2–$3B to complete long-lead investments; post-2026 CapEx can be reduced further if demand is weak.