Texas Instruments

Latest Financial State — Q3 2026

Q3 2026 revenue was $6.055B, operating profit $2.874B, net income $2.425B and diluted EPS $2.62. [S2]

Segment results:

Analog              $4.911B revenue / $2.505B operating profit
Embedded              $858M revenue /   $227M operating profit
Other                 $286M revenue /   $142M operating profit

Analog grew 32% year over year and Embedded 21%. Management described broad growth across industrial, automotive and data center. [S46]

Q4 guidance was $5.8B–$6.3B revenue and $2.45–$2.79 EPS. [S45]

Why Analog Is Different

Analog semiconductors perform physical/electrical functions: voltage regulation, battery management, amplification, conversion, isolation, interface and sensing. Almost every electronic system needs multiple analog chips.

Unlike a flagship processor, an analog part often does not become obsolete because a newer transistor node appears. A qualified amplifier or power regulator can stay in a customer design for many years. This supports long product lives, long inventory usefulness and high cumulative returns on one design/R&D investment.

Embedded Processing Economics

Embedded products provide control and computation through MCUs, processors, connectivity and radar. Customer-written software creates switching cost. Once a factory controller or vehicle ECU has years of validated code, changing the MCU means more than swapping a chip: software, safety, testing and tools may need rework. [S11][S12]

2025 End-Market Mix

TI's 2025 market mix was approximately Industrial 33%, Automotive 33%, Data Center 9%, Personal Electronics 21% and Communications Equipment 3%. [S42]

Industrial + Automotive + Data Center represented about 75% of revenue and receive additional strategic emphasis because semiconductor content and product lifetimes can be attractive.

The Long-Tail Portfolio

The portfolio has more than 80,000 products. [S8][S9] A customer may use TI for an MCU, multiple regulators, an ADC, an amplifier, isolation and interface parts in one design. Breadth raises the probability that TI participates in more sockets without requiring any single chip to dominate company revenue.

This long tail reduces dependence on one end customer or one product cycle. The 2025 report says about half of revenue came from customers outside the largest 50. [S41]

Direct Customer Relationships

More than 80% of 2025 revenue was direct, versus roughly one-third in 2019. [S7][S41]

TI invested in TI.com, order fulfillment, inventory programs, logistics and direct sales. The goal was to see more design activity directly and sell more TI parts into each design. This gives TI better demand information and pricing/customer insight, but also requires TI to operate more channel infrastructure itself.

Internal Manufacturing

TI's manufacturing strategy is unusually integrated. It operates 15 manufacturing sites and targets more than 95% internally manufactured wafers by 2030, with more than 80% on 300mm. [S19][S40]

The advantage is lower structural cost and greater supply control. The cost is fixed assets: when demand is weak, depreciation and underutilization pressure margins.

300mm Footprint

Richardson: RFAB1 and RFAB2 are in production. RFAB1 pioneered 300mm analog manufacturing. [S21]

Lehi: LFAB1 is in production; LFAB2 is under construction. [S22]

Sherman: SM1 entered production in December 2025; the site can ultimately host four connected fabs and SM2 construction has advanced. [S20][S24]

TI's long-term U.S. manufacturing plan contemplates more than $60B of potential investment across Texas and Utah sites. [S23]

Why 300mm Can Lower Cost

A 300mm wafer has much more surface area than a 200mm wafer. If a process/product can migrate efficiently, more die are produced per wafer and automation/fixed factory cost is spread across more chips.

Analog economics are especially suited to this because products can run for years on defined process technologies. TI can invest once in a manufacturing platform and reuse it across thousands of products.

Capex Cycle and FCF Recovery

2025 cash flow from operations was $7.153B, capex $4.550B and free cash flow under TI's definition $2.938B after CHIPS proceeds. [S47]

For the trailing twelve months ending Q3 2026, CFO rose to $9.896B, capex fell to $2.578B and free cash flow rose to $8.422B after $1.104B of CHIPS incentive proceeds. [S4][S48]

The strategic sequence is:

Inventory Strategy

Year-end 2025 inventory was $4.80B and days inventory 222. [S39]

TI intentionally holds more inventory because many Analog/Embedded products have long lives. Inventory lets TI support fragmented customers quickly when demand rebounds. The cost is working capital and the risk that forecasts/product lifecycles are wrong.

Gross Margin and Factory Loading

Q3 2026 gross profit was $3.887B on $6.055B revenue, about 64.2% gross margin. [S2]

Factory loading matters because internal manufacturing has substantial fixed cost. In a downturn, lower utilization raises unit cost. In recovery, higher volume can produce strong operating leverage as the same factory depreciation/overhead is spread across more units.

Automotive

Automotive represented about 33% of 2025 revenue. [S42] Semiconductor content rises through EV power conversion, battery management, radar, ADAS, networking, body electronics and safety.

TI's 2026 portfolio included high-performance automotive SoCs, 8x8 4D imaging radar and 10BASE-T1S automotive Ethernet. [S14]

Industrial

Industrial represented about 33% of 2025 revenue. [S42] It spans automation, robotics, energy infrastructure, medical, aerospace/defense, buildings and test/measurement. Long equipment lives and fragmented customers fit TI's catalog, inventory and direct-channel strengths.

Data Center

Data Center represented about 9% of 2025 revenue after TI separated it from the old enterprise-systems category. [S42]

AI servers need power conversion, hot-swap protection, sensing, clocks, isolation and control around the GPU/CPU. TI can benefit from AI infrastructure without making the accelerator itself.

Capital Allocation

TI says long-term free cash flow per share is its ultimate value metric. It invests first in competitive advantages such as R&D and manufacturing, then returns free cash flow to owners over time.

TTM Q3 2026: dividends $5.174B, repurchases $0.636B, total cash returned $5.810B. [S44]

Silicon Labs Pending Acquisition

In February 2026 TI agreed to acquire Silicon Labs for $231/share, about $7.5B enterprise value. [S35] Silicon Labs adds about 1,200 wireless-connectivity products. TI targets roughly $450M of annual manufacturing/operational synergies within three years post-close.

At Sept. 30, 2026 the deal was still pending, expected to close in H1 2027 subject to approvals. [S36]

The strategic fit is direct:

Money Flow and the Cost of Serving Designs

The flow is an explanation of the model, not a claim that cash and accounting revenue arrive simultaneously in every transaction. Receivables, inventory and payment timing can separate earnings from cash.

An attractive design can generate repeat shipments over years, but it is not a guaranteed subscription. Developing and maintaining the product, supplying samples, supporting software and preserving qualified routes all consume resources. The whole lifetime relationship matters more than one unit's apparent gross profit.