Texas Instruments 2026 Capital Management Call Summary Company Overview - **Company**: Texas Instruments (NasdaqGS:TXN) - **Date of Call**: February 24, 2026 - **Speakers**: Mike Beckman (Head of Investor Relations), Haviv Ilan (Chairman, President, and CEO), Rafael Lizardi (CFO) Key Industry Insights - **Market Recovery**: The semiconductor market is recovering, but at a more modest pace compared to previous cycles, with unit shipments still below historical trends [12][26] - **End Markets Focus**: Texas Instruments emphasizes growth in industrial, automotive, and data center markets, which collectively accounted for approximately 75% of revenue in 2025 [13][25] - **Automotive Sector**: There is a growing opportunity in the automotive sector due to increased content in vehicles, including battery electric, hybrid, and internal combustion engines [13][14] - **Industrial Sector**: The industrial market is expected to see continued growth driven by automation, sensing requirements, and energy efficiency [14] - **Data Center Market**: The data center market is characterized by ongoing investment and growth, with TI's products supporting various infrastructure needs [15][16] Financial Performance and Projections - **2025 Financials**: - Operating cash flow was $7.2 billion, a 13% increase from the previous year [26] - Capital expenditures (CapEx) were approximately $4.6 billion, representing 26% of revenue [26] - Free cash flow per share was $3.23, a 97% increase from 2024 [27] - **2026 Projections**: - Expected CapEx for 2026 is projected to be between $2 billion and $3 billion [9][10] - Anticipated free cash flow per share is expected to exceed $8, with potential for higher based on revenue growth [27][35] - **Dividend Policy**: Texas Instruments has consistently increased its dividend for 22 consecutive years, with a 4% increase in Q4 2025 [28] Capital Allocation Strategy - **Long-term Focus**: The company aims to maximize long-term growth of free cash flow per share, which is viewed as the primary driver of long-term value [4][32] - **Investment in Growth**: Over the past decade, TI has allocated approximately $109 billion in capital, with a significant portion directed towards R&D, sales, marketing, and manufacturing capacity [10][11] - **Acquisition Strategy**: The recent acquisition of Silicon Labs is expected to enhance TI's position in embedded wireless connectivity solutions, with a focus on strategic and financial alignment [10][58] Competitive Advantages - **Manufacturing and Technology**: TI's competitive advantages include a strong manufacturing base, a broad product portfolio, extensive market reach, and long-lived positions in various markets [5][6] - **Internal Supply Chain Control**: More than 90% of TI's wafers and assembly are manufactured internally, providing cost advantages and greater control over the supply chain [18][19] - **300mm Wafer Production**: Investments in 300mm wafer production are expected to lower costs and enhance capacity, with a goal of producing over 95% of wafers internally by 2030 [23][22] Additional Insights - **R&D Investments**: R&D investments are focused on growth opportunities in industrial, automotive, and data center markets, reflecting the belief in their long-term potential [24] - **Inventory Management**: TI aims to maintain high levels of customer service and minimize obsolescence, with inventory days targeted between 150-250 days [9][72] - **Market Signals**: The company is monitoring market conditions closely, with expectations for continued growth in key sectors, particularly automotive and data centers [78] This summary encapsulates the key points discussed during the Texas Instruments 2026 Capital Management Call, highlighting the company's strategic focus, financial performance, and market outlook.