# Texas Instruments Incorporated (TXN) — Narrative

Sources: the annual report on Form 10-K for the fiscal year ended December 31, 2025 (filed February 6, 2026, accession 0000097476-26-000059); the quarterly report on Form 10-Q for the quarter ended June 30, 2026 (filed July 24, 2026, accession 0000097476-26-000152); the Current Report on Form 8-K furnished July 22, 2026 with the second-quarter earnings release as Exhibit 99 (accession 0000097476-26-000148); and two Current Reports on Form 8-K on management changes — one filed March 25, 2026 (accession 0001193125-26-124057) and one filed June 2, 2026 reporting an event of May 27, 2026 (accession 0000950103-26-008325).

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## Business

*From the FY2025 Form 10-K, accession 0000097476-26-000059.*

Texas Instruments designs and manufactures semiconductors sold to electronics designers and manufacturers worldwide. Operations began in 1930; the company is incorporated in Delaware, headquartered in Dallas, Texas, and has design, manufacturing or sales operations in more than 30 countries. It had about 33,000 employees at December 31, 2025, roughly 90% of them in R&D, sales or manufacturing, with a 2025 turnover rate of 10.1%. Revenue in 2025 was $17.68 billion.

**Stated objective and strategy.** Management names growth of free cash flow per share over the long term as its objective and "the best metric for owners to measure our progress." The strategy has three elements:

1. A business model focused on analog and embedded processing products, built on four competitive advantages: a strong foundation of manufacturing and technology (lower cost, greater supply-chain control); a broad product portfolio (more opportunity per customer); the reach of its market channels (access to more customers and more of their design projects); and diversity and longevity of products, markets and customer positions (less single-point dependency, longer returns on investment).
2. Disciplined capital allocation. Over the ten years 2016–2025 the company allocated $109 billion, the largest share to organic growth (R&D, sales and marketing, capital expenditures, inventory working capital), including about $24 billion to capital expenditures. The remainder went to dividends, share repurchases and, for inorganic growth, acquisitions meeting its financial and strategic objectives.
3. Efficiency — "constantly striving for more output for every dollar spent."

**Segments.** Two reportable segments, plus Other:

- **Analog** — $14.01 billion of 2025 revenue, about 79% of the total. Analog chips condition, amplify and convert real-world signals (sound, temperature, pressure, light) and manage power — converting, distributing, storing, discharging, isolating and measuring electrical energy. Two major product lines: **Power** (battery management, DC/DC and AC/DC switching regulators, power switches, linear and low-dropout regulators, voltage references, multiphase controllers and power stages, lighting) and **Signal Chain** (amplifiers, data converters, interface products, motor drives, clocks, logic, sensing).
- **Embedded Processing** — $2.70 billion of 2025 revenue, about 15% of the total. The digital "brains" of electronic equipment: microcontrollers, processors, wireless connectivity and radar. Customers frequently invest their own R&D in software running on these parts, which lengthens customer relationships because many prefer to reuse software across product generations. Used particularly in industrial and automotive.
- **Other** — $979 million of 2025 revenue: DLP products (primarily high-definition image projection), calculators, and certain custom ASICs. Other also absorbs items not used in evaluating segment results — acquisition, integration and restructuring charges, litigation expense, environmental costs, and gains and losses on asset dispositions.

The portfolio spans more than 80,000 products.

**End markets (2025, as a percentage of revenue).** Industrial 33% (industrial automation, aerospace and defense, energy infrastructure, building automation, medical and healthcare, test and measurement, other industrial equipment, appliances, power delivery, robotics); Automotive 33% (infotainment and cluster, ADAS, body electronics and lighting, hybrid/electric/powertrain, chassis control and safety); Personal electronics 21%; Data center 9% (data center compute, data center networking, rack power and thermal management); Communications equipment 3% (wireless infrastructure, wired networking, broadband fixed line access). Calculators were about 1%. Markets were realigned in 2025 "to better reflect the growth opportunities for our analog and embedded products." Management places additional strategic emphasis on industrial, automotive and data center as the best long-term growth opportunities.

**Customers and channel.** More than 100,000 customers, with about half of revenue from customers outside the largest 50. In 2025 more than 80% of revenue was direct, including TI.com; less than 20% came through distributors. The company offers customers a single worldwide distributor and a few region-specific distributors for order fulfillment.

**Manufacturing.** TI owns and operates both wafer fabrication and assembly/test facilities in North America, Asia, Japan and Europe, and does most manufacturing in-house — a deliberate choice management frames as lower cost, greater supply-chain control and "geopolitically dependable capacity" for customers. The structural cost argument rests on 300mm: an unpackaged chip built on a 300mm wafer costs about 40% less than one built on 200mm. In 2025 the company continued qualifying and ramping production at its newest 300mm fabs in Richardson and Sherman, Texas, and Lehi, Utah, positioned to absorb customer demand, external foundry transfers and internal transfers from legacy 150mm facilities. The majority of both wafer fabrication and assembly/test was sourced internally in 2025; outside foundries and subcontractors are used selectively. Principal manufacturing and design sites include North Texas (Dallas, Richardson, Sherman), Lehi (Utah), South Portland (Maine), Tucson, Santa Clara, Houston, Chengdu and Shanghai, Freising (Germany), Bangalore, Aizu and Miho (Japan), Kuala Lumpur and Melaka (Malaysia), Aguascalientes (Mexico), Baguio and Pampanga/Clark (Philippines), and Taipei. U.S. facilities held approximately 17.8 million square feet at December 31, 2025 and non-U.S. facilities approximately 12.8 million.

**Inventory policy.** The stated strategy is to build ahead of demand for broad-based products used across many applications and customers with low obsolescence risk, so as to hold high service levels and dependable lead times; factory loadings are adjusted to execute it.

**Industry characteristics management flags.** The semiconductor cycle — alternating tight supply and surplus inventory, amplified by the time and money required to build and maintain fabs. Seasonality — sequential revenue growth historically weaker in the first and fourth quarters than in the second and third. Competition — despite consolidation the analog and embedded markets remain highly fragmented, with competition from dozens of large and small companies, broad-based and niche, including emerging companies particularly in Asia.

**Capital structure and returns.** TI common stock trades on The Nasdaq Global Select Market; there were 10,238 holders of record at December 31, 2025 and 907,550,774 shares outstanding as of January 27, 2026. Repurchases run under board authorizations of $12.0 billion (announced September 20, 2018) and $15.0 billion (announced September 15, 2022), with $18.79 billion remaining available at December 31, 2025 and no expiration date specified.

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## Risk factors

*From the FY2025 Form 10-K, accession 0000097476-26-000059 — the substantive risks, condensed.*

**Geopolitics, trade and country exposure.** Facilities in more than 30 countries; about 60% of revenue comes from customers headquartered outside the United States. Revenue from end customers headquartered in China was about 20% of 2025 revenue, while revenue from products *shipped into* China was about 50% — a materially larger exposure than the headquarters figure suggests. The semiconductor industry has been the focus of increased regulatory activity and scrutiny, and the United States and China in particular have seen geopolitical tension and administrative measures — tariffs including tariffs specific to TI's products, import/export restrictions, embargoes and sanctions, restrictions on cross-border investment — that could limit market access, impede product delivery and customer support, restrict purchases or receipt of manufacturing equipment and materials, or drive customers to alternate suppliers. Broader exposures include acts of war and terrorism, public health crises, labor conditions, climate risk, and disruption of power, water, transportation, communications and IT networks. Remeasurement of non-U.S. dollar transactions can hurt results.

**Competition and pricing.** Intense technological and pricing competition from large and niche competitors and emerging companies, particularly in Asia. China is actively promoting and reshaping its domestic semiconductor industry through policy and investment. Certain competitors have sufficient resources and access to government incentives to compete favorably, and consolidation among competitors may make them more effective. Price and development pressure may reduce margins and cost business where TI cannot match price declines, cost efficiencies or technological advances.

**Demand, cyclicality and inventory matching.** The cyclical nature of the semiconductor market occasionally produces significant, rapid swings in demand. Loss or curtailment of purchases by one or more large customers — including from changes in customers' design or manufacturing-sourcing policies — distributor inventory adjustments, tariffs or export controls can hurt results. Ability to match inventory and production to the mix needed to fill orders affects whether a quarter's revenue forecast is met; inaccurate manufacturing forecasts can leave inadequate, excess or obsolete inventory.

**Margin variability and fixed cost.** Margins vary with demand and shipment volume, capital expenditures and resulting depreciation, manufacturing processes, mix, inventory levels, tariffs and freight. Because TI owns much of its manufacturing capacity a significant portion of operating cost is fixed, and with the capacity expansion capital expenditures and depreciation have increased. These fixed costs do not fall with reduced demand or factory loadings and can compress margins.

**Manufacturing and supply chain.** Reliance on third parties for goods and services, exposed to supplier disputes, quality excursions, cybersecurity incidents, natural events and limited or delayed access to key materials, services and utilities. Geopolitical tension is disrupting and reshaping global supply chains; suppliers have extended lead times, limited supply or raised prices. Certain key materials are primarily sourced from limited geographies and governments have adopted or proposed export controls on certain minerals, materials and equipment. Failure to timely implement new manufacturing technologies, install equipment or staff manufacturing operations could hurt results, and expected returns on capacity investments may not be realized. A portion of wafer fabrication and assembly/test is subcontracted; TI does not have long-term contracts with all suppliers and alternates are limited.

**Technology change and R&D return.** Rapid technological change can shorten product life cycles and cut average selling prices. R&D investments are generally made before commercial viability can be assured, may not earn the expected return, and commercially viable projects may not contribute to results until at least a few years after completion.

**Cybersecurity.** Breaches or disruptions of TI's IT systems or those of customers, suppliers and third parties — from viruses, ransomware, malware, software vulnerabilities, unauthorized access, nation-state espionage, employee malfeasance, use of AI tools or human error — could compromise networks, corrupt or lose data, release confidential or personal information, disrupt manufacturing and online services, and trigger remediation costs, regulatory inquiries, penalties or damages claims. Threats are described as frequent, increasingly sophisticated and constantly evolving.

**Strategic and organizational change.** Acquisitions, divestitures, capital investments and restructuring may not deliver the expected growth, cost savings or other benefits, and associated charges could differ materially in amount and timing from expectations.

**Natural events and site concentration.** Manufacturing, data and design facilities sit in locations exposed to severe weather, geological events and epidemics; climate change may make such events more frequent or intense. A prolonged disruption where TI has principal manufacturing and design operations could be material.

**People.** Success depends on retaining and recruiting skilled engineering, management, sales and technical personnel in a market where competition for talent is intense, and on effective succession of senior management and key employees. International recruiting and employee deployment may be limited by immigration law and policy.

**Product claims and legal proceedings.** Warranty, product liability, epidemic or delivery-failure claims could bring significant defense costs, damages or settlements, customer compensation, inventory write-offs and recall costs — noted specifically for automotive and handheld applications. Product liability insurance may not be available or adequate. Counterfeit product or improper handling or diversion of TI parts could cause reputational harm.

**Distribution.** Distributors carry competing product lines and may promote them over TI's; distributor financial difficulty or administrative measures affecting their operation could hurt results, and disputes with current or former distributors could be disruptive.

**Legal, regulatory and tax.** A complex international, national and local regulatory perimeter covering environment and climate, safety, health, trade, bribery and corruption, financial reporting, tax, data privacy, labor, competition, market access, intellectual property and currency movement; compliance may be onerous and expensive and could restrict manufacturing or shipment. Environmental, safety and health rules may require abatement equipment beyond what TI employs or addition/elimination of a material or process, and a substitute may not exist or may not be affordable. On tax: operations in more than 30 countries subject TI to taxation and audit by many authorities; rate increases could come from shifts in the jurisdictional mix of profit, changes in available credits or deductions (including for stock compensation), rate changes, tariff changes, accounting changes or adverse audit resolutions. Many countries have enacted or are enacting laws aligned with the OECD's Base Erosion and Profit Shifting recommendations, and their application to U.S.-based multinationals remains uncertain. Government incentives already received or expected — including tax incentives — could be subject to reduction, modification, clawback or termination, and TI may face increased scrutiny over how they are earned and spent.

**Intellectual property.** Market access depends in part on the continued strength of the patent portfolio in every jurisdiction where TI operates; there is no assurance TI will obtain necessary rights or develop technology without infringing others'. TI faces infringement claims directly and indirectly, including from nonpracticing entities, plus indemnification claims from customers. Its own enforcement cannot prevent all misappropriation, including unauthorized copying and cloning and counterfeit product bearing its trademark, and laws in some countries protect IP less than U.S. law.

**Financing and balance-sheet risks.** Debt service depends on future performance subject to economic conditions and industry cycles, and principal and interest obligations could divert funds from operations or shareholder returns or force new debt, equity or asset sales. Liquidity depends on continuous access to bank and investment accounts and credit lines, which instability in financial markets could restrict. A significant amount of goodwill sits on the balance sheet and impairment charges could hurt results.

**Market-risk sensitivities disclosed at December 31, 2025.** Most aggregate non-U.S. dollar balance-sheet exposure is hedged with forward currency contracts; a hypothetical 10% move in non-U.S. currency rates against the dollar would produce a pretax currency gain or loss of approximately $5 million. Forward currency contracts outstanding had a notional value of $675 million (including $174 million to sell Malaysian ringgit, $169 million to buy Indian rupee and $107 million to sell British pounds). A hypothetical 100 basis point rise in interest rates would cut the fair value of cash equivalents and short-term investments by about $11 million and the fair value of long-term debt by $969 million; because long-term debt carries fixed rates, rate changes would not affect its cash flows.

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## Management's discussion — fiscal 2025

*From the FY2025 Form 10-K, accession 0000097476-26-000059.*

**Context management gave the year.** In 2025 the overall analog and embedded semiconductor market recovery continued, "though at a slower pace than prior upturns, likely related to broader macroeconomic dynamics and overall uncertainty," with global semiconductor shipments still below the prior peak. Growth of semiconductor content in electronics continued to drive demand, particularly in automotive, industrial and data center, and management said it believed TI was well positioned with inventory and capacity to meet immediate customer demand.

**Full-year 2025 versus 2024.**

- Revenue of $17.68 billion increased $2.04 billion, or 13.0%, on increased demand in Analog and, to a lesser extent, Embedded Processing.
- Gross profit of $10.08 billion rose $989 million, or 10.9%, on higher revenue, held back by higher manufacturing costs from the planned capacity expansions and helped by reduced costs from increased factory loadings. Gross margin *fell* to 57.0% from 58.1% — revenue grew faster than gross profit.
- Operating expenses (R&D and SG&A) were $3.94 billion against $3.75 billion.
- Restructuring charges/other was a $117 million charge, from efforts to drive operational efficiencies including the planned closures of the two remaining factories with 150mm production, plus a non-cash goodwill impairment related to custom ASIC products. The prior year carried a $124 million *credit*, primarily a gain on sale of a property — a $241 million year-over-year swing in this line.
- Operating profit was $6.02 billion, or 34.1% of revenue, versus $5.47 billion, or 34.9%.
- Other income and expense was $230 million of income versus $496 million, the decline due to lower interest income.
- Interest and debt expense of $543 million rose $35 million on additional long-term debt issued.
- The tax provision was $709 million versus $654 million; the effective tax rate was 12.4% versus 12.0%, reflecting changes in the effect of U.S. tax benefits including the One Big Beautiful Bill Act, and higher pretax income, partly offset by $37 million of higher discrete tax benefits primarily related to non-U.S. operations.
- Net income was $5.00 billion versus $4.80 billion; EPS was $5.45 versus $5.20.

**U.S. tax legislation.** The One Big Beautiful Bill Act, enacted July 4, 2025, changed federal tax law — expensing of U.S. research expenditures and eligible capital expenditures, an increased CHIPS Act investment tax credit, and other provisions. Its effect *raised* the 2025 effective tax rate; for 2026 and beyond management expects the effective rate and tax-related cash payments to be lower than they would have been under prior law.

**2025 segment results.**

| Segment | 2025 revenue | 2024 revenue | Change | 2025 operating profit | 2024 operating profit | Change | 2025 margin | 2024 margin |
|---|---|---|---|---|---|---|---|---|
| Analog | $14,006M | $12,161M | 15% | $5,412M | $4,608M | 17% | 38.6% | 37.9% |
| Embedded Processing | $2,697M | $2,533M | 6% | $304M | $352M | (14)% | 11.3% | 13.9% |
| Other | $979M | $947M | 3% | $307M | $505M | (39)% | 31.4% | 53.3% |

Analog revenue rose in both product lines about evenly on higher demand, with operating profit up on revenue and gross profit, partly offset by higher operating expenses. Embedded Processing revenue rose on higher demand but operating profit *fell*, primarily on higher manufacturing costs and operating expenses. Other's operating profit fell $198 million — the line includes restructuring charges/other, and the prior year's property-sale gain sat here.

The LFAB facility in Lehi, Utah primarily supports Embedded Processing. Management said it was purchased as an operating fab and is "in the early stages of ramping, so we expect factory loadings to increase over time." For the period until that ramp is complete, management said: "Until LFAB ramps, we expect Embedded to carry manufacturing costs that disproportionately affect Embedded Processing operating profit as compared to Analog."

**Financial condition and cash at year-end 2025.** Total cash (cash and cash equivalents plus short-term investments) was $4.88 billion, *down* $2.70 billion from the end of 2024 — $3.23 billion of cash and equivalents and $1.66 billion of short-term investments. Accounts receivable were $1.96 billion, up $244 million, with days sales outstanding of 40 versus 39. Inventory was $4.80 billion, up $277 million, but days of inventory fell to 222 from 241.

Cash flow from operations was $7.15 billion, up $835 million, on higher net income and non-cash items partly offset by higher working-capital use, and including $335 million of CHIPS Act investment tax credit cash benefit used to reduce income taxes payable (versus $588 million in 2024). Investing used $1.44 billion versus $3.20 billion: capital expenditures of $4.55 billion versus $4.82 billion, $335 million of CHIPS Act incentive proceeds including $75 million of direct funding, and $2.78 billion provided by short-term investments. Financing used $5.69 billion versus $2.88 billion: $1.20 billion of net proceeds from fixed-rate long-term debt against $750 million of maturing debt retired, $5.00 billion of dividends paid (versus $4.80 billion, on an increased rate), $1.48 billion to repurchase 8.5 million shares (versus $929 million for 4.7 million), and $400 million from employee option exercises.

Free cash flow — cash flow from operations less capital expenditures plus CHIPS Act incentive proceeds, a non-GAAP measure the company defines and reconciles — was $2.94 billion in 2025, 16.6% of revenue, versus $1.50 billion and 9.6% in 2024. Cash flow from operations was 40.5% of revenue versus 40.4%.

**Capital spending intent.** Management said TI is nearing the end of its six-year elevated capital expenditures cycle and expects to spend about $2 billion to $3 billion in 2026, with spending beyond 2026 dependent on revenue and growth expectations. It expects continued CHIPS Act benefit, including the 35% investment tax credit on qualifying manufacturing investments for assets placed in service after December 31, 2025, and direct funding of up to $1.6 billion for the three large-scale 300mm fabs in Sherman, Texas and Lehi, Utah.

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## Current quarter — second quarter and first six months of 2026

*From the Form 10-Q for the quarter ended June 30, 2026, accession 0000097476-26-000152, except where the July 22, 2026 earnings release (accession 0000097476-26-000148) is identified.*

**What changed.** Revenue was $5.46 billion, up 13% sequentially and 23% year over year, with growth management described as broad and led by industrial, data center and automotive. Net income was $1.98 billion and EPS $2.14. The earnings release added that EPS included a 5-cent benefit that was not in the company's original guidance.

**Second quarter 2026 versus second quarter 2025.**

- Revenue of $5.46 billion increased $1.02 billion, or 23%, on increased demand in Analog and, to a lesser extent, Embedded Processing.
- Gross profit of $3.35 billion rose $777 million, or 30%, on higher revenue, partly offset by higher manufacturing costs from planned capacity expansions. Gross margin *expanded* to 61.4% from 57.9% — a reversal of the direction gross margin moved over full-year 2025.
- Operating expenses (R&D and SG&A) were $1.03 billion against $1.01 billion — essentially flat while revenue grew 23%.
- Acquisition charges were $17 million, transaction-related costs of the planned Silicon Labs acquisition; there were none a year earlier.
- Operating profit was $2.31 billion, or 42.3% of revenue, versus $1.56 billion, or 35.1%.
- Other income and expense was $69 million of income versus $48 million, on higher interest income.
- Interest and debt expense of $141 million rose $8 million.
- The tax provision was $258 million versus $183 million on higher pretax income, partly offset by $35 million of higher discrete tax benefits related to stock-based compensation. The effective tax rate was 12% in both periods, against the 21% U.S. statutory rate, the difference attributed to U.S. tax benefits.
- Net income was $1.98 billion versus $1.30 billion; EPS was $2.14 versus $1.41.

**Second quarter segment results.**

| Segment | Q2 2026 revenue | Q2 2025 revenue | Change | Q2 2026 operating profit | Q2 2025 operating profit | Change | Q2 2026 margin | Q2 2025 margin |
|---|---|---|---|---|---|---|---|---|
| Analog | $4,365M | $3,452M | 26% | $1,992M | $1,325M | 50% | 45.6% | 38.4% |
| Embedded Processing | $788M | $679M | 16% | $168M | $85M | 98% | 21.3% | 12.5% |
| Other | $310M | $317M | (2)% | $150M | $153M | (2)% | 48.4% | 48.3% |

Analog revenue rose in both product lines, led by Signal Chain, on higher demand. Embedded Processing revenue rose on higher demand, and its operating margin nearly doubled off a low base. Other revenue fell $7 million and operating profit $3 million; Other carries the acquisition charges. Management's expectation for LFAB's effect on Embedded Processing has reversed. Management said the Lehi fab "is continuing to ramp production, so we expect factory loadings to increase over time," and now states that "[a]s LFAB ramps, we expect Embedded to carry manufacturing costs that disproportionately benefit Embedded Processing operating profit as compared to Analog." At the end of 2025, with the fab not yet ramped, management expected those same manufacturing costs instead to "disproportionately affect" that operating profit.

**First six months of 2026 versus 2025.** Revenue of $10.29 billion increased $1.77 billion, or 21%. Gross profit of $6.15 billion rose $1.26 billion, or 26%, with gross margin at 59.8% versus 57.4%. Operating expenses were $2.00 billion in both periods. Acquisition charges were $34 million. Operating profit was $4.12 billion, or 40.0% of revenue, versus $2.89 billion, or 33.9%. Other income and expense was $116 million of income versus $128 million, the decline attributed to lower interest income — the opposite direction from the quarter. Interest and debt expense of $282 million rose $21 million. The tax provision was $427 million versus $280 million, an effective rate of 11% versus 10%. Net income was $3.53 billion versus $2.47 billion; EPS was $3.82 versus $2.69.

Year-to-date segment revenue and operating profit: Analog $8,289M and $3,630M (from $6,662M and $2,531M, revenue up 24%, profit up 43%, margin 43.8% versus 38.0%); Embedded Processing $1,511M and $290M (from $1,326M and $125M, revenue up 14%, profit up 132%, margin 19.2% versus 9.4%); Other $488M and $198M (from $529M and $231M, revenue down 8%, profit down 14%).

**Revenue by end-customer geography, second quarter 2026** (estimated by the location of end customers' headquarters): United States $2,131M (39%), China $1,223M (22%), Europe/Middle East/Africa $1,075M (20%), Rest of Asia $606M (11%), Japan $330M (6%), rest of world $98M (2%). Germany was 9% of revenue in the quarter, versus 10% a year earlier.

**Financial condition at June 30, 2026.** Total cash was $7.00 billion, up $2.12 billion from the end of 2025 — $3.66 billion of cash and equivalents and $3.34 billion of short-term investments, a sharp rebuild from the year-end position. Accounts receivable were $2.52 billion, up $557 million, with days sales outstanding of 42 versus 40 at the end of 2025. Inventory was $4.61 billion, *down* $199 million, with days of inventory falling to 196 from 222 — management attributes this to continued execution of the inventory strategy. Total stockholders' equity was $18.01 billion, up from $16.27 billion at year-end 2025. Long-term debt including the current portion carried at $14.05 billion, with an estimated fair value of $13.09 billion; the current portion rose to $1,149 million from $500 million and no debt was issued or repaid in the six months. Treasury shares fell to 828 million from 834 million.

**Cash flows, first six months of 2026** (the quarterly report presents cash flows on a six-month basis only). Operating activities provided $4.22 billion, up $1.51 billion year over year on higher net income and non-cash items and lower cash used for working capital, and including $301 million of CHIPS Act investment tax credit cash benefit used to reduce income taxes payable (versus $203 million). Investing used $1.75 billion versus $82 million: capital expenditures of $1.19 billion — less than half the prior-year $2.43 billion — CHIPS Act incentive proceeds of $1.10 billion versus $260 million, and $1.66 billion of cash used by short-term investments against $2.10 billion provided a year earlier. Financing used $2.04 billion versus $2.78 billion: no debt issued or retired this year against $1.20 billion of net proceeds and $750 million retired a year earlier; dividends paid of $2.59 billion versus $2.47 billion on an increased rate; $185 million to repurchase 0.9 million shares against $955 million for 5.4 million shares — a near-halt in buyback activity; and $754 million from employee stock option exercises versus $233 million. Dividends declared and paid were $1.42 per share in each quarter of 2026, up from $1.36 in 2025.

On a trailing-twelve-month basis through June 30, 2026, cash flow from operations was $8.67 billion (up 35% from $6.44 billion) and free cash flow $6.53 billion, against $1.76 billion a year earlier. The earnings release, which presents a three-month cash flow column the quarterly report does not, reported second-quarter cash flow from operations of $2,703 million and free cash flow of $2,738 million, with dividends paid of $1,295 million and stock repurchases of $27 million in the quarter. In that release management framed the twelve months as $3.9 billion invested in R&D and SG&A, $3.3 billion in capital expenditures and $5.8 billion returned to shareholders.

**Liquidity.** The $1 billion variable-rate revolving credit facility, available until March 2027 and indexed to Term SOFR, was undrawn at June 30, 2026, with no commercial paper outstanding. Management reaffirmed the $2 billion to $3 billion 2026 capital expenditure plan and the CHIPS Act benefits described above, of which $630 million of the direct funding had been received. CHIPS Act incentives receivable stood at $1,005 million in prepaid expenses and other current assets and $1,158 million in other long-term assets, down from $1,709 million and $1,639 million at year-end 2025. Disclosure controls and procedures were concluded effective.

**Pending acquisition and its financing.** As announced February 4, 2026, TI entered a definitive agreement to acquire Silicon Labs for $231.00 per share in an all-cash transaction, a total enterprise value of approximately $7.5 billion. Silicon Labs stockholders receive $231.00 in cash per share at closing, expected in the first half of 2027, subject to regulatory approvals and other customary closing conditions. Management expects to fund the transaction with a combination of cash on hand and debt financing. In June 2026 TI entered a 364-day delayed draw term loan credit facility for borrowings up to $5 billion to support the acquisition consideration and related transaction expenses; availability of funding is conditioned on consummation of the acquisition, and there were no outstanding borrowings at June 30, 2026. Acquisition charges of $17 million in the quarter and $34 million in the six months relate to this transaction.

**Guidance.** In the July 22, 2026 earnings release, management guided third-quarter 2026 revenue to a range of $5.65 billion to $6.15 billion and earnings per share to between $2.23 and $2.57.

**Contingencies.** No material accruals or payments regarding product warranty or product liability in the periods presented. The company routinely sells products with intellectual property indemnification in the terms of sale and says it has historically had only minimal, infrequent losses on those indemnities and cannot reasonably estimate future liabilities. It is subject to various legal and administrative proceedings but believes the results will not have a material adverse effect on the consolidated financial statements. No accounting standards were newly adopted; three updates are being evaluated for future periods — ASU 2024-03 on disaggregation of income statement expenses (effective for the period ending December 31, 2027), ASU 2025-06 on internal-use software (March 31, 2028) and ASU 2025-10 on government grants (March 31, 2029).

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## Subsequent events

The quarterly report for the quarter ended June 30, 2026 (accession 0000097476-26-000152) does not present a subsequent-events note; its notes end with supplemental financial information. The material items outstanding as of and after the period close, as disclosed in that filing and in Current Reports on Form 8-K, are:

- **The Silicon Labs acquisition remains pending**, on the terms and with the financing described above. (Accession 0000097476-26-000152.)

- **Chief Financial Officer transition announced May 27, 2026, effective August 1, 2026 — after the quarter closed.** The board acted before the period end, appointing Julie Knecht, 54, senior vice president and Chief Financial Officer (Chief Accounting Officer) effective August 1, 2026. She had served the company more than 25 years, most recently as vice president and Chief Accounting Officer since 2021, and receives an annual base salary of $700,000 and equity compensation totaling $2 million in restricted stock units. She succeeds Rafael Lizardi, who retires after 25 years with the company; the filing states his retirement is not related to the company's financial or operating results or to any disagreement or concern over financial or reporting practices or internal control, and that the company and Mr. Lizardi expect to enter into a separation agreement. (Accession 0000950103-26-008325.)

- **Senior officer retirement.** Hagop Kozanian, Senior Vice President, announced on March 25, 2026, before the quarter closed, his intention to retire effective August 31, 2026 — an effective date that, like the Chief Financial Officer transition above, falls after the period close. (Accession 0001193125-26-124057.)

No post-period acquisition or divestiture beyond the pending Silicon Labs transaction, no post-period debt issuance or repayment, and no litigation outcome is disclosed in the filings covering this period.