Texas Instruments
A cost-advantaged analog tollbooth compounding behind industrial and auto electrification
Texas Instruments is the global leader in broad-based analog and embedded semiconductors with deep design-in stickiness, a uniquely scaled 300mm internal manufacturing base, and a product catalog exceeding 80,000 parts serving more than 100,000 customers.
Its moat rests on switching costs from long-lived design-ins, structural cost advantages from 300mm analog production, and efficient scale in fragmented end markets such as industrial and automotive, which together represented roughly 69% of 2024 revenue.
The firm is expanding U.S. capacity with a multi-fab buildout supported by CHIPS Act incentives, reinforcing supply dependability and cost leadership for decades. The near-term trade-off is free cash flow compression from elevated capital expenditures while new fabs ramp.
Over the trailing 12 months to Q3 2025, TI generated about 6.9 billion dollars of cash from operations and 2.4 billion dollars of free cash flow including CHIPS proceeds, after approximately 4.8 billion dollars of capex.
Revenue has begun to recover, up 14% year over year in Q3 2025, but margins remain below peak as factory loadings and depreciation weigh. Our quality assessment is strong, but our valuation discipline relies on today’s free cash flow, which remains cyclically and investment-suppressed.
We therefore prefer patience and price discipline while recognizing the long-term compounding that the current investment cycle is designed to unlock.
Texas Instruments a-t-elle un rempart concurrentiel (moat) solide ?
Components and weights: Switching costs 35% (score 85). TI’s parts are designed into systems for many years and often tied to customer software on TI microcontrollers; redesign costs, requalification, and field risk make swapping difficult. Product lifecycles typically run 10 to 15 years, reinforcing stickiness. Cost advantage 35% (score 90).
TI leads 300mm analog wafer manufacturing, with cost per chip about 40% lower than 200mm. Internal sourcing is expanding toward ~95% by 2030 and GaN internal manufacturing capacity has been scaled, further strengthening structural cost economics. Efficient scale 20% (score 80).
Analog is fragmented and characterized by many niches with limited addressable capacity per product, where a broad, low-cost incumbent benefits from scale and long duration assets. Intangibles 7% (score 80).
Strong brand, deep field application support, and TI.com direct channel serving 100,000-plus customers with fast fulfillment add soft power to retention. Network effects 3% (score 20). Minimal classic network effects. Weighted moat score results in the low-to-mid 80s and is durable given captive 300mm fabs, U.S. siting, and long product lives.
Risks: analog commoditization in select categories, overbuild or underutilization pressure on margins during downturns, and geopolitical or tariff frictions given 19% revenue exposure to China.
Texas Instruments a-t-elle un pricing power dans son secteur ?
Evidence: gross margins remain structurally high through cycles relative to peers, supported by 300mm cost per die advantages and a catalog of differentiated power and signal chain parts where bill-of-material cost is small relative to system value.
In tight cycles TI has historically realized better pricing; in slack cycles, structural costs preserve margins. Recent margin compression is primarily from planned depreciation and reduced factory loadings rather than broad price erosion. TI’s direct channel and broad portfolio enhance mix management.
Latent power remains as industrial and automotive content per unit rises, and TI’s growing presence in data center power and sensing adds higher-value sockets. Risks: price competition in commoditizing categories, customer dual-sourcing, and auto OEM pricing pressure.
Quelle est la prévisibilité de l'activité de Texas Instruments ?
Positives: the business is predominantly catalog analog and embedded with long lifecycles, multi-year design-ins, and diversified customers. Industrial and automotive together were roughly 69% of 2024 revenue, providing secular tailwinds from electrification, automation, and content growth.
TI reported broad-based sequential growth in 2025 as the cycle turned, with Q3 2025 revenue up 14% year over year. Negatives: analog is cyclical with inventory corrections and factory loading swings, and geopolitical or tariff changes introduce forecasting uncertainty.
TI cited reduced loadings and recorded restructuring charges while closing remaining 150mm sites, which can temporarily cloud near-term gross margin predictability. Geographic mix includes about 19% of revenue from China, adding macro policy risk. Overall, medium-high predictability over multi-year horizons, medium in any single year.
Texas Instruments est-elle financièrement solide ?
Balance sheet and cash generation: as of Q3 2025 TI had approximately 14.05 billion dollars of total debt and about 5.19 billion dollars of cash and short-term investments, implying net debt near 8.9 billion dollars.
TTM cash from operations was 6.9 billion dollars against about 4.8 billion dollars of capex and 2.4 billion dollars of free cash flow including CHIPS proceeds. 2024 EBIT covered interest by over 10 times, and the credit profile is investment-grade. Liquidity is strong with an undrawn revolver.
The main near-term financial risk is capex intensity during ramp years, which depresses free cash flow and elevates depreciation. However, the CHIPS ITC and proposed direct funding offset a portion of the burden, and capex is modular. Inventory days normalized to 215 in Q3 2025. Overall resilience through cycles remains high.
Quelle est l'efficacité de la stratégie d'allocation de capital de Texas Instruments ?
Philosophy and record: management focuses on long-term free cash flow per share growth, with three pillars of a great business model, disciplined capital allocation, and efficiency. Over the last 12 months TI returned 6.6 billion dollars to owners and invested 4.8 billion dollars in capex.
The dividend has been raised for 21-plus consecutive years, and 2024 saw a 5% increase to 1.36 dollars per quarter, with 2025 dividends continuing and share repurchases resuming as capacity investments progressed. SBC dilution is managed with an explicit target of under 2% net annual dilution.
Constructive critique: the current capex cycle is unusually heavy; activist engagement in 2024 pressed for more dynamic capacity management and a path to higher FCF per share by 2026. We view the spend as moat-accretive and U.S.-sited, but we monitor utilization discipline and the cadence of buybacks while FCF is temporarily suppressed.
Texas Instruments a-t-elle une direction de haute qualité ?
Leadership: CEO Haviv Ilan, a 26-year TI veteran and former COO, succeeded Rich Templeton in 2023 and will become chairman effective January 2026 following Templeton’s retirement as chair. CFO Rafael Lizardi is a long-tenured insider with consistent IR transparency.
Governance and alignment appear solid, though insider equity ownership is modest given TI’s scale. Operational execution through a large U.S. capacity build, including the Sherman and Lehi fabs, has been steady with clear communication on loadings, depreciation, and CHIPS accounting. Cultural continuity and internal promotions support consistency.
We score management as strong, with conservative communication and long-term orientation.
Texas Instruments est-elle une entreprise de qualité ?
Texas Instruments est une entreprise de qualité a good avec un score de qualité de 84/100
- End-market depth and longevity: industrial 34% and automotive 35% of 2024 revenue drive multi-year, design-in driven demand with typical product lifecycles of 10 to 15 years, supporting resilience and switching costs.
- Structural cost advantage: TI’s 300mm analog wafer production is about 40% cheaper per chip than 200mm peers, a durable edge that scales as new U.S. fabs ramp.
- Capacity and supply reliability: more than 60 billion dollars of planned U.S. investment across seven fabs, including Sherman SM1 initial production and CHIPS support of up to 1.6 billion dollars plus 6 to 8 billion dollars in ITC, anchor dependable domestic supply.
- Owner orientation with a balance: 21-plus years of dividend increases and ongoing repurchases alongside elevated strategic capex; TI returned 6.6 billion dollars to owners over the last 12 months while investing 4.8 billion dollars in capex.
- TTM economics to anchor valuation: as of Q3 2025 TTM cash from operations was 6.9 billion dollars and free cash flow 2.4 billion dollars including CHIPS proceeds. Our fair multiple uses TTM FCF and a risk-free check, with an added discussion of near-term capex distortion.
Quelle est le prix juste de l'action Texas Instruments ?
Texas Instruments est-elle un bon investissement à $192 ?
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