TI(US:TXN)2023-06-01 19:05Texas Instruments Incorporated (NASDAQ:TXN) Conference Call Summary Company Overview - Company: Texas Instruments Incorporated (TI) - Event: Bernstein's 39th Annual Strategic Decisions Conference - Date: June 1, 2023 - Participants: - Dave Pahl - Vice President, Investor Relations - Haviv Ilan - President and Chief Executive Officer - Rafael Lizardi - Senior Vice President and Chief Financial Officer - Stacy Rasgon - Bernstein Research Analyst Key Points Industry and Market Dynamics - TI is experiencing a shift in market dynamics, with a focus on capital expenditures (CapEx) and investment plans that differ from previous years, indicating a new phase in the company's evolution [3][7] - The semiconductor industry is witnessing synchronous market behavior across various sectors, including personal electronics, industrial, and automotive, with TI observing market trends earlier than competitors [10][11] Financial Performance and Strategy - TI's revenue from industrial and automotive sectors has grown significantly, from 42% in 2013 to 65% in 2022, with an annual growth rate of nearly 11% [30][31] - The company aims for a long-term revenue target of $45 billion by the end of the decade, supported by a growth strategy of approximately 10% [37][38] - CapEx is projected to ramp up to about $5 billion annually from 2023 to 2026, reflecting TI's commitment to expanding capacity [47][48] Inventory Management - TI is adopting a proactive inventory strategy, aiming to maintain higher inventory levels to meet future demand and avoid supply shortages, as experienced during the pandemic [21][24] - The company emphasizes a customer-friendly approach, avoiding non-cancelable orders to better align with customer needs [14][15] Embedded and Analog Business - TI is investing heavily in its embedded processing business, which includes microcontrollers and real-time control systems, indicating confidence in future growth despite historical underperformance [66][70] - The average selling price (ASP) for TI's products ranges from below $0.03 to tens of dollars, with a current average ASP around $0.35 to $0.40 [75][76] Automotive Sector Focus - The automotive segment, which constitutes about 25% of TI's total revenues, is identified as a key growth area, particularly with the rise of electric vehicles (EVs) [77] - TI's strategy includes a broad approach to automotive applications, focusing on multiple sockets and components rather than just high-value items [77][81] Long-term Investments and CHIPS Act - TI's investment strategy is bolstered by the CHIPS Act, which provides tax credits and subsidies, enhancing competitiveness in the semiconductor market [55][58] - The company is positioning itself to benefit from potential geopolitical shifts in semiconductor manufacturing, emphasizing the importance of U.S.-based capacity [59][62] Conclusion - TI is navigating a transformative period with strategic investments in CapEx, inventory management, and a focus on high-growth sectors like automotive and embedded processing. The company's long-term vision is supported by a robust market position and proactive measures to address future demand and supply chain challenges.