| Geographical Segment | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **United States** ($ million) | N/A | **555**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **715**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **630**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **1,288**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **1,408**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **1,639**  **[0000097476-24-000042_txn-20240930.htm:5]**  |
| **China** ($ million) | N/A | **1,831**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **1,820**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **1,880**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **623**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **745**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **823**  **[0000097476-24-000042_txn-20240930.htm:5]**  |
| **Rest of Asia** ($ million) | N/A | **549**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **534**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **571**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **401**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **417**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **431**  **[0000097476-24-000042_txn-20240930.htm:5]**  |
| **Europe, Middle East, and Africa** ($ million) | N/A | **986**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **956**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **952**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **955**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **898**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **880**  **[0000097476-24-000042_txn-20240930.htm:5]**  |
| **Japan** ($ million) | N/A | **289**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **349**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **338**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **330**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **292**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **313**  **[0000097476-24-000042_txn-20240930.htm:5]**  |
| **Rest of World** ($ million) | N/A | **169**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **157**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **161**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **64**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **62**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **65**  **[0000097476-24-000042_txn-20240930.htm:5]**  |
| **Total Revenue** ($ million) | N/A | **4,379**  **[0000097476-23-000025_txn-20230331.htm:5]**  | **4,531**  **[0000097476-23-000035_txn-20230630.htm:5]**  | **4,532**  **[0000097476-23-000041_txn-20230930.htm:5]**  | N/A | **3,661**  **[0000097476-24-000021_txn-20240331.htm:4]**  | **3,822**  **[0000097476-24-000030_txn-20240630.htm:5]**  | **4,151**  **[0000097476-24-000042_txn-20240930.htm:5]**  |

af1a9e6f8d7e08b4f93fc4e1bb956ded41a4f3f39159efdfdd9c5823c9fd41d9

d68702b63fe633245fb7213cddfe3d71bf262b09ad225e44a99490f36678e981

99883c4f5b869fdc467b43bd29c42ffcbdc52bb69f81746f40b053b2719f077b

Texas Instruments (TXN) designs and manufactures semiconductors, which are sold to electronics designers and manufacturers globally. The company operates primarily through two reportable segments: Analog and Embedded Processing, with additional activities reported under "Other" **[0000097476-24-000007_txn-20231231.htm:40]** **[0000097476-24-000021_txn-20240331.htm:4]** **[0000097476-24-000007_txn-20231231.htm:6]**. Texas Instruments focuses on industrial and automotive markets, which together represented about 75% of its revenue in 2023 **[0000097476-24-000012_txn-20240312.htm:46]** **[TXN_3399421_1]**.

1. **Analog** - Designs and produces semiconductors used to manage power and convert real-world signals into digital data, including Power and Signal Chain product lines.
   - **Power** - Manages power in electronic devices.
   - **Signal Chain** - Converts real-world signals into digital data.
2. **Embedded Processing** - Develops microcontrollers, digital signal processors, and applications processors that serve as the digital "brains" of electronic equipment, particularly in industrial and automotive markets.
   - **Microcontrollers** - Provides control functions in electronic devices.
   - **Digital Signal Processors** - Processes digital signals for various applications.
   - **Applications Processors** - Powers complex applications in electronic devices.
3. **Other** - Includes DLP® products, calculators, and custom ASIC products.
   - **DLP® Products** - Offers digital light processing technology.
   - **Calculators** - Manufactures calculators for educational and professional use.
   - **Custom ASIC Products** - Designs custom application-specific integrated circuits.

849a985fbe57669d3bc84f5840c90bdfb6d03ad38ab785e51b01fb219fc7cb50

| Segment/Quarter                  | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 |
|----------------------------------|---------|---------|---------|---------|---------|---------|---------|---------|
| **Analog (in millions)**         | $3,558  **[0000097476-23-000003_q42022txnex99-er1.htm:3]** **[0000097476-23-000003_q42022txnex99-er1.htm:3]**  | $3,289  **[0000097476-23-000025_txn-20230331.htm:14]** **[0000097476-23-000025_txn-20230331.htm:14]**  | $3,278  **[0000097476-23-000035_txn-20230630.htm:16]** **[0000097476-23-000035_txn-20230630.htm:16]**  | $3,353  **[0000097476-23-000041_txn-20230930.htm:16]** **[0000097476-23-000041_txn-20230930.htm:16]**  | $3,120  **[0000097476-24-000004_q42023txnex99-er1.htm:3]** **[0000097476-24-000004_q42023txnex99-er1.htm:3]**  | $2,836  **[0000097476-24-000021_txn-20240331.htm:14]** **[0000097476-24-000021_txn-20240331.htm:14]**  | $2,928  **[0000097476-24-000030_txn-20240630.htm:16]** **[0000097476-24-000030_txn-20240630.htm:16]**  | $3,223  **[0000097476-24-000042_txn-20240930.htm:16]** **[0000097476-24-000042_txn-20240930.htm:16]**  |
| **Embedded Processing (in millions)** | $837  **[0000097476-23-000003_q42022txnex99-er1.htm:3]** **[0000097476-23-000003_q42022txnex99-er1.htm:3]**  | $832  **[0000097476-23-000025_txn-20230331.htm:14]** **[0000097476-23-000025_txn-20230331.htm:14]**  | $894  **[0000097476-23-000035_txn-20230630.htm:16]** **[0000097476-23-000035_txn-20230630.htm:16]**  | $890  **[0000097476-23-000041_txn-20230930.htm:16]** **[0000097476-23-000041_txn-20230930.htm:16]**  | $752  **[0000097476-24-000004_q42023txnex99-er1.htm:3]** **[0000097476-24-000004_q42023txnex99-er1.htm:3]**  | $652  **[0000097476-24-000021_txn-20240331.htm:14]** **[0000097476-24-000021_txn-20240331.htm:14]**  | $615  **[0000097476-24-000030_txn-20240630.htm:16]** **[0000097476-24-000030_txn-20240630.htm:16]**  | $653  **[0000097476-24-000042_txn-20240930.htm:16]** **[0000097476-24-000042_txn-20240930.htm:16]**  |
| **Other (in millions)**          | $275  **[0000097476-23-000003_q42022txnex99-er1.htm:3]** **[0000097476-23-000003_q42022txnex99-er1.htm:3]**  | $258  **[0000097476-23-000025_txn-20230331.htm:14]** **[0000097476-23-000025_txn-20230331.htm:14]**  | $359  **[0000097476-23-000035_txn-20230630.htm:16]** **[0000097476-23-000035_txn-20230630.htm:16]**  | $289  **[0000097476-23-000041_txn-20230930.htm:16]** **[0000097476-23-000041_txn-20230930.htm:16]**  | $205  **[0000097476-24-000004_q42023txnex99-er1.htm:3]** **[0000097476-24-000004_q42023txnex99-er1.htm:3]**  | $173  **[0000097476-24-000021_txn-20240331.htm:14]** **[0000097476-24-000021_txn-20240331.htm:14]**  | $279  **[0000097476-24-000030_txn-20240630.htm:16]** **[0000097476-24-000030_txn-20240630.htm:16]**  | $275  **[0000097476-24-000042_txn-20240930.htm:16]** **[0000097476-24-000042_txn-20240930.htm:16]**  |

c9bade22ca8ac1edb4b5ac915d695ed64f23997a705833ee5afec5c7938a4596

1. With inventory levels reaching $4.3 billion and plans to further increase inventories despite moderating factory loadings, how do you intend to mitigate the risks of excess inventory amid cyclical uncertainty, and what impact might this have on your margins and cash flow?

2. Embedded Processing revenue declined 27% year-over-year; can you elaborate on the specific strategies you're implementing to address this significant underperformance, and when do you anticipate seeing a turnaround in this segment?

3. You've noted that while China has experienced strong sequential growth, other regions have not followed suit due to asynchronous market behaviors; what actions are you taking to stimulate demand recovery in non-Chinese markets, and when do you expect these markets to rebound?

4. Considering that high inventory levels and low customer order visibility could lead to demand forecasting challenges, how are you managing production planning to prevent overproduction and potential inventory write-downs?

5. Operating profit decreased by 18% compared to the same quarter last year, and net income similarly declined; what initiatives are in place to address these profitability concerns, and how do you plan to improve margins in light of declining revenues?

8006b4da7287524ceabb571022ec4b1e39c091bf6e5597468f4c076290d7074f

Analog

Embedded Processing

Other

Total Revenue

85154a1eec2b123ec32a1f4f43c3306bdf9859136d196e5b450583bda0d7bb62

Total Revenue [USD, Millions]

Cost of Goods Sold (COGS) [USD, Millions]

Selling, General, and Administrative Expenses (SG&A) [USD, Millions]

Research and Development (R&D) [USD, Millions]

Depreciation and Amortization (D&A) [USD, Millions]

Interest Expense [USD, Millions]

Operating Income (EBIT) [USD, Millions]

Net Income [USD, Millions]

Earnings Per Share (EPS) - Basic [USD]

Earnings Per Share (EPS) - Diluted [USD]

83fd515ef2b2910895dfbff356965049c8b7aa3fc0383017ec5c8db39e8a9163

Adjustments for Non-Cash Items [USD, Millions]

Stock-Based Compensation [USD, Millions]

Changes in Working Capital [USD, Millions]

Capital Expenditures (CapEx) [USD, Millions]

Proceeds from Debt [USD, Millions]

Repayments of Debt [USD, Millions]

Share Repurchases [USD, Millions]

Dividend Payments [USD, Millions]

Net Change in Cash [USD, Millions]

a29ea5e5b561c7df8f6a28d76ce5a76f336a6cef9b936c1dafb665a6c36ce5c0

- **TI's Analog revenue grew 2% year-over-year in Q4 2024** after eight consecutive quarters of decline, signaling a recovery in demand for their analog products.  **[TXN_3413153_0]** ,  **[TXN_3413153_7]**
- **TI expects to receive $7.5 billion to $9.5 billion in total CHIPS Act funding over the life of the program**, which will support their investments in 300-millimeter manufacturing capacity and reduce future depreciation expenses, improving free cash flow.  **[TXN_3413153_10]**
- **TI's business in China grew mid-teens year-over-year in Q4 2024**, driven by strength in the automotive and personal electronics markets, indicating strong demand in a major market.  **[TXN_3413153_5]** ,  **[TXN_3413153_16]**

79f10a30a3a0f9621db60c4b6a4e086823eb0de632531edc705498965c3222d1

- **Gross profit margin is expected to decrease by a few hundred basis points in Q1 due to lower revenue, higher depreciation, and reduced factory loadings.**  **[TXN_3413153_3]**
- **Inventory levels have increased to $4.5 billion, with days increasing to 241; management expects inventories to rise by an additional \$100 million or more in Q1, indicating potential oversupply and demand uncertainty.**  **[TXN_3413153_3]** **[TXN_3413153_13]**
- **The Embedded Processing segment is experiencing sharp revenue and margin declines, disproportionately affected by underutilization at the Lehi factory.**  **[TXN_3413153_4]**

32e8dd727e37179709157447f7590254b17664ae76d256efa3c303bb9fcb36c4

1. **CHIPS Act Funding Impact**  
   **Q:** Have you mapped out the $1.6B CHIPS Act grants over 2025-26 and updated free cash flow per share?  
   **A:** The Department of Commerce awarded us up to **$1.6 billion** in CHIPS Act funding.  **[TXN_3413153_10]**  Along with the ITC, we expect to receive **$7.5 to $9.5 billion** in total over the life of the program.  **[TXN_3413153_10]**  While we don't have specific details on cash payments yet, this funding decreases our expected depreciation.  **[TXN_3413153_10]**  For 2025, depreciation is now expected to be **$1.8 to $2 billion**, slightly down from previous expectations.  **[TXN_3413153_10]**  In 2026, we expect depreciation to be in the lower half of the **$2.3 to $2.7 billion** range.  **[TXN_3413153_10]** 

2. **Gross Margin Outlook**  
   **Q:** How should we think about gross margins beyond the March quarter?  
   **A:** Revenue remains the primary driver of gross margin.  **[TXN_3413153_11]**  We recommend modeling revenue and applying a **75% to 85%** fall-through rate.  **[TXN_3413153_11]**  Depreciation increases, which we've updated, should be adjusted in your calculations.  **[TXN_3413153_11]**  Factory loadings will impact margins; we expect a hit in Q1 due to underutilization but anticipate improvement as revenues grow.  **[TXN_3413153_11]** 

3. **China Sales and Market Dynamics**  
   **Q:** Can you address the sustainability of China longer term and any changes in dynamics there?  
   **A:** China is a crucial market, representing **20%** of world GDP and accounting for **20%** of our revenue in 2024.  **[TXN_3413153_16]**  Our business in China is healthy, particularly in automotive and personal electronics.  **[TXN_3413153_5]** **[TXN_3413153_16]**  We have not been notified of any investigations regarding product dumping.  **[TXN_3413153_16]**  We continue to compete effectively due to our broad portfolio and strong manufacturing capabilities.  **[TXN_3413153_16]** 

4. **Embedded Business Margins**  
   **Q:** What needs to be done to improve embedded margins?  
   **A:** Embedded is a business in transition.  **[TXN_3413153_9]**  Margins are under pressure due to revenue declines and underutilization of our LFAB facility, which disproportionately affects Embedded.  **[TXN_3413153_9]**  As we ramp up LFAB and move production internally, we expect margins to improve and contribute significantly to free cash flow per share.  **[TXN_3413153_9]** 

5. **Inventory Levels and Factory Loadings**  
   **Q:** Is there a near-term inventory target, and how are you managing factory loadings?  
   **A:** Our goal is to maintain high customer service levels while minimizing obsolescence.  **[TXN_3413153_13]**  We expect inventory levels to increase by **$100 million plus** in the first quarter.  **[TXN_3413153_13]**  To manage inventory, we are reducing factory loadings in Q1, which will impact gross margins by a few hundred basis points.  **[TXN_3413153_3]** **[TXN_3413153_13]** 

6. **Pricing Environment**  
   **Q:** Has the pricing environment changed meaningfully?  
   **A:** We haven't seen any significant change; pricing behaved as expected in 2024, declining low single digits per part per year.  **[TXN_3413153_6]**  The mix has shifted due to changes in revenue between industrial and personal electronics markets.  **[TXN_3413153_6]**  We anticipate similar pricing behavior across all geographies in 2025.  **[TXN_3413153_6]** 

7. **Market Outlook for End Markets**  
   **Q:** How do you expect end markets to play out this year?  
   **A:** Certain markets like personal electronics, enterprise, and communications are on a cyclical upturn.  **[TXN_3413153_8]**  However, industrial and automotive, which comprised **70%** of our business in 2024, haven't found the bottom yet.  **[TXN_3413153_8]**  We see points of strength, especially in China, but we'll have to wait and see how the year unfolds.  **[TXN_3413153_8]** 

8. **Capital Expenditure Plans**  
   **Q:** Is the depreciation guidance due to tax credits and grants, or lower CapEx?  
   **A:** The lower depreciation is a result of CHIPS Act funding and ITC benefits, not reduced CapEx.  **[TXN_3413153_15]**  We continue to expect **$5 billion** in CapEx for 2025.  **[TXN_3413153_15]**  Our capacity expansion plans remain on track, and we're executing them as previously outlined.  **[TXN_3413153_15]** 

9. **Competition and Market Share**  
   **Q:** Are there any changes in the competitive backdrop or market share gains?  
   **A:** We haven't observed significant changes; competition feels stable and remains intense during this down cycle.  **[TXN_3413153_14]**  We continue to compete effectively across all markets and geographies due to our strong portfolio and cost structure.  **[TXN_3413153_14]** 

10. **Customer Behavior and Demand Indicators**  
    **Q:** Have pushouts, cancellations, or changes in customer forecasts changed?  
    **A:** Cancellations remain at very low levels.  **[TXN_3413153_10]**  Turn orders are high as customers place orders at the last moment, and we fulfill them promptly due to our short lead times and product availability.  **[TXN_3413153_10]**  This trend contributed to our strong performance in the fourth quarter.  **[TXN_3413153_10]** 

aa9ba80c7158db314b5f17224e0c7594fde20136b2c6288297ab8c6f68133d04

58c5d392d0bd4d4bc20f46b55576a5f258b6e2b2c51e6af0a5431754ee66b0f6

United States

China

Rest of Asia

Asia (including China)

EMEA

Japan

Rest of World

0bac223e3077f41bf0d1497cd4e3921018a97a95af07446ff0a8901fc2abea33

23794d91c53ae875c8e247d72561e35d9d06ee07c70c9e0dbcc977a6d161504a

### Q3 2024 Earnings Call
- **Issued Period**: Q3 2024
- **Guided Period**: Q4 2024
- **Guidance**:
  - **Revenue**: $3.7 billion to $4 billion  **[TXN_3403206_2]** .
  - **Earnings per Share (EPS)**: $1.07 to $1.29  **[TXN_3403206_2]** .
  - **Effective Tax Rate**: About 13%  **[TXN_3403206_2]** .
  - **Gross Margins**: Expected to decrease due to lower revenue at the midpoint and increased depreciation, including the start of depreciation for the building and clean room for SM1 in October  **[TXN_3403206_4]** .
  - **Operating Expenses (OpEx)**: Expected to be flat to slightly up  **[TXN_3403206_4]** .

### Q2 2024 Earnings Call
- **Issued Period**: Q2 2024
- **Guided Period**: Q3 2024
- **Guidance**:
  - **Revenue**: $3.94 billion to $4.26 billion  **[TXN_3393964_2]** .
  - **Earnings per Share (EPS)**: $1.24 to $1.48  **[TXN_3393964_2]** .
  - **Effective Tax Rate**: Above 13%  **[TXN_3393964_2]** .
  - **Depreciation for 2024**: $1.5 billion to $1.6 billion  **[TXN_3393964_8]** .
  - **Depreciation for 2025**: $2 billion to $2.3 billion  **[TXN_3393964_8]** .
  - **Capital Expenditures (CapEx) for 2024**: $5 billion  **[TXN_3393964_20]** .

### Q1 2024 Earnings Call
- **Issued Period**: Q1 2024
- **Guided Period**: Q2 2024
- **Guidance**:
  - **Revenue**: $3.65 billion to $3.95 billion  **[TXN_3380281_1]** .
  - **Earnings per Share (EPS)**: $1.05 to $1.25  **[TXN_3380281_1]** .
  - **Effective Tax Rate**: About 13%  **[TXN_3380281_1]** .

### Q4 2023 Earnings Call
- **Issued Period**: Q4 2023
- **Guided Period**: Q1 2024
- **Guidance**:
  - **Revenue**: $3.45 billion to $3.75 billion  **[TXN_3370597_1]** .
  - **Earnings per Share (EPS)**: $0.96 to $1.16  **[TXN_3370597_1]** .
  - **Effective Tax Rate for 2024**: About 13%  **[TXN_3370597_1]** .

f172e7366d35b1d09f17a9ec9511b06a462a3689fb046416638247ebf21ab156

| Name                  | Position                                               | Start Date | Short Bio                                                                                                                                                                                                 |
|-----------------------|--------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| Haviv Ilan            | Director, President, and Chief Executive Officer       | 2023-04-01 | Haviv Ilan has been an employee of Texas Instruments for over 20 years, serving in senior roles since 2014. He became a director in 2021 and assumed the role of President and CEO on April 1, 2023  **[0000097476-24-000012_txn-20240312.htm:8]** **[0000097476-23-000017_txn-20230314.htm:9]** . |
| Rafael R. Lizardi     | Senior Vice President and Chief Financial Officer      | N/A        | Rafael R. Lizardi serves as the Senior Vice President and CFO of TXN. He has been an employee and executive officer of the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** .                                          |
| Ahmad S. Bahai        | Senior Vice President                                  | 2018       | Ahmad S. Bahai is a Senior Vice President at TXN. He became an executive officer in 2018 and has been with the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** **[0000097476-23-000007_txn-20221231.htm:9]** .                                                   |
| Mark S. Gary          | Senior Vice President                                  | 2020       | Mark S. Gary is a Senior Vice President at TXN. He became an executive officer in 2020 and has been with the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** **[0000097476-23-000007_txn-20221231.htm:9]** .                                                     |
| Hagop H. Kozanian     | Senior Vice President                                  | 2018       | Hagop H. Kozanian is a Senior Vice President at TXN. He became an executive officer in 2018 and has been with the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** **[0000097476-23-000007_txn-20221231.htm:9]** .                                                |
| Shanon J. Leonard     | Senior Vice President                                  | 2022       | Shanon J. Leonard is a Senior Vice President at TXN. He became an executive officer in 2022  **[0000097476-24-000007_txn-20231231.htm:9]** .                                                                                                          |
| Mark T. Roberts       | Senior Vice President                                  | 2021       | Mark T. Roberts is a Senior Vice President at TXN. He became an executive officer in 2021 and has been with the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** .                                                     |
| Amichai Ron           | Senior Vice President                                  | 2019       | Amichai Ron is a Senior Vice President at TXN. He became an executive officer in 2019 and has been with the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** .                                                         |
| Richard K. Templeton  | Director and Chairman of the Board                     | 2008       | Richard K. Templeton is a 40-year veteran of the semiconductor industry, having served 29 years at a senior level at TXN. He has been the company's Chairman since 2008  **[0000097476-24-000012_txn-20240312.htm:9]** **[0000097476-23-000017_txn-20230314.htm:10]** .                           |
| Cynthia Hoff Trochu   | Senior Vice President, Secretary, and General Counsel  | N/A        | Cynthia Hoff Trochu serves as Senior Vice President, Secretary, and General Counsel at TXN. She has been an employee and executive officer of the company for more than five years  **[0000097476-24-000007_txn-20231231.htm:9]** .                   |
| Christine A. Witzsche | Senior Vice President                                  | 2021       | Christine A. Witzsche is a Senior Vice President at TXN. She became an executive officer in 2021  **[0000097476-24-000007_txn-20231231.htm:9]** .                                                                                                     |
| Mohammad Yunus        | Senior Vice President                                  | 2024       | Mohammad Yunus is a Senior Vice President at TXN. He became an executive officer in 2024  **[0000097476-24-000007_txn-20231231.htm:9]** .                                                                                                             |
| Reginald DesRoches    | Board of Directors Member                              | 2024-03-01 | Reginald DesRoches has been a member of the Board of Directors at TXN since March 1, 2024. He is also the President of Rice University since 2022  **[0000097476-24-000012_txn-20240312.htm:5]** **[0001127602-24-008583_xslF345X02/form3.xml:0]** .                                                 |

67f57fa204e4a8bf75d86ecb590514182cd25b9b4dc08256fb63c14d1b2e8d49

| Program Details          | Program 1                  | Program 2                  |
|--------------------------|----------------------------|----------------------------|
| Approval Date            | September 20, 2018  **[0000097476-24-000042_txn-20240930.htm:23]**      | September 15, 2022  **[0000097476-24-000042_txn-20240930.htm:23]**      |
| End Date/Duration        | N/A                        | N/A                        |
| Total Additional Amount  | **$12.0 billion**  **[0000097476-24-000042_txn-20240930.htm:23]**       | **$15.0 billion**  **[0000097476-24-000042_txn-20240930.htm:23]**       |
| Remaining Authorization  | **$5.80 billion**  **[0000097476-24-000042_txn-20240930.htm:23]**       | **$15.0 billion**  **[0000097476-24-000042_txn-20240930.htm:23]**       |
| Details                  | Part of $20.80 billion remaining from both authorizations combined  **[0000097476-24-000042_txn-20240930.htm:23]**  | Part of $20.80 billion remaining from both authorizations combined  **[0000097476-24-000042_txn-20240930.htm:23]**  |

195e542a9bdf876726916468b35fba0c40c5a5c2aa00777e840ecc875203cb99

Texas Instruments Q4: Analog revenue up 2% YoY after 8 consecutive declines; China grew mid-teens. Up to $9.5B in CHIPS funding to bolster FCF. Q1 gross margin to dip on higher depreciation & underutilization. Inventory at $4.5B, days at 241—watch oversupply risks.

3b0f1e3c9f395f996a3648d398feec7718bf4c6add841e82a8ee74b8eb06c35e

**Quarterly guidance for Q1 2025:**
- **Revenue**: $3.74B to $4.06B  **[TXN_3413153_1]**  (raised from $3.7B to $4.0B  **[TXN_3403206_2]** )  
- **EPS**: $0.94 to $1.16  **[TXN_3413153_1]**  (lowered from $1.07 to $1.29  **[TXN_3403206_2]** )  
- **Gross margin**: Expected to decrease by a few hundred basis points  **[TXN_3413153_3]**  (no prior numeric guidance)  
- **Operating expenses (OpEx)**: Expected to increase by 3% to 5% from Q4 2024  **[TXN_3413153_3]**  (raised from “flat to slightly up”  **[TXN_3403206_4]** )  
- **Interest income**: Expected to decrease by about $50M  **[TXN_3413153_3]**  (no prior guidance)

**Annual guidance for 2025:**
- **Effective tax rate**: About 12%  **[TXN_3413153_1]**  (no prior guidance)  
- **Depreciation**: $1.8B to $2.0B  **[TXN_3413153_10]**  (no prior guidance)  
- **CapEx**: $5B  **[TXN_3413153_15]**  (no prior guidance)

**Annual guidance for 2026:**
- **Depreciation**: $2.3B to $2.7B  **[TXN_3413153_10]**  (no prior guidance)  
- **CapEx**: $2B to $5B  **[TXN_3413153_15]**  (no prior guidance)

370e4110546f9fd5c32de336454de10f4d151b41720db7460c215c1547b39759

| Name               | Start Date | End Date | Reason for Change |
|--------------------|------------|----------|-------------------|
| Ernst & Young LLP | 1952  **[0000097476-24-000007_txn-20231231.htm:65]**    | Present  | Current auditor   |

6c49fdca3f538eda252c04c1f43679ccccd4aa350198fa61840308b34cd5f558

89fed855cb1bf85e626012412e8b0ed66c79d601f0a2c6e94fb432be7ff2e045

- Total Revenue: $4,007 million (-2% YoY)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:1]** **[0000097476-24-000007_txn-20231231.htm:40]**   
- Analog: $3,174 million (+2% YoY)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:3]** **[0000097476-24-000007_txn-20231231.htm:40]**   
- Embedded Processing: $613 million (**-19% YoY**)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:3]** **[0000097476-24-000007_txn-20231231.htm:40]**   
- Other: $22 million (**-89% YoY**)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:3]** **[0000097476-24-000007_txn-20231231.htm:40]**   
- Operating Income (EBIT): $1,377 million (**-10% YoY**)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:1]** **[0000097476-25-000003_q42024txnex99-eredgar.htm:0]** **[0000097476-24-000007_txn-20231231.htm:37]** **[0000097476-24-000007_txn-20231231.htm:40]**   
- Net Income: $1,205 million (**-12% YoY**)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:1]** **[0000097476-25-000003_q42024txnex99-eredgar.htm:0]** **[0000097476-24-000007_txn-20231231.htm:37]** **[0000097476-24-000007_txn-20231231.htm:40]**   
- EPS (Diluted): $1.30 (**-13% YoY**)  **[0000097476-25-000003_q42024txnex99-eredgar.htm:1]** **[0000097476-25-000003_q42024txnex99-eredgar.htm:0]** **[0000097476-24-000007_txn-20231231.htm:37]** **[0000097476-24-000007_txn-20231231.htm:40]**   

20d4a00164fbf13e206072cb782c2fe393c960e6aad81a8ec54764942a891a21

c49a0cdff039f7df83835b68ab0a4fe92d4e0d3e1fc121cf4f5a59423fbfb4a2

| Year  | Amount Due (in millions) | Debt Type          | Interest Rate (%) | % of Total Debt                                                                 |
|-------|---------------------------|--------------------|-------------------|---------------------------------------------------------------------------------|
| 2024  | 300                       | Notes             | 4.70             | 2.1% = (300 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                            |
| 2025  | 750                       | Notes             | 1.375            | 5.4% = (750 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2026  | 500                       | Notes             | 1.125            | 3.6% = (500 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2027  | 650                       | Notes             | 4.60             | 4.6% = (650 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2027  | 500                       | Notes             | 2.90             | 3.6% = (500 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2028  | 700                       | Notes             | 4.60             | 5.0% = (700 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2029  | 650                       | Notes             | 4.60             | 4.6% = (650 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2029  | 750                       | Notes             | 2.25             | 5.4% = (750 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2030  | 750                       | Notes             | 1.75             | 5.4% = (750 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2031  | 500                       | Notes             | 1.90             | 3.6% = (500 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2032  | 400                       | Notes             | 3.65             | 2.9% = (400 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2033  | 950                       | Notes             | 4.90             | 6.8% = (950 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2034  | 600                       | Notes             | 4.85             | 4.3% = (600 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2039  | 750                       | Notes             | 3.875            | 5.4% = (750 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2048  | 1,500                     | Notes             | 4.15             | 10.7% = (1,500 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                        |
| 2051  | 500                       | Notes             | 2.70             | 3.6% = (500 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2052  | 300                       | Notes             | 4.10             | 2.1% = (300 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2053  | 650                       | Notes             | 5.00             | 4.6% = (650 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2054  | 750                       | Notes             | 5.15             | 5.4% = (750 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                           |
| 2063  | 1,550                     | Notes             | 5.05             | 11.1% = (1,550 / 14,000) * 100 **[0000097476-24-000042_txn-20240930.htm:10]**                                        |

976b6def199b31520fc724fc5e45eadd917748c25137c0dd492f98dab64c436d

- **Texas Instruments is experiencing declines in key markets**, with the **industrial market down low single digits** and the **automotive market down mid-single digits** in Q2 2024. This marks the **third consecutive quarter of decline** in automotive revenue, which is **down about 13% from where the revenue peaked**.  **[TXN_3393964_19]**
- **The company is facing increased depreciation expenses** due to significant capital investments, which may pressure gross margins in the coming quarters. **Depreciation is expected to increase by approximately $100 million per quarter in 2024**, impacting profitability.  **[TXN_3393964_10]**
- **Embedded Processing revenue is declining**, with sequential declines and an accelerated year-over-year decline in Q2 2024. The embedded business is facing corrections as customers adjust their inventories, and it is also absorbing a **disproportionate amount of fixed costs**, posing a headwind to operating margins.  **[TXN_3393964_14]**

3cdcef26dc6a948f02c44fbd14b49238bb97f1f8d3fa594d7fd867c1c85c8c8e

- **Prolonged weakness in the industrial market:** Texas Instruments' industrial segment has experienced eight consecutive quarters of decline since Q3 2022, with revenue down more than **30%** from its peak, and a recovery has not yet been observed.  **[TXN_3403206_6]** **[TXN_3403206_15]**
- **Lack of visibility into customer demand and inventories:** Management has acknowledged limited visibility into customer demand, noting that customers are taking parts only when needed and are not building inventories, which could signal continued softness in demand.  **[TXN_3403206_20]** **[TXN_3403206_17]** **[TXN_3403206_18]**
- **Dependence on recovery in industrial and automotive markets:** While some markets like personal electronics, enterprise systems, and communication systems are recovering, TXN's reliance on the industrial and automotive markets—which are still declining or searching for a bottom outside of China—may hinder overall growth prospects.  **[TXN_3403206_6]** **[TXN_3403206_9]**

a1c57f78cec916951099c151707963793cb1691ae8a90b98744610f7bd2d0171

1. **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.  **[TXN_3403206_6]** 

2. **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.  **[TXN_3403206_3]** 

3. **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.  **[TXN_3403206_4]** **[TXN_3403206_7]** 

4. **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.  **[TXN_3403206_7]** 

5. **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.  **[TXN_3403206_5]** 

6. **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.  **[TXN_3403206_8]** 

7. **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.  **[TXN_3403206_9]** 

8. **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.  **[TXN_3403206_10]** 

9. **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.  **[TXN_3403206_18]** 

10. **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.  **[TXN_3403206_15]** 

11. **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.  **[TXN_3403206_14]** 

12. **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.  **[TXN_3403206_11]** 

13. **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.  **[TXN_3403206_16]** 

14. **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.  **[TXN_3403206_17]** 

15. **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.  **[TXN_3403206_12]** 

16. **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.  **[TXN_3403206_13]** 

17. **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.  **[TXN_3403206_19]** 

18. **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.  **[TXN_3403206_20]** 

091b1635c814cfdef3926f01f134e6904c78370105f46817ff62ba920d204105

- **Texas Instruments is experiencing significant growth in key markets as the cyclical recovery continues**  **[TXN_3403206_1]** **[TXN_3403206_6]** :
- **TI is well-prepared for the upturn with strong inventory levels and low lead times**, enabling excellent customer service  **[TXN_3403206_20]** **[TXN_3403206_7]** **[TXN_3403206_19]** **[TXN_3403206_18]** :
- **TI remains committed to long-term growth and returning value to shareholders**  **[TXN_3403206_20]** **[TXN_3403206_2]** :

52b4101707314c751f4d9e09ea2ae9185f2578a4e923a5edb33fcf2337e20df6

1. **China Market Recovery**  
   **Q:** How did China revenue perform this quarter?  
   **A:** TI's China business grew sequentially by **about 20%** compared to the first quarter, marking a strong recovery after **seven quarters of sequential decline**.  **[TXN_3393964_19]**  All markets in China, including automotive and industrial, showed strong growth between **15% and over 20%**, indicating customers have worked down their inventories and are now shipping to end demand.  **[TXN_3393964_19]** 

2. **Gross Margin Outlook**  
   **Q:** Are gross margins bottoming now?  
   **A:** Gross margins could be bottoming, depending on revenue trends.  **[TXN_3393964_10]**  Depreciation is expected to increase by **$100 million** per quarter next year, but as utilization rates rise and revenues grow, margins may improve.  **[TXN_3393964_10]**  With a fall-through of **75% to 85%** excluding depreciation, gross margins can be modeled accordingly.  **[TXN_3393964_10]** 

3. **CapEx and Long-Term Growth**  
   **Q:** What is the outlook for CapEx and long-term revenue growth?  
   **A:** TI remains committed to its CapEx strategy, supporting revenue growth and providing flexibility.  **[TXN_3393964_8]**  More details will be provided at the upcoming capital management call in August.  **[TXN_3393964_8]**  For 2024, depreciation is expected to be between **$1.5 billion and $1.6 billion**  **[TXN_3393964_8]** , and CapEx is planned at **$5 billion**.  **[TXN_3393964_20]** 

4. **Competition in China**  
   **Q:** Is increased Chinese capacity a concern for pricing and supply?  
   **A:** Competition in China has intensified over the past several years, with ambitious local competitors offering more than just simple parts.  **[TXN_3393964_6]**  Despite this, TI can compete and win business at attractive margins, aiming to continue gaining market share in China.  **[TXN_3393964_6]** 

5. **Embedded Processing Performance**  
   **Q:** Why did Embedded Processing revenue decline?  
   **A:** The decline is due to customers adjusting their inventories in industrial and automotive markets that peaked later.  **[TXN_3393964_14]**  However, the embedded business is strengthening, with an improved product portfolio and strong design win momentum in areas like real-time control for EVs, connectivity, and radar systems.  **[TXN_3393964_15]** 

6. **Industrial and Automotive Demand**  
   **Q:** Are industrial and automotive markets bottoming?  
   **A:** In industrial, about half the sectors are forming a bottom, while others continue to decline.  **[TXN_3393964_11]**  The automotive market has declined for three consecutive quarters, down about **13%** from its revenue peak, but the decline is shallow compared to other markets.  **[TXN_3393964_12]** 

7. **Bookings and Order Trends**  
   **Q:** Are bookings increasing month over month?  
   **A:** Revenue and orders increased throughout the quarter, which is typical for the second quarter.  **[TXN_3393964_11]**  Cancellations continue to decline, and lead times are stable, indicating supply and demand are becoming more balanced.  **[TXN_3393964_11]** 

8. **Customer Inventory Behavior**  
   **Q:** Will high inventory prevent future shortages?  
   **A:** TI's investments in capacity and inventory aim to improve customer service and prepare for future upturns.  **[TXN_3393964_17]**  By maintaining high service levels and short lead times, the company hopes to discourage customers from holding excess inventory.  **[TXN_3393964_18]** 

9. **ti.com Investments**  
   **Q:** What are the trends and investments in ti.com?  
   **A:** TI continues to invest strategically in ti.com to digitize customer interactions and improve service.  **[TXN_3393964_16]**  While orders through ti.com are down from their peak, its long-term value is significant, enabling customers to access inventory and automate ordering processes.  **[TXN_3393964_16]** 

10. **CHIPS Act Benefits**  
    **Q:** What's the update on CHIPS Act funding?  
    **A:** TI is still going through the process of obtaining CHIPS Act grants.  **[TXN_3393964_3]**  The company has accrued about **$1.8 billion** under the **25% investment tax credit**, which has begun reducing depreciation expenses.  **[TXN_3393964_3]**  TI received **$312 million** in cash benefits in the second quarter and expects another **$200 million** in the third quarter, totaling **$1 billion** for 2024.  **[TXN_3393964_3]** 

498eb53d890559fd6d29a4a54cb243adfd7616923b1f7a3d56eca9c6ca06e71a

- **Texas Instruments is investing $5 billion per year in capital expenditures over the next three years** to expand manufacturing capacity, positioning the company for future growth and strengthening its competitive advantages.  **[TXN_3380281_6]**
- **TI's unique "geopolitically dependable capacity" outside of China and Taiwan is in high demand**, especially from automotive customers seeking supply chain security, giving TI a competitive edge in the market.  **[TXN_3380281_9]** **[TXN_3380281_13]**
- **Bookings increased each month of the quarter**, and some industrial sectors are starting to recover from inventory corrections, indicating improving demand trends for TI's products.  **[TXN_3380281_16]** **[TXN_3380281_17]**

5c53b773da083a5b9933df39f812f821472c344b43805abb289ff195a97ac74c

- **Investment in geopolitically dependable, large-scale, and affordable 300-millimeter manufacturing capacity in the U.S. is attracting increased customer interest and positioning Texas Instruments to gain market share.**  **[TXN_3393964_3]**
- **Robust sequential growth in China indicates that inventory corrections are largely behind, signaling potential growth opportunities as demand recovers.**  **[TXN_3393964_19]**
- **Strengthening of the embedded processing business, with an improved product portfolio and increased design win momentum in industrial and automotive markets, positions the company for significant future growth and free cash flow per share.**  **[TXN_3393964_15]**

43585fa001b911bb1b7e7256a4f9d6184e483a940335080ad08609e24bc7c041

- **Texas Instruments expects Q1 revenue to decline 12% sequentially**, significantly below typical seasonality, due to **increasing weakness in industrial and automotive markets** as customers reduce inventory levels.  **[TXN_3370597_2]** **[TXN_3370597_7]**
- **Gross margins are under pressure**, declining by **250 basis points sequentially**, caused by **underutilization charges from reduced factory loadings** and **increasing depreciation expenses from ongoing capital investments**.  **[TXN_3370597_4]** **[TXN_3370597_16]**
- **Free cash flow is below the level of dividend payments**, impacted by **high capital expenditures of $5 billion per year**, which may limit share repurchases and other uses of cash.  **[TXN_3370597_12]** **[TXN_3370597_4]**

6cce747d7f542f3bafddb4196e0cbd1aff5bbcf44ec957b625cd5ffd7f402d85

- **Texas Instruments is committed to significant capital investments**, maintaining **$5 billion per year in CapEx through 2026** to expand manufacturing capacity and support future growth opportunities.  **[TXN_3370597_4]**
- The company is **focusing on long-term investments in R&D and SG&A**, particularly in the **industrial and automotive** sectors, which are **very long-term in nature**, to drive future revenue growth.  **[TXN_3370597_15]**
- **Benefiting from the Chips Act Investment Tax Credit**, TI has **accrued $1.4 billion** and expects to receive **$500 million later this year**, strengthening its financial position and supporting future profitability.  **[TXN_3370597_11]**

a86c0a5168c4c2f0b56382328d6f3eb8c3a00a3c43590dec7249359c82b4e138

- **Significant year-over-year declines in key markets:** The industrial market revenue declined **25%**, communications equipment was down about **50%**, and enterprise systems was down mid-teens, indicating ongoing weakness in these sectors.  **[TXN_3380281_10]**
- **Increasing competition in China from local suppliers:** TI acknowledges that it is now harder to compete in China due to competent local competitors and subsidized capacity, which could potentially lead to loss of market share.  **[TXN_3380281_8]** **[TXN_3380281_13]**
- **High capital expenditures reducing free cash flow and share repurchases:** TI's free cash flow for the trailing 12 months was **$940 million**, while it returned **$4.8 billion** to shareholders, leading to reduced share repurchases to preserve cash amid high capital investments.  **[TXN_3380281_1]** **[TXN_3380281_18]** **[TXN_3380281_12]**

f67f74f5baec3d8c321b590e10d76d4d66f7fcff521f33698899ecf771ebe28e

1. **Financial Impact of ITC and CHIPS Act**  
   **Q:** Update on CHIPS Act funding and ITC benefits?  
   **A:** We've accrued about **$1.5 billion** in ITC credits.  **[TXN_3380281_2]**  Starting next quarter, we'll receive **$300 million**, totaling **$1 billion** for all of 2024.  **[TXN_3380281_2]**  No update on CHIPS Act grant; still in process.  **[TXN_3380281_2]** 

2. **Capital Allocation and Share Buybacks**  
   **Q:** When will share buybacks resume?  
   **A:** As our free cash flow increases post-investment phase, we'll consider resuming buybacks.  **[TXN_3380281_18]**  In the last 12 months, free cash flow was **$940 million**, and we returned **$4.8 billion** to owners.  **[TXN_3380281_18]** 

3. **Demand Trends and Market Outlook**  
   **Q:** Is demand normalizing, and is inventory correction over?  
   **A:** Some markets show recovery; personal electronics is behaving seasonally.  **[TXN_3380281_6]**  Industrial sectors are mixed; some slowing declines, a few grew sequentially.  **[TXN_3380281_6]**  Overall, Q2 is seasonally strong for us.  **[TXN_3380281_6]** 

4. **China Competition and Market Share**  
   **Q:** How is China competition affecting you?  
   **A:** Competition in China has increased over the years, but we continue to compete effectively.  **[TXN_3380281_8]**  We're leveraging our advantages in manufacturing, portfolio breadth, and market reach.  **[TXN_3380281_8]** 

5. **Pricing Trends and Margins**  
   **Q:** Any changes in pricing environment?  
   **A:** Pricing returned to pre-pandemic trends with low single-digit declines.  **[TXN_3380281_5]**  We continue to see this environment.  **[TXN_3380281_5]** 

6. **Inventory Levels and Factory Utilization**  
   **Q:** Outlook for inventory levels and factory loadings?  
   **A:** Adjusted factory loadings as we neared desired inventory levels, growing inventory by about **$80 million** in Q1.  **[TXN_3380281_3]**  For Q2, we'll adjust loadings based on future demand.  **[TXN_3380281_3]** 

7. **Supply Chain and Dependence on China**  
   **Q:** Impact of customers reducing China dependence?  
   **A:** Customers seek "geopolitically dependable capacity"; we're positioned to support them.  **[TXN_3380281_9]**  We're unique in building capacity at scale outside China and Taiwan.  **[TXN_3380281_13]** 

8. **Year-over-Year End Market Performance**  
   **Q:** How did end markets perform year-over-year?  
   **A:** Industrial down **25%**; automotive down low single digits; personal electronics up single digits; communications equipment down **50%**; enterprise systems down mid-teens.  **[TXN_3380281_10]** 

9. **R&D Investment Allocation**  
   **Q:** Where are R&D investments focused?  
   **A:** Increasing investments in industrial and automotive due to secular growth trends.  **[TXN_3380281_19]**  Maintaining steady investments in personal electronics and communications equipment.  **[TXN_3380281_19]** 

10. **Embedded Business Strategy**  
    **Q:** Update on embedded business progress?  
    **A:** We continue to invest, aiming for growth and free cash flow contribution.  **[TXN_3380281_15]**  Investing in capacity to gain control over supply and gain share.  **[TXN_3380281_15]** 

11. **Bookings and Demand Signals**  
    **Q:** Are bookings recovering broadly?  
    **A:** Bookings increased each month in Q1, behaving as expected.  **[TXN_3380281_16]**  Demand signals are reflected in our guidance.  **[TXN_3380281_16]** 

12. **Depreciation Expectations**  
    **Q:** Update on depreciation impact?  
    **A:** Expecting **$1.5 to $1.8 billion** in depreciation this year, likely at bottom half.  **[TXN_3380281_11]**  For 2025, expect **$2 to $2.5 billion**.  **[TXN_3380281_11]** 

13. **Capital Management and Cash Usage**  
    **Q:** Any changes in cash usage and capital management?  
    **A:** Increasing cash to protect **$5 billion** per year CapEx investments in manufacturing.  **[TXN_3380281_12]**  Conscious of liquidity and repurchases.  **[TXN_3380281_12]** 

14. **Pricing Strategy with Increased Capacity**  
    **Q:** Will increased capacity affect pricing strategy?  
    **A:** No change in pricing strategy; we price to be competitive.  **[TXN_3380281_14]**  Our competitive products and 300mm capacity support this.  **[TXN_3380281_14]** 

15. **Automotive Market Inventory and Demand**  
    **Q:** Are automotive inventories normalizing?  
    **A:** Customers are re-evaluating supply chains; seeking dependable capacity.  **[TXN_3380281_9]**  We're positioned to support growth in this market.  **[TXN_3380281_9]** 

16. **Industrial Sector Recovery**  
    **Q:** Which industrial sectors are recovering?  
    **A:** Shorter-cycle sectors began recovery earlier; longer-term sectors are turning recently.  **[TXN_3380281_17]** 

17. **Impact of China Insourcing**  
    **Q:** Is China insourcing affecting growth?  
    **A:** Local suppliers account for about **12%** of content; we aim to maintain and gain share in China.  **[TXN_3380281_13]** 

9f39f9429099800c689dba26fe0c527b8557ca0d5106f9ca36a14aae9097b4e7

Texas Instruments Inc (TXN)

Financials