stockrowWhat it does
Texas Instruments designs and manufactures semiconductors for electronics designers and manufacturers worldwide. It was founded in 1930 and is headquartered in Dallas. Haviv Ilan is chairman, president and chief executive officer.
Semiconductors, or chips, are components inside electronic equipment. Texas Instruments focuses on analog chips, which handle signals from the physical world and manage electrical power, and embedded-processing chips, which perform defined computing tasks inside equipment. Its products can sense temperature, pressure, sound or light; convert and condition those signals; distribute and convert power; connect devices; and process data.
The company sells these chips into industrial equipment, vehicles, data centers, personal electronics and communications equipment. Its industrial applications include factory automation, energy infrastructure, medical equipment, robotics and test equipment. Automotive applications include infotainment, driver-assistance systems, body electronics, lighting, powertrain systems and safety systems. In data centers, its products are used in computing, networking, rack power and thermal-management systems.
The company also reports DLP products, calculators and certain application-specific integrated circuits in Other. Its stated long-term operating objective is growth in free cash flow per share.
How it makes money
Texas Instruments has two reportable segments: Analog and Embedded Processing. Analog was the larger segment in FY2025, generating $14.0 billion, or 79.2% of revenue. Embedded Processing generated $2.7 billion, or 15.3% of revenue. Other generated $979.0 million, or 5.54% of revenue.
Analog includes Power and Signal Chain products. Power chips manage electrical energy across different voltage levels, including battery-management, regulators, power switches and lighting products. Signal Chain chips sense, condition and measure signals, then transfer or convert them for further processing and control. Embedded Processing includes microcontrollers, processors, wireless-connectivity and radar products. Customers frequently develop software for these products, and the company says reuse of that software across product generations can lengthen customer relationships.
FY2025 segment revenue: Analog $14.0 billion; Embedded Processing $2.7 billion; Other $979.0 million. In Q3 2026, Analog revenue was $4.9 billion. Management said on the call that Analog revenue grew 32.0% year over year and Embedded Processing revenue grew 21.0%.
Revenue changes are generally driven by shipment volumes, while product mix can also affect revenue and gross profit. Management said on the call that stronger demand created some pricing movement, mainly in Analog, in the second half of 2026 after flat pricing in the first half. The company generally discusses pricing with customers annually. Its broad product base means new products do not typically make a significant revenue difference in one period.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Analog | $14.0 billion | 79.2% | 15.2% |
| Embedded Processing | $2.7 billion | 15.3% | 6.47% |
| Other | $979.0 million | 5.54% | 3.38% |
Customers and how it sells
Texas Instruments sells to over 100,000 customers. Its customer base spans electronics designers and manufacturers serving industrial, automotive, data-center, personal-electronics and communications-equipment applications. Customer Number One represented 12.0% of FY2025 revenue.
The company sells through direct channels, including its website and sales and marketing organization, and to a lesser extent through distributors. More than 80% of 2025 revenue was direct, including TI.com. It also offers a single worldwide distributor and several region-specific distributors for order fulfillment. Distributors carry competing product lines.
Texas Instruments has design, manufacturing or sales operations in more than 30 countries. About 60% of revenue comes from customers headquartered outside the United States. Revenue from end customers headquartered in China represented about 20% of 2025 revenue, while products shipped into China represented about 50% of revenue. The company is investing in direct capabilities including fulfillment services, inventory programs, logistics, business processes and e-commerce tools.
| Segment | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Analog | $14.0 billion | 79.2% | 15.2% |
| Embedded Processing | $2.7 billion | 15.3% | 6.47% |
| Other | $979.0 million | 5.54% | 3.38% |
Suppliers and costs
Texas Instruments owns and operates wafer-fabrication and assembly/test facilities in North America, Asia, Japan and Europe, and performs most manufacturing internally. It selectively uses outside foundries and subcontractors to supplement internal capacity. It sources materials, parts and supplies from a global set of suppliers, although some critical materials are sourced mainly from limited geographies and alternate suppliers for certain services are limited.
The company is qualifying and ramping 300mm wafer fabs in Richardson and Sherman, Texas, and Lehi, Utah. It says an unpackaged chip built on a 300mm wafer costs about 40% less than one built on a 200mm wafer. Management said on the call that it is ramping a new assembly and test site in Malaysia and is receiving less output than desired from outside assembly and test partners.
Because it owns much of its manufacturing capacity, a significant share of operating cost is fixed. Lower factory loadings spread those costs over fewer units and can reduce margins; higher loadings can have the opposite effect. Manufacturing expansion also increases depreciation and related fixed costs.
- Revenue$17.7B
- Cost of revenue−$7.6B
- Research and development−$2.1B
- Selling, general and administrative−$1.9B
- Other operating costs−$117.0M
- Operating income$6.0B
Competitive position
Texas Instruments competes in analog and embedded-processing semiconductors against dozens of large and small broad-line and niche suppliers, including emerging companies in Asia. The markets remain highly fragmented. Competition turns on product breadth, route to market, technical innovation, product-development execution, support, quality, reliability, price, manufacturing capacity and process and packaging technology. Customer software investments also matter in Embedded Processing.
Semtech is named in connection with long-range, low-power wireless applications: Texas Instruments’ Sub-1 GHz wireless products are alternatives for some applications served by Semtech’s LoRa technology. No other individual competitor is named in the supplied company material.
Texas Instruments identifies four sources of competitive advantage: manufacturing and technology; its analog and embedded-processing portfolio; market-channel reach; and diversity and longevity across products, markets and customer positions.
Our reading: Manufacturing and technology are a meaningful moat source because internal production gives the company supply-chain control and its 300mm strategy is intended to reduce unit cost. Our reading: The broad portfolio and direct channels are meaningful moat sources because they give the company access to more customer designs across a large customer base. Our reading: Embedded customer software investment is a narrower moat source because reuse across generations can increase switching costs for those products.
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| Semtech | long-range, low-power wireless applications | Medium |
Growth opportunities
Texas Instruments places additional strategic emphasis on industrial, automotive and data-center markets. The company expects semiconductor content in electronics to continue expanding, particularly in those markets. It is investing in manufacturing capacity and inventory to support demand, while its newer 300mm fabs are intended to support customer demand, transfers from external foundries and transfers from older 150mm facilities.
Management said on the Q3 2026 call that revenue was $6.1 billion, with broad growth across end markets and regions. Industrial revenue increased more than 40.0% year over year, data-center revenue increased 95.0%, Analog revenue grew 32.0%, and Embedded Processing revenue grew 21.0%. Data center represented about 13.0% of Q3 2026 revenue.
Management said on the call that it sees growth in data-center chip demand from telemetry, cooling, efficiency and power-density requirements, and that it sells about 10,000 generic part numbers into this market. It also said the company has reserved equipment-tool slots for 2027 and beyond and will adjust installation rates based on the revenue growth it aims to support. The company expects capital expenditures of about $2 billion to $3 billion in 2026.
- $18.3BFY2021
- $20.0BFY2022
- $17.5BFY2023
- $15.6BFY2024
- $17.7BFY2025
Structural risks
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Cyclical demand and inventory: Semiconductor supply and demand cycles can cause rapid changes in demand. Customer or distributor inventory adjustments, a slowdown in end markets, or reduced purchases by major customers can affect revenue and operating results.
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Trade and geopolitical exposure: Tariffs, import and export restrictions, sanctions, trade barriers and tensions involving countries where the company operates could limit market access, disrupt supply chains, restrict equipment or material availability, or cause customers to seek alternative suppliers.
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Competition and technology: Competition can create pricing and product-development pressure. Failure to match competitors’ cost, technology, software, support or manufacturing advances can reduce margins or result in lost business.
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Capacity, supplier and execution risk: Manufacturing requires critical equipment, materials, utilities, contractors and third-party suppliers. Shortages, delayed tools, limited alternate suppliers, construction delays or failure to achieve expected returns on capacity investments could affect results.
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Fixed-cost exposure: A substantial share of operating costs is fixed because the company owns much of its capacity. Lower demand or factory loadings can reduce margins, while capacity expansion raises depreciation.
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Cybersecurity and operational disruption: Cybersecurity incidents, system failures, natural events, utility disruptions and incidents at suppliers or customers can disrupt manufacturing, services and transactions or expose confidential information.
Bottom line
Our reading
Our reading: Texas Instruments is a broad-based analog and embedded-processing semiconductor manufacturer whose revenue is centered on industrial, automotive and data-center electronics. Its business rests on internal manufacturing, a broad portfolio, direct customer access and long-lived customer positions, while its fixed manufacturing cost base makes profitability sensitive to factory utilization. Current growth is being supported by a cyclical recovery alongside expanding semiconductor content, but trade restrictions, supply-chain constraints and competition remain material exposures.