Texas Instruments (TXN) Capital Management Update summary

Capital allocation strategy and objectives

• Focus remains on maximizing long-term growth of free cash flow per share, supported by disciplined capital allocation and efficiency improvements.

• Investments are prioritized in analog and embedded processing, with a strong emphasis on manufacturing, technology, and broad product portfolio.

• Over the past decade, about $100 billion has been allocated, with half invested in R&D, sales, marketing, CapEx, and inventory.

• Commitment to return all free cash flow to owners via dividends and share repurchases, with a 21-year record of dividend increases.

• Business model leverages four sustainable competitive advantages: manufacturing/technology, broad product portfolio, market channel reach, and diversity/longevity.

Manufacturing, technology, and capacity investments

• Significant progress in expanding 300mm wafer fab capacity, with internal manufacturing rising from 40% to 60% of wafers in 2024 and targeting 80%+ by 2030.

• CapEx for 2025 is set at $5 billion, with 2026 expected between $2–$5 billion, supporting both current and future capacity needs.

• Modular capacity expansion allows flexibility to scale CapEx based on demand, with long lead-time investments ensuring readiness for market upturns.

• By 2030, over 95% of wafers and 90% of assembly are expected to be internal, enhancing cost control and supply chain dependability.

• 300mm wafer technology provides about 40% lower chip cost and higher gross margins compared to 200mm.

Market positioning and growth outlook

• Industrial and automotive markets now represent about 70% of revenue, up from 40% in 2013/2014, driven by secular content growth.

• Embedded business is undergoing a strategic turnaround, with investments in low-power MCUs, real-time control, and wireless connectivity expected to drive future growth.

• Data center and enterprise systems are emerging focus areas, with R&D investments supporting growth in power delivery and networking solutions.

• Direct customer relationships and digital channels now account for 80% of revenue, enhancing market reach and customer insight.

• Industrial positions are diverse, with thousands of products sold to a broad customer base and secular content growth in automation and robotics.