Texas Instruments (TXN) Investor Update summary

Capital Allocation Strategy and Objectives

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

• Investments prioritized in manufacturing, technology, R&D, and expanding product portfolio, especially in analog, embedded processing, and high-growth markets.

• Commitment to return all free cash flow to owners via dividends and share repurchases over time.

• Capital expenditures are being reduced from $5B per year (2023–2025) to $2–$3B in 2026, aligning with completion of major capacity expansions.

• Inventory days target set at 150–250 days to ensure high customer service and stable lead times.

Growth Expectations and Market Positioning

• Revenue exposure to industrial, automotive, and data center markets has grown from 43% in 2013 to 75% in 2025.

• R&D investments have shifted to emphasize industrial, automotive, and data center, with industrial and automotive each at 33% of revenue and data center at 9%.

• Product portfolio strengthened through investments in process and package technologies, positioning for growth in large, fast-growing markets.

• Data center now recognized as a distinct end market, with significant opportunities in compute, networking, and power infrastructure.

• Market recovery is ongoing but at a more modest pace than previous cycles; secular content growth remains strong.

Manufacturing and Technology Investments

• Over 90% of wafers and assembly to be manufactured internally by 2026/2030, with more than 70%–80% on 300mm wafers.

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

• Major fab expansions (RFAB2, LFAB1/2, SM1/2) are on track, supporting scalable capacity and future growth.

• CHIPS Act benefits received, including $630 million in direct funding to date, supporting U.S.-based capacity expansions.

• Modular capacity expansion allows for flexible scaling based on demand.