Texas Instruments Incorporated (TXN)

Texas Instruments reported third quarter 2026 revenue of $6.06 billion on 21 October, up 28 percent from a year earlier, with net income of $2.43 billion and earnings per share of $2.62 1.

Gross profit, which is revenue minus the cost of making the chips, was 64.2 percent of revenue against 57.4 percent a year earlier 2. Operating profit was 47.5 percent of revenue against 35.1 percent 2.

Analog chips brought in $4.91 billion, up 32 percent, and embedded processing chips brought in $858 million, up 21 percent 2.

Chief executive Haviv Ilan told analysts that industrial revenue rose more than 40 percent from a year earlier, automotive rose in the mid-teens and data center rose about 95 percent 4.

Data center was about 13 percent of the quarter's revenue, he said 4. The company expects fourth quarter revenue of $5.80 billion to $6.30 billion and earnings per share of $2.45 to $2.79 1.

Ilan tied that above-seasonal outlook to long-term growth in chip content plus a cyclical recovery, the usual rebound after a downturn 4.

The largest open item is the pending acquisition of Silicon Labs, a maker of wireless connectivity chips, in an all-cash deal with a total enterprise value of about $7.5 billion 25.

TI expects it to close in the first half of 2027, subject to regulatory approvals 2. Silicon Labs stockholders approved it on 30 April 2026, and the antitrust waiting period expired on 22 May 2026 2120.

Texas Instruments says its operations began in 1930 and that it was a pioneer in the move from vacuum tubes to transistors and then to integrated circuits 3. Its stated aim is to make electronics more affordable through semiconductors 3.

Analog chips handle sound, heat, pressure and power 3. TI deepened that business by acquiring National Semiconductor in 2011 for $6.5 billion, which Reuters called its biggest purchase before Silicon Labs 5.

Revenue rose 27 percent to $18.34 billion in 2021 as demand grew, mainly for analog chips, and operating profit reached 48.8 percent of revenue 10. The report covered the fiscal year ended 31 December 2021 10.

From 2021 TI set out to add 300-millimeter wafer factories: it bought one in Lehi, Utah, built another in Richardson, Texas, and began two more in Sherman, Texas 109.

The reason is cost: an unpackaged chip built on a 300mm wafer costs about 40 percent less than one built on a 200mm wafer, TI says 3.

Revenue rose to $20.03 billion in 2022, up 9.2 percent, helped by higher prices and a richer mix of products shipped 9. Operating profit that year was 50.6 percent of revenue 9.

Then demand fell: revenue dropped 12.5 percent to $17.52 billion in 2023, mostly in analog 8. Gross profit fell to 62.9 percent of revenue from 68.8 percent because factories ran less full and new capacity added cost 8.

Revenue fell again in 2024, by 10.7 percent to $15.64 billion, and embedded processing revenue dropped 25 percent 7. Operating profit was 34.9 percent of revenue 7.

TI says its revenue moves mainly with customer demand, and that because it owns much of its factory capacity, profit margins fall when the factories run less full 3.

Spending stayed high through the downturn: capital expenditures were $5.07 billion in 2023 and $4.82 billion in 2024 7. The company expected $7.5 billion to $9.5 billion through 2034 from the CHIPS Act, the U.S. law that supports chip factories at home 7.

In 2025 revenue recovered 13.0 percent to $17.68 billion, with analog at $14.01 billion 3. Restructuring charges of $117 million covered the planned closure of its two remaining 150mm factories and a write-down tied to custom chips 3.

On 17 December 2025 TI held the ribbon-cutting for SM1, its first Sherman fab, three years after breaking ground on a project with up to $40 billion in planned investment 11.

On 4 February 2026 TI agreed to acquire Silicon Labs, with a total enterprise value of about $7.5 billion, to widen its wireless connectivity range 25.

Analog: power and signal chain

Analog chips turn real-world signals such as sound, temperature, pressure or light into data that other chips can process, and they manage power inside equipment 3.

The Power line covers battery management, switching regulators and power switches 3. The Signal Chain line covers amplifiers, data converters, interface chips and motor drives 3.

Analog brought in $14.01 billion in 2025, about 79 percent of revenue 3. In the third quarter of 2026 its revenue rose 32 percent and its operating profit reached 51.0 percent of revenue 2.

The company's own table lists industrial automation as the largest sector in industrial, at 33 percent of 2025 revenue 3.

Embedded processing

Embedded processing chips are the digital brains of equipment, from simple microcontrollers to radar and vision processors, and the segment also includes wireless connectivity 3.

The segment generated $2.70 billion in 2025, about 15 percent of revenue 3. In the third quarter of 2026 its revenue rose 21 percent to $858 million, and operating profit was 26.5 percent of revenue against 15.2 percent a year earlier 2.

Customers often write their own software for these chips, which tends to lengthen the relationship because they reuse that software from one chip generation to the next 3. TI also says the LFAB fab, still ramping, weighs on this segment's profit until it fills 3.

Other: display chips, calculators and custom chips

Other generated $979 million in 2025 from DLP chips that project high-definition images, calculators and custom chips known as ASICs 3. Calculators were about 1 percent of revenue 3.

In the third quarter of 2026, Other revenue fell 6 percent to $286 million 2.

Who buys the chips

TI says it supplies over 100,000 customers, with about half of revenue from customers outside its largest 50, and more than 80 percent of 2025 revenue came direct, including through TI.com 3.

By the headquarters of the end customer, the United States was 38 percent of 2025 revenue and China 21 percent 3. About 50 percent of revenue came from products shipped into China 3.

Its own market table for 2025 puts the largest sector in automotive, infotainment and instrument clusters, at 33 percent of revenue, mobile phones in personal electronics at 21 percent and wireless infrastructure at 3 percent 3.

Data center power

Data center compute was 9 percent of 2025 revenue 3. Ilan said data center was about 13 percent of third quarter 2026 revenue and up about 95 percent from a year earlier 4.

On 23 May 2025 TI said it was working with Nvidia on power management and sensing for 800-volt direct current systems in data center servers 15.

TI says rack power is predicted to rise from 100kW today to more than 1MW, and that a 48V system would need almost 450lbs of copper for a 1MW rack 15.

Power Electronics News reported on 23 March 2026 that TI unveiled a full 800 VDC architecture, whose 800-volt-to-6-volt converter uses gallium nitride power stages and reaches up to 97.6 percent peak efficiency 16.

Plants and workforce

TI makes most of its chips in its own factories 3. Its owned principal sites include North Texas (Dallas, Richardson and Sherman), Lehi in Utah, South Portland in Maine and Tucson in Arizona 3.

Abroad it lists Freising in Germany, Aizu and Miho in Japan, and sites in China, India, Malaysia, the Philippines, Mexico and Taiwan 3. Its facilities held about 17.8 million square feet in the United States and about 12.8 million outside it at the end of 2025 3.

In 2025 TI kept qualifying and ramping its newest 300mm fabs in Richardson and Sherman, Texas, and Lehi, Utah 3. Ilan said on the call that clean room space is open in Lehi and a second Lehi shell is in its last stages of completion 4.

The company had about 33,000 employees at the end of 2025, about 90 percent in research and development, sales or manufacturing, and its turnover was 10.1 percent 3.

The people in charge

Haviv Ilan, 57, is chairman, president and chief executive 3. Julie Knecht became chief financial officer on 1 August 2026, succeeding Rafael Lizardi, who retired after 25 years with the company 13.

Senior vice president Hagop Kozanian announced he would retire effective 31 August 2026 14.

Rivals and open problems

TI says analog and embedded markets remain highly fragmented, with dozens of large and small competitors, including emerging companies in Asia 3. Bloomberg names Analog Devices beside TI as a seller of analog chips 12.

On 13 September 2025 China's commerce ministry opened an anti-dumping probe into certain American-made analog chips, the kind sold by TI and Analog Devices, Bloomberg reported 12. It is to run about a year, with a possible six-month extension 12.

TI says about 20 percent of 2025 revenue came from end customers headquartered in China 3. It also lists tariffs and import or export limits among the trade barriers that could hurt it 3.

On the call, Ilan said broad demand puts pressure on lead times, with tools taking longer to arrive, especially for the back end where chips are packaged and tested 4. TI says legal proceedings are in the ordinary course and not expected to be material 3.

The umbrella, in words

Brands: TI sells under its own name and DLP, its brand for display chips that project images 3.

Subsidiaries: Exhibit 21 lists subsidiaries as of 31 December 2025, among them National Semiconductor Corporation from the 2011 purchase, Burr-Brown International Holding Corporation and Texas Instruments Semiconductor Manufacturing (Chengdu) Co., Ltd. in China 175.

Agreed: under a merger agreement dated 4 February 2026, Caldwell Merger Corp., a TI subsidiary, is to merge into Silicon Labs, which would then be a wholly owned TI subsidiary 206.

Share classes: the balance sheet shows common stock only, with no preferred shares issued 1.

Control: Vanguard Capital Management reported owning 7.49 percent of the common stock in a Schedule 13G as of 31 March 2026 18. TI's 2026 proxy lists The Vanguard Group at 10.04 percent and BlackRock at 8.5 percent from earlier filings 19.

Land: the principal plants above are owned except the sites it marks as leased, and most facilities outside the United States include some leased land 3.

For the fourth quarter, TI expects revenue of $5.80 billion to $6.30 billion and earnings per share of $2.45 to $2.79 1. It expects an effective tax rate of about 13 percent in that quarter and 13 percent to 14 percent for 2027 4.

On spending, the 10-K said TI expected to spend about $2 billion to $3 billion on capital in 2026 as a six-year elevated cycle nears its end 3. Ilan said it is aiming for the higher end if tools arrive on time 4.

Ilan declined to give 2027 figures and said more color would come on the February capital management call 4. He said slots for tools are reserved for 2027 and beyond, to be adjusted to the revenue growth TI wants to support 4.

TI also expects benefits from the CHIPS Act 3. They include a 35 percent tax credit on qualifying investment placed in service after 31 December 2025 and direct funding of up to $1.6 billion for three large fabs in Sherman and Lehi 3.

The Silicon Labs deal is expected to close in the first half of 2027, subject to other regulatory approvals 220. Reuters reported that the deal is likely to generate about $450 million a year in manufacturing and operational savings within three years of closing 5.

Reuters also reported that Silicon Labs would owe a $259 million termination fee if it walked away and TI $499 million if it abandoned the deal 5.

To finance part of it, TI offered four series of senior notes of $500 million each, due 2028, 2031, 2033 and 2036, to be issued on 9 November 2026 6. A 364-day credit line of up to $5 billion stands behind the deal 2.

If the acquisition is not completed by the later of 4 February 2027, or its automatic extension, and the agreement's other end date, TI must redeem the notes at 101 percent of principal 6.

In September TI announced a 7 percent dividend increase, which the finance chief called the 23rd consecutive year of increases 4.

How it operates

Texas Instruments designs and manufactures semiconductors and sells them to electronics designers and manufacturers all over the world. Its operations began in 1930, it is incorporated in Delaware, it is run from Dallas, Texas, and it has design, manufacturing or sales operations in more than 30 countries. The catalogue is vast: more than 80,000 products. Two segments are reported. Analog chips change real world signals such as sound, temperature, pressure or light, conditioning them, amplifying them and often turning them into digital data, and they also manage power in equipment, converting, distributing, storing, discharging, isolating and measuring electrical energy. Embedded processing chips are the digital brains of equipment, built to handle specific tasks, running from wireless connectivity and simple microcontrollers to radar and vision processing. Everything else is reported as Other: DLP chips, which project high definition images, calculators, and custom chips known as application specific integrated circuits. 1920212223242526

It sells to over 100,000 customers, and about half of its revenue comes from customers outside its largest 50. Its own table of markets, which it realigned in 2025, puts industrial at 33 percent of revenue and automotive at another 33, personal electronics at 21, data center at 9 and communications equipment at 3, with calculators about 1. Within each market the sectors are listed in declining order of revenue: industrial automation heads industrial, infotainment and instrument clusters head automotive, mobile phones head personal electronics, and data center compute heads data center. Concentration is low but not absent: one end customer accounted for 12 percent of revenue in both 2025 and 2024, recognized primarily in the Analog segment; in 2023 no end customer reached a tenth of revenue. 272829303132

In 2025 more than 80 percent of revenue was sold direct, which includes the TI.com website, and less than 20 percent went through distributors, for which it offers customers a single worldwide distributor and a few region specific ones. That shift is deliberate and expensive: order fulfilment services, inventory programs, business processes, logistics and e-commerce built over several years, which the company says give it access to more customers and more of their design projects, and so the chance to sell more parts into each design. 3334353637

Measured by where end customers are headquartered, which the company calls where critical decisions are made, the United States brought 38 percent of 2025 revenue, China 21 percent, Europe, the Middle East and Africa 21 percent with Germany alone 10, the rest of Asia 11 percent and Japan 7 percent. About 60 percent of revenue comes from customers headquartered outside the United States. Shipments tell a different story from headquarters: products shipped into China were about 50 percent of revenue in 2025, against about 20 percent from customers headquartered there. 38394041

Texas Instruments owns its factories, and calls that a core competitive advantage rather than a cost to be handed to someone else. It runs wafer fabrication plants, known as fabs, and assembly and test plants in North America, Asia, Japan and Europe, and does most manufacturing in house, which it says gives it lower cost, more control of its supply chain and what it calls geopolitically dependable capacity. The economics turn on the size of the wafer, the silicon disc chips are made on: an unpackaged chip built on a 300mm wafer costs about 40 percent less than one built on a 200mm wafer. Through 2025 it kept qualifying and ramping its newest 300mm fabs in Richardson and Sherman, Texas, and Lehi, Utah, which are meant to absorb work moved in from outside foundries and from its own legacy 150mm plants. It sourced the majority of wafer fabrication and of assembly and test internally that year, and uses outside foundries and subcontractors only to supplement. 4243444546

The specifics

The company states one objective and repeats it: the growth of free cash flow per share over the long term, which it calls the best metric for owners to measure its progress. The strategy under it has three parts: a business model built on four advantages, which are manufacturing and technology, a broad portfolio, the reach of its market channels, and the diversity and longevity of its products, markets and customer positions; discipline in allocating capital; and efficiency. It puts figures behind the second: over the ten years from 2016 to 2025 it allocated 109 billion dollars, about 24 billion of it to capital expenditures, and it says it is near completion of a six year elevated capital expenditures cycle. 47484950

Public money and tax law sit close to this business. The company says it expects to keep benefiting from the CHIPS Act, including a 35 percent investment tax credit on qualifying manufacturing investments for assets placed in service after the end of 2025, and direct funding of up to 1.6 billion dollars for its three large scale 300mm fabs in Sherman, Texas and Lehi, Utah. In 2025 it received 335 million dollars of proceeds from those incentives, including 75 million in direct funding. The One Big Beautiful Bill Act, enacted on July 4, 2025, changed federal tax law by allowing research and eligible capital spending to be expensed and by raising that credit; the filing says the new law made the effective tax rate higher in 2025, at 12.4 percent against 12.0 percent the year before. 51525354

Two old factories are closing. The 117 million dollar restructuring charge of 2025 covers efforts to drive operational efficiencies, including the planned closures of the two remaining factories with 150mm production, and a non cash goodwill impairment on the custom chip products, 32 million dollars, taken because the expected present value of future cash flows from certain products in Other declined. The year before ran the other way: a credit of 124 million dollars, mostly a gain on the sale of a property. 5556

The filing names no competitor. It says the analog and embedded processing markets remain highly fragmented despite consolidation, and that it faces significant global competition from dozens of large and small companies, broad based and niche, including emerging companies particularly in Asia. It describes the semiconductor cycle in plain terms, as the ebb and flow of supply and demand and the building and depleting of inventories, and says its own revenue growth is seasonally weaker in the first and fourth quarters than in the second and third. On patents it claims no single dependency: it owns many, keeps adding to them and licenses both ways, but says it does not consider its business materially dependent upon any one patent or patent license. 57585960

What drives growth, line by line

Revenue of 17.68 billion dollars rose 2.04 billion, or 13.0 percent, which the company attributes to higher demand in Analog and, to a lesser extent, in Embedded Processing. It describes 2025 as a continuing recovery in the analog and embedded market, though at a slower pace than prior upturns, with global semiconductor shipments still below the prior peak. The filed record shows what it is recovering from: revenue of 20.0 billion in 2022, then 17.5 billion in 2023 and 15.6 billion in 2024. Gross profit rose 10.9 percent to 10.08 billion but took a smaller share of revenue, 57.0 percent against 58.1 percent, on higher manufacturing costs from planned capacity expansions, partly offset by fuller factories. Because the company owns much of its capacity, a large part of its operating cost is fixed, so margins move with how full the plants are. 6162636465

Analog. The big one: 14.0 billion dollars, 79.2 percent of 2025 revenue, up 15.2 percent on the year. The company says both product lines grew about evenly on higher demand. Operating profit rose 17 percent and took 38.6 percent of the segment's revenue, against 37.9 percent a year earlier, the gain coming from the higher revenue and the gross profit on it, partly offset by higher operating expenses. The two lines are Power and Signal Chain. Power chips manage power across voltage levels, from battery management to switching and low dropout regulators, power switches, voltage references and lighting. Signal Chain chips sense, condition and measure real world signals and turn them into data, and include amplifiers, data converters, interface products, motor drives, clocks, logic and sensing. 666768697071

Embedded Processing. 2.7 billion dollars, 15.3 percent of revenue, up 6.5 percent, and the one line where profit went backwards: operating profit fell 14 percent, to 11.3 percent of the segment's revenue from 13.9 percent, on higher manufacturing costs and operating expenses. The company explains the cost. The plant it calls LFAB, which primarily supports Embedded Processing, was bought as an operating fab and is in the early stages of ramping, and until it ramps the company expects Embedded to carry manufacturing costs that fall disproportionately on this segment's operating profit compared with Analog. It is also the line with the stickiest customers: buyers write their own software for these chips and tend to reuse it from one product generation to the next, which lengthens the relationship. 6672737475

All Other. 979.0 million dollars, 5.5 percent of revenue, up 3.4 percent: DLP chips, calculators and custom chips. Revenue rose 32 million dollars while operating profit fell 198 million, but that fall is mostly a matter of where charges are booked rather than a business event. The company parks in Other the items it does not use to judge its segments, and in the segment table the whole 117 million dollars of restructuring charges and other items sits in Other, against a 124 million credit sitting there in 2024. 662576777855

What comes next, in the company's own words: capital spending of about 2 billion to 3 billion dollars in 2026 as the six year elevated cycle ends; continued CHIPS Act benefit, including the 35 percent credit and up to 1.6 billion dollars of direct funding for the three fabs in Sherman and Lehi; and a definitive agreement, announced on February 4, 2026, to acquire Silicon Labs in an all cash transaction that the filing puts at a total enterprise value of about 7.5 billion dollars. That deal is expected to close in the first half of 2027, subject to regulatory approvals and to a vote of Silicon Labs stockholders, and is to be funded with cash on hand and debt financing arranged before closing. 7951808182

The read's section on the people who run it is on the People tab.

What the desk infers Inferred

1. Inferred

   The unnamed end customer behind 12 percent of revenue is most likely a maker of personal electronics, and most likely of phones, rather than an industrial or an automotive buyer.

   Because

   • One end customer accounted for 12 percent of revenue in both 2025 and 2024, recognized primarily in the Analog segment. 32
   • Industrial and automotive are the two largest markets at 33 percent of revenue each, but they are also the most scattered: the company sells to over 100,000 customers and about half of its revenue comes from customers outside its largest 50. 2927
   • Data center is 9 percent of revenue and communications equipment 3 percent, both too small to hold a buyer of this size. 30
   • Personal electronics is 21 percent of revenue, mobile phones is the first sector listed beneath it, and the company says the sectors are listed in declining order of revenue. 3028
   Confidence 55 of 100Wrong if A filing or a public disclosure that names that end customer as a carmaker, an industrial group, a data center operator or any buyer outside personal electronics.
2. Inferred

   China is more of an assembly floor than a customer here: about half of what Texas Instruments ships goes into China, but only about a fifth of its revenue comes from customers headquartered there, so much of what it ships is built into other companies' equipment in China and sold on by buyers based elsewhere.

   Because

   • Revenue from end customers headquartered in China was about 20 percent of revenue in 2025, while revenue from products shipped into China was about 50 percent. 41
   • The company books revenue by where its end customers are headquartered, which it calls where critical decisions are made, and on that measure China was 21 percent of 2025 revenue and the United States 38 percent. 3839
   • The gap cannot be a channel effect: more than 80 percent of revenue is sold direct and less than 20 percent through distributors. 3334
   Confidence 80 of 100Wrong if A filing that explains the gap between products shipped into China and revenue from customers headquartered in China by something other than manufacturing performed in China, or a year in which the two shares meet.
3. Inferred

   The fall in the Other line's operating profit says almost nothing about DLP chips, calculators and custom chips: it is mostly the place where the company books charges and gains that it keeps out of its segments.

   Because

   • Other's revenue rose 3.4 percent, by 32 million dollars, while its operating profit fell 198 million. 6676
   • The company says Other includes items it does not use in evaluating the results of, or allocating resources to, its segments, naming acquisition, integration and restructuring charges, litigation expenses, environmental costs, insurance settlements and gains and losses on asset dispositions. 77
   • In the segment table the whole 117 million dollars of restructuring charges and other items sits in Other, and the 124 million credit of the year before sat there too. 7855
   Confidence 85 of 100Wrong if A year in which the Other line's operating profit falls sharply while restructuring charges and other corporate items booked there are nil.
4. Inferred

   Texas Instruments holds on its own books the buffer stock that a distributor heavy rival would keep in the channel, which is why its inventory is deep by its own history and why its reported revenue tracks what customers actually build.

   Because

   • More than 80 percent of 2025 revenue was sold direct, including TI.com, and less than 20 percent went through distributors. 3334
   • Its stated strategy is to build ahead of demand the broad based products that are used across many applications and customers and have low risk of obsolescence. 83
   • It ended 2025 with 4.80 billion dollars of inventory, 222 days of it, against 241 days a year earlier. 84
   • It names the timing of customer or distributor inventory adjustments among the things that may hurt its results. 85
   Confidence 65 of 100Wrong if A filing in which distributor sales return to more than a third of revenue, or one that attributes a revenue swing mainly to distributor inventory adjustments rather than to end demand.