Texas Instruments Incorporated (NASDAQ:TXN) UBS Global Technology and AI Conference Call December 3, 2024 10:55 AM ET Company Participants Haviv Ilan - CEO, President & Director Conference Call Participants Tim Arcuri - UBS Investment Bank Tim Arcuri Good morning. I think we'll start. I'm Tim Arcuri. I'm the semiconductor analyst here, and we're very pleased to have Haviv Ilan, who is the CEO of Texas Instruments with us. So thank you, Haviv. Haviv Ilan Good morning, Tim. Thanks for having us. Appreciate it ...

Valuation and Stock Performance - Texas Instruments currently trades at a forward 12-month P/E ratio of 34.84, which is lower than the Zacks Semiconductor – General industry average of 37.16, indicating a relatively discounted entry point compared to peers [1] - Year-to-date, Texas Instruments' shares have risen only 16.8%, significantly underperforming the industry's 122.2% surge and major players like NVIDIA, Amtech Systems, and Marvell Technology [2] Challenges Impacting Performance - The industrial market has been a persistent drag, with revenues declining sequentially in the low-single-digit percentage in Q3 2024, marking eight consecutive quarters of contraction [5] - Inventory levels reached $4.3 billion at the end of Q3, exceeding historical norms, posing risks of obsolescence and potential margin pressure if market conditions do not improve [6] - The semiconductor industry's cyclicality and softened end-market demand, particularly in industrial and personal electronics sectors, have added pressure [7] - Texas Instruments' shares are trading below their 50-day moving average, signaling a bearish trend and potential short-term downward pressure [8][9] Growth Opportunities and Strategic Initiatives - The automotive market is a bright spot, with Q3 revenues growing in the upper-single-digit percentage sequentially, driven by rising demand for EVs and advanced driver-assistance systems [12] - The company is well-positioned to benefit from the global transition toward EVs and autonomous vehicles, with a strategic focus on automotive chips tailored for power efficiency and advanced features [13] - Texas Instruments' diversified portfolio across industrial, automotive, and communications sectors provides resilience against market volatility, with products essential for renewable energy systems, factory automation, and 5G infrastructure [14] - The company is investing approximately $5 billion annually over the next few years to expand its manufacturing capabilities, particularly in advanced 300-mm wafer fabs, reducing reliance on external suppliers and strengthening its competitive position [15] Conclusion - Texas Instruments' current valuation and strong fundamentals make it a stock worth holding, despite near-term challenges like industrial market weakness and elevated inventory levels [16] - The automotive sector's robust demand and strategic capacity investments provide a solid foundation for future growth, though immediate upside may be limited due to cyclical pressures and competition [17] - For investors seeking stability and growth potential in the semiconductor space, Texas Instruments offers a compelling hold opportunity, allowing shareholders to benefit from its long-term strengths while waiting for market conditions to improve [18]

Company Overview - Texas Instruments Inc (TI) is a Dallas-based designer and manufacturer of semiconductors with operations in over 30 countries globally [3] - The company sells its products to electronics companies worldwide and operates through two reportable segments: Analog and Embedded Processing [3] - The Analog segment includes Power and Signal Chain product lines, while the Embedded Processing segment includes digital signal processors (DSPs), microcontrollers, and applications processors [4] - Major markets for TI's products include industrial, automotive, personal electronics, communications equipment, and enterprise systems [4] Technology and Innovation - The report provides insights into TI's digital transformation strategies and innovation programs [1][2] - It covers technology initiatives, including partnerships and product launches, with details on technology themes, objectives, and benefits [2] - The report includes information on TI's estimated ICT budgets and major ICT contracts [2] Strategic Focus - The report highlights TI's technology themes under focus and its venture arm, TI Strategic Relationships and Ventures [5][6] - It provides a partnerships network map and insights into various product launches and partnerships [5][6] - Key executives and a selection of companies mentioned in the report include AWS, Delta Electronics, Smart Eye, SLAMcore, and Picocom [6]

News highlights: The new TMS320F28P55x series of C2000™ MCUs with an integrated edge artificial intelligence (AI) hardware accelerator enables smarter real-time control, with up to 99% fault detection accuracy. The latest 64-bit C29 core in the new F29H85x series more than doubles the real-time control performance of existing generations and will have an integrity level up to Automotive Safety Integrity Level (ASIL) D and SIL 3. DALLAS, Nov. 11, 2024 /PRNewswire/ -- Texas Instruments (TI) (Nasdaq: TXN) toda ...

Earnings Commentary - Texas Instruments (TXN) recently reported earnings, with the market reacting positively to the results [1] - The core investment thesis for Texas Instruments remains largely unchanged despite the earnings release [1] Best Anchor Stocks Performance - Best Anchor Stocks focuses on identifying high-quality stocks with strong growth and lower-than-expected volatility [1] - The portfolio has consistently delivered revenue growth with below-average volatility since its inception in January 2022 [2] - Best Anchor Stocks' portfolio has outperformed both the S&P 500 and the Nasdaq since its launch [2]

Investment Rating - The report assigns a neutral investment rating for Texas Instruments (TXN) based on its performance and market conditions [3][48]. Core Insights - Texas Instruments reported Q3 FY24 revenue of $4.151 billion, a year-over-year decrease of 8% but a quarter-over-quarter increase of 8.6%, slightly above the guidance midpoint [3][6]. - The gross margin for Q3 FY24 was 59.6%, down 2.51 percentage points year-over-year but up 1.75 percentage points quarter-over-quarter, attributed to revenue growth and production optimization [3][8]. - The net profit for Q3 FY24 was $1.362 billion, reflecting a quarter-over-quarter increase of 20.85% but a year-over-year decrease of 20.30% [3][11]. - Inventory at the end of Q3 FY24 was $4.3 billion, with an increase of $190 million from the previous quarter, and inventory days increased to 231 days [3][13]. - Capital expenditures for Q3 FY24 were $1.3 billion, with total capital expenditures over the past 12 months amounting to $4.8 billion [3][14]. - Free cash flow for the past 12 months was $1.5 billion, including $220 million from investment tax credits due to the CHIPS Act [3][21]. Revenue Breakdown - The revenue from the Analog segment in Q3 FY24 was $3.223 billion, accounting for 77.6% of total revenue, with a quarter-over-quarter increase of 10.08% and a year-over-year decrease of 3.88% [3][15]. - The Embedded Processing segment generated $653 million in revenue, representing 15.7% of total revenue, with a quarter-over-quarter increase of 6.18% and a year-over-year decrease of 26.63% [3][15]. - Other businesses contributed $275 million, down 4.84% year-over-year and 1.43% quarter-over-quarter, making up 6.6% of total revenue [3][15]. End Market Performance - The industrial market showed a low single-digit decline, primarily due to customers continuing to digest inventory, while the automotive market exhibited high single-digit growth driven by the Chinese market [3][17]. - The personal electronics market grew approximately 30%, the communication equipment market increased about 25%, and the enterprise systems market grew around 20% [3][17]. - The automotive market in China has shown strong performance, with growth rates reaching 20% for two consecutive quarters, driven by the demand for electric and hybrid vehicles [3][27]. Company Guidance - For Q4 FY24, Texas Instruments provided revenue guidance in the range of $3.7 billion to $4.0 billion, with an expected EPS between $1.07 and $1.29 [3][18].

Have you assessed how the international operations of Texas Instruments (TXN) performed in the quarter ended September 2024? For this chipmaker, possessing an expansive global footprint, parsing the trends of international revenues could be critical to gauge its financial resilience and growth prospects. The global economy today is deeply interlinked, making a company's engagement with international markets a critical factor in determining its financial success and growth path. It has become essential for i ...

The large-cap semiconductor stock- Texas Instruments (NASDAQ: TXN ), noted for its expertise in analog and embedded processing chips, appears to have gotten its mojo back this year. After a disappointing 2023, where it only generated aAnalyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensati ...

NEWS HIGHLIGHTS:TI adds GaN manufacturing in Japan, quadrupling its internal GaN manufacturing capacity between its factories in the United States and Japan.TI's GaN-based semiconductors are in production and available now.TI enables the most energy-efficient, reliable and power-dense end products with the widest portfolio of integrated GaN-based power semiconductors.TI has successfully piloted the development of GaN manufacturing on 300mm wafers.DALLAS and AIZU, Japan, Oct. 24, 2024 /PRNewswire/ -- Texas I ...

Core Insights - Texas Instruments (TXN) reported Q3 2024 earnings of $1.47 per share, exceeding the Zacks Consensus Estimate by 8.1% and falling within the guided range of $1.24-$1.48 per share, although this represents a 20.5% decline year over year [1] - Revenues for TXN reached $4.15 billion, surpassing the Zacks Consensus Estimate by 1% and aligning with management's guidance of $3.94-$4.26 billion, marking an 8.4% year-over-year decrease but an 8.6% sequential increase [1] - The Personal Electronics market grew approximately 30%, Enterprise Systems increased around 20%, and Communication Equipment rose about 25%, while the automotive market saw high single-digit growth, driven by strength in the Chinese market [1] Segment Performance - The Analog segment generated revenues of $3.22 billion, accounting for 77.6% of total revenues, down 4% year over year but above the Zacks Consensus Estimate of $3.08 billion [3] - Embedded Processing revenues were $653 million, representing 15.7% of total revenues, down 26.6% year over year and missing the Zacks Consensus Estimate of $724 million [3] - Other segment revenues totaled $275 million, or 6.6% of total revenues, down 4.7% from the prior year and below the consensus mark of $288.3 million [3] Operating Metrics - TXN's gross margin was 59.6%, a contraction of 251 basis points from the previous year [4] - Selling, general and administrative expenses were $428 million, down 34 basis points year over year [4] - Research and development expenses increased to $492 million, expanding 146 basis points as a percentage of revenues [4] - The operating margin was 37.44%, down 431 basis points from the prior year [4] Financial Position - As of September 30, 2024, TXN had cash and short-term investments of $8.75 billion, down from $9.7 billion as of June 30, 2024 [5] - Long-term debt remained stable at $12.84 billion, with current debt at $1.05 billion [5] - Cash generated from operations was $1.7 billion, an increase from $1.57 billion in the previous quarter [5] - Capital expenditures were $1.3 billion, with free cash flow reported at $416 million [5] - TXN paid dividends totaling $1.19 billion and repurchased shares worth $318 million during the quarter [5] Future Guidance - For Q4 2024, TXN expects revenues between $3.70 billion and $4 billion, with the Zacks Consensus Estimate at $4.11 billion, indicating a 0.83% increase year over year [5] - Earnings per share guidance is set between $1.07 and $1.29, with the consensus at $1.36, reflecting an 8.7% decline from the previous year [6] - The effective tax rate is anticipated to be approximately 13% [6] Market Context - TXN's stock has gained 13.8% year to date, underperforming the Zacks Semiconductor – General industry, which has surged 134.8% during the same period [2]