TI(US:TXN) Seeking Alpha·2024-02-01 23:49Core Insights - Texas Instruments (TI) is focused on maximizing long-term growth of free cash flow per share, which is viewed as the primary driver of long-term value for the company [5][6][30] - The company is committed to maintaining a disciplined approach to capital allocation, emphasizing investments in manufacturing and technology to support growth in the semiconductor market, particularly in industrial and automotive sectors [5][14][19] Group 1: Business Strategy and Competitive Advantages - TI's business model is built on four sustainable competitive advantages: manufacturing and technology, a broad product portfolio, extensive market channels, and diverse, long-lived positions [6][8][12] - The company aims to strengthen its manufacturing and technology capabilities, particularly through investments in 300-millimeter wafer fab capacity, which enhances cost control and supply chain management [16][18][19] - TI's focus on analog and embedded products positions it well for growth, with a significant increase in revenue from industrial and automotive markets, which now account for approximately 75% of total revenue [14][25][76] Group 2: Capital Allocation and Financial Performance - Over the past decade, TI has allocated approximately $94 billion in capital, with about 40% directed towards organic growth initiatives such as R&D and capital expenditures [12][10] - In 2023, TI's capital expenditures were around $5 billion, with a similar amount returned to shareholders through dividends and share repurchases, reflecting a commitment to returning all free cash flow over time [10][31] - The company reported a free cash flow of $1.49 per share in 2023, with expectations for continued elevated levels of capital expenditures through 2026 to support long-term growth [30][31] Group 3: Market Dynamics and Future Outlook - TI anticipates a strong secular growth in semiconductor content, particularly in the industrial and automotive sectors, which are expected to grow faster than the overall semiconductor market over the next decade [14][75] - The company is investing in capacity to support approximately $45 billion in revenue by 2030, with plans to increase internal manufacturing to over 90% for both wafers and assembly [15][19][21] - TI's strategy includes adapting to geopolitical changes, with a focus on providing dependable capacity outside of China and Taiwan, which is increasingly important to customers [5][15][75]