Future Growth Expectations
Q: When will TI see above-seasonal growth to reach prior levels?
A: TI expects recovery in personal electronics, enterprise systems, and communication systems to continue, but significant growth requires the industrial and automotive markets to join. The industrial market remains down over 30% from its peak, and while automotive in China is strong, the rest of the market is still searching for a bottom. TI cannot predict the exact timing for above-seasonal growth but anticipates improvement when all markets align. -

Automotive Growth in China
Q: Why did auto sales grow despite market weakness?
A: Automotive revenue grew 7-8%, driven by strong growth in China, particularly in EVs where TI's content is expanding. Automotive revenue in China increased 20% in Q2 and another 20% in Q3, reaching an all-time high. This momentum is expected to continue in China, even as the rest of the automotive market remains weak. -

Gross Margins and Loadings
Q: Are you reducing loadings due to gross margin decline?
A: With revenue decreasing in Q4, gross margins will decline. Depreciation is increasing, notably with the start of depreciation for the SM1 facility in October. TI has moderated factory loadings and expects them to decrease slightly in Q4 but will continue to grow inventory to support future demand. - -

Utilization Rates and Inventory
Q: How are you managing utilization and inventory amid uncertainty?
A: TI aims to support revenue growth by building inventory, expecting an increase of a few hundred million dollars in Q4. Factory loadings will slightly decrease, yet inventory will grow due to detailed planning by device. This inventory is considered low risk because it serves many customers and has a long life cycle. -

Strength in Personal Electronics
Q: Why is personal electronics strong despite weak PCs and phones?
A: Personal electronics revenue grew 30% sequentially in Q3, with growth across sectors including phones and notebooks. TI is recovering from a low point, having previously prioritized supply for industrial and automotive markets during shortages. The market may have bottomed cyclically, and TI is now able to win new sockets with improved supply. -

Chinese OEMs in Europe
Q: Are Chinese OEMs taking share in Europe affecting TI?
A: TI observes that Chinese OEMs and Tier 1 suppliers are gaining momentum globally, including in Europe. Their efficiency and competitive performance contribute to TI's growth in automotive in China, and this expansion may be reflected in other regions as well. -

China Rebound Elsewhere
Q: Will other regions see similar rebound as China?
A: TI expects all markets to recover eventually, but China experiences faster cycles due to quick design and inventory adjustments. The rest of the business has not yet shown the same rebound, but TI anticipates broader market alignment in the future. -

OpEx Outlook for 2025
Q: How will OpEx trend structurally in 2025?
A: TI will maintain disciplined investments, with R&D expenses continuing to grow to support future opportunities. SG&A will focus on efficiency, growing at a slower pace than R&D. Both are expected to grow below the rate of revenue growth, sustaining cost discipline. -

Customer Inventory Levels
Q: Do customers have more inventory than expected?
A: TI lacks visibility into customer inventory levels but believes customers are not building inventory due to high interest rates and year-end. With TI's strong inventory and low lead times, customers rely on TI for timely supply, reducing their need to hold excess inventory. -

Industrial Market Dynamics
Q: Are certain industrial sectors stronger or weaker?
A: The industrial market has declined for eight consecutive quarters since Q3 2022. Most sectors have found a bottom but remain at low levels. Factory automation and motor drives are still declining, while appliances and power delivery show some growth. Overall, weakness persists in the industrial sector. -

Auto and Industrial Growth Prospects
Q: Do you still see auto and industrial as double-digit growers?
A: TI continues to view both automotive and industrial markets as strong growth areas. Automotive is expected to sustain double-digit growth in the next 5-10 years, driven by increasing electronic content per vehicle, especially in EVs. Industrial growth is seen as a multi-decade opportunity, with TI still in the early stages across many sectors. -

China Strength Beyond Auto
Q: Is China strength seen outside automotive?
A: While TI's growth in China is primarily driven by automotive, particularly EVs, there is also momentum in personal electronics off a low base. However, industrial markets in China have not recovered and remain about 40% below their peak, indicating limited strength outside automotive. -

Embedded Market vs. Analog
Q: Why is embedded weaker than analog?
A: TI is pleased with the progress in embedded processing, which focuses on higher average selling prices and longer design cycles. The downturn in embedded began later than analog, around mid-2023, but TI sees strong momentum and is optimistic about future growth in this area. -

Pacing of Orders
Q: Have you seen any acceleration or deceleration in orders?
A: Order rates behaved normally, increasing each month during the quarter without significant acceleration or deceleration. TI's low lead times and robust inventory mean customers place orders as needed, resulting in low visibility but consistent supply. -

Seasonality in Q1
Q: What is typical seasonality for Q1 vs. pre-COVID?
A: Historically, the first quarter is seasonally weaker for TI, typically flat to slightly down, similar to the fourth quarter. This pattern was consistent even before COVID-19, with stronger seasons in the second and third quarters. -

Enterprise, PE, Comm Momentum
Q: Are enterprise, PE, comm markets improving?
A: All three markets are showing strong sequential growth: personal electronics up 30%, enterprise systems up 20%, and communications up 25% in Q3. These markets are recovering from low levels, and although still below previous peaks, TI expects the momentum to continue. -

Industrial Market Stabilization
Q: Is the industrial market stabilizing or worsening?
A: Most industrial sectors have stabilized, hovering at low levels after continuous declines since Q3 2022. However, factory automation and motor drives continue to decline. TI believes recovery is due but has not observed it yet. -

Customers Waiting Due to Macros
Q: Are customers delaying orders due to macro factors?
A: TI does not sense that customers are delaying orders in anticipation of macroeconomic changes like interest rates or elections. Customers order as needed, relying on TI's strong inventory and low lead times, and TI intends to support them through the next cycle. -