Texas Instruments Incorporated Q1 FY2026 earnings call

• Announced agreement to acquire Silicon Labs, expected to close in first half of 2027. • First quarter revenue overview: $4.8 billion, up 9% sequentially and 19% year-over-year. • Market environment: Semiconductor market recovery continuing, well positioned with inventory and capacity. • Capital management: Cash flow from operation $1.5 billion in quarter, $7.8 billion on 12-month basis; capital expenditures $676 million in quarter, $4.1 billion over last 12 months; free cash flow on 12-month basis $4.4 billion; returned $6 billion to owners in past 12 months; balance sheet strong with $5.1 billion of cash and short-term investments. • Continue to invest in competitive advantages like manufacturing, technology, broad product portfolio, etc.

First quarter revenue was $4.8 billion, an increase of 9% sequentially and 19% year-over-year. Analog revenue grew 22% year-on-year, embedded processing grew 12%, and the other segment declined 16% from the year-ago quarter. Analog and embedded both grew sequentially and year-on-year. Industrial increased more than 30% year on year and was up more than 20% sequentially, automotive increased mid-single digits year on year and was about flat sequentially, data center grew about 90% year on year and grew more than 25% sequentially, personal electronics was flat year-on-year and grew low single digits sequentially, and communications equipment grew about 25% year-on-year and grew more than 30% sequentially.

Expect TI's revenue in second quarter to be in the range of $5 billion to $5.4 billion, and earnings per share to be in the range of $1.77 to $2.05. Effective tax rate expected to be about 13% in second quarter.

Q: Tim Arcuri with UBS asked about customer behavior, rush orders, price increases.

A: Growth led by industrial and data center, similar to Q4, industrial growth broader across sectors and regions.

Q: Vivek Arya with Bank of America asked about industrial growth drivers.

A: Industrial growth still below 2022 peak, broad application growth, secular growth continuing.

Q: Joe Moore with Morgan Stanley asked about fab loading, inventory, gross margin.

A: Well positioned in inventory, can modulate fab loadings, gross margin in fall through 75%-85% guided.

Q: Stacy Raskin with Bernstein Research asked about gross margin drivers.

A: Expect OPEX growth, acquisition charges line to consider.

Q: Ross Seymour with Deutsche Bank asked about first quarter surprise, pricing.

A: Pricing stable, breadth of demand drove Q1, second half unknown.

Q: Tori Sonberg with Stifel asked about data center power moats.

A: Unique combination of broad portfolio, ability to support customers, R&D investment.

Q: Matthew Prisco with Cantor Fitzgerald asked about capex, depreciation, CHIPS Act.

A: Capex $2 - $3 billion in 2026, no change to depreciation expectations, CHIPS Act direct funding remaining to be received.

Q: Joe Quattrochi with Wells Fargo asked about seasonality, free cash flow.

A: Second and third quarters typically stronger, free cash flow per share likely high.

Q: Chris Queso with Wolf Research asked about fab loadings, pricing.

A: Comfortable with fab loadings and inventory, pricing follows market, depends on demand sustainability