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.

• Capital is allocated to organic growth, dividends, share repurchases, and selective acquisitions, with all free cash flow returned via dividends and repurchases.

• Updated CapEx target for 2026 is $2–$3 billion, with future CapEx dependent on revenue growth and completion of major capacity expansions.

• Inventory days target updated to 150–250 days to support customer service and minimize obsolescence, with cash and inventory management ensuring liquidity.

Growth Expectations and Market Positioning

• Industrial, automotive, and data center markets now represent about 75% of revenue, up from 43% in 2013.

• Automotive sector benefits from content expansion across all vehicle types; industrial sees growth from automation and energy efficiency trends.

• R&D investments are increasingly directed toward these high-growth markets, with industrial and automotive each at 33% of revenue and data center at 9%.

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

• Data center segment is growing rapidly, supported by a broad product set and transition to advanced power architectures.

Manufacturing and Technology Investments

• Over 90% of wafers and assembly are now manufactured internally, with a structural cost advantage from 300mm wafer fabs.

• 300mm wafer technology provides about 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.

• By 2030, over 95% of wafers and 90% of assembly expected to be internal, with more than 80% on 300mm.

• Received $630 million in CHIPS Act funding to date, with further incentives tied to U.S. CapEx.