Texas Instruments Incorporated

What they do

Texas Instruments designs and manufactures semiconductors sold worldwide, with operations in more than 30 countries. The company operates two reportable segments: Analog and Embedded Processing, with remaining activities reported in Other. It owns and operates its own manufacturing, process, and packaging technology, including 300mm wafer production, and also uses outside foundries and subcontractors.

Revenue drivers

• Analog — One of two reportable segments; manufactures analog semiconductors for a broad range of applications, serving industrial, automotive, and data center markets.
• Embedded Processing — The second reportable segment; includes microcontrollers and processors, with LFAB facility ramping to support growth.
• Industrial, automotive, and data center markets — Strategically emphasized markets expected to provide the best long-term growth opportunities; led growth in Q2 2026.

Recent performance

In Q2 2026, Texas Instruments reported revenue of $5.46 billion, up 23% from Q2 2025, and net income of $1.98 billion, up 53% year-over-year. Operating profit was $2.31 billion, a 48% increase. Earnings per share were $2.14, including a 5-cent benefit. Cash flow from operations for the trailing 12 months was $8.67 billion, and free cash flow was $6.53 billion, representing 33.6% of revenue.

Strategy

Texas Instruments aims to maximize long-term free cash flow per share growth through a business model focused on analog and embedded processing, disciplined capital allocation, and efficiency. It invests in manufacturing and technology to lower costs and control supply chain, with a focus on 300mm wafer production. The company returns cash to shareholders through dividends and share repurchases, and views acquisitions as opportunities to meet financial and strategic objectives.

Risks

• Geopolitical and trade tensions — Global operations, especially U.S.-China tensions, could impose tariffs, import/export restrictions, and sanctions affecting semiconductor sales and supply chains.
• China revenue concentration — Revenue from end customers headquartered in China was about 20% of 2025 revenue, and products shipped into China represented about 50% of 2025 revenue, creating exposure to China-specific risks.
• Semiconductor cycle volatility — The industry experiences cycles of tight supply and surplus inventory, which can impact factory loadings and profit margins.
• Macroeconomic weakness — A potential downturn could affect the performance of the company and its customers, impacting demand for semiconductors.

Outlook

Management expects third quarter 2026 revenue in the range of $5.65 billion to $6.15 billion, with earnings per share between $2.23 and $2.57. The company continues to invest in manufacturing capacity, including LFAB, and expects factory loadings to increase over time. It remains focused on strengthening competitive advantages and long-term free cash flow per share growth.