TXN
Texas Instruments
Semiconductors
★ Quality 41/100Price today
$258.44
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What this business is made of
Where does the value come from?
5-year cycle
Money made year by year
This business has cycles — good years and bad years. That's why we don't use just the last year.
We use the average of those 5 years as the base for the math — not the good year, not the bad year. That way the value reflects what the company makes steadily.
The business
You design their chip once and buy it for ten years.
Texas Instruments makes analog and embedded chips — over 80,000 products that turn real-world signals into data. It gets paid selling silicon to industrial and automotive customers, where a chip worth a few dollars is designed once and bought for a decade.
The real moat is cost: they manufacture on 300mm wafers in-house, something almost no one else does in analog, giving them the cheapest chip in the catalog. Long design cycles and a spread-out customer base make revenue sticky, but the model rates it a moderate moat — China is learning to make basic analog.
Revenue history
From $18.3B to $17.7B in 4 years. Sales aren't taking off — the engine is stuck.
Where each $100 of sales goes
Revenue $17.7B · FY2025
Of every $100 in sales, $72 goes to costs and operations; $28 is left as net profit (28% margin).
Catalysts and risks
~$60B capex plan for U.S. fabs (Sherman, Texas) with CHIPS Act funding near $1.6B, capacity maturing toward 2026-2027.
Cyclical recovery in industrial and automotive demand after bottoming in 2024 ($15.6B); revenue already bounced back to $17.7B in FY2025.
Capex peak around 2026 frees up FCF — today squeezed at $2.6B on $5.0B of net income.
Massive capex is choking FCF: $2.6B against $5.0B of net income. The dividend gets paid, but the cushion is thin.
$14.0B of debt against $3.2B of cash, right when the cycle hasn't yet confirmed the recovery.
Chinese competitors advancing in low-cost analog, exactly the terrain where TXN wins on price.
Charlie's note
“A cost moat built on their own 300mm wafers and 57% gross margin at 13x is a sensible price for a business of this quality; the flat growth warns that China is biting into basic analog, so pay the multiple without illusions and let the decade-long design cycles do the work.”
Analysis · June 2026
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