Texas Instruments (TXN) Q1 FY26 earnings call: guidance and Q&A

Inquired about customer behavior, especially in industrial, and if pricing increases are impacting it, given strong Q1 and Q2 guidance. Also asked for segment-specific color on Q2 guidance, particularly for industrial and auto.

Haviv noted Q1 was a continuation of Q4 trends, led by broad industrial growth (all sectors/regions, 5-6 months of growth) and data center (8th sequential growth quarter). He clarified that auto was flat sequentially in Q1 (China down, rest of world up) but remains near peak levels and expects secular growth. Mike added that auto has been steady at elevated levels without a steep correction.

“I expect growth to be led by industrial and data center. I won't break it out between the 2, but we see strength in both.”

asked by Timothy Arcuri · answered by Haviv Ilan

Asked for drivers of 30% YoY industrial growth, if it's inventory replenishment/pricing/share gains, and checks against double-ordering. Also asked about H2 outlook compared to last year's deceleration and fab loading.

Haviv stated no evidence of double-ordering. Industrial is still 15% below its 2022 peak, with secular growth suggesting more room. Growth is broad-based across applications, regions, and customer sizes. He cautioned about H2 sustainability given last year's 'head-fake' but is optimistic long-term. Rafael confirmed capacity and inventory are well-positioned for upturn scenarios.

“In Q1, our industrial, we had a very good quarter in Industrial, growing at the rates that you've mentioned, but still 15% lower than the peak that was back in 2022.”

asked by Vivek Arya · answered by Haviv Ilan

Asked about Q2 inventory changes and if incremental gross margin would be normal, or affected by inventory management.

Rafael reiterated strong inventory positioning for customer service and stable lead times, adjusting loading as needed. Haviv added that Q1 growth depleted some inventory, and TI is ready for rapid market growth. Rafael confirmed fall-through rates of 75-85% (excluding depreciation) are expected, and implied Q2 gross margins should be reasonable.

“No, the fall-through that you should expect is in the 75% to 85% that we have guided, that's excluding depreciation over a long term.”

asked by Joseph Moore · answered by Rafael Lizardi

Followed up on gross margin, noting implicit Q2 GM of low to mid 59% and asking about drivers, especially depreciation. Also asked about TI's reporting intentions (GAAP vs. non-GAAP) post-Silicon Labs acquisition.

Rafael clarified that acquisition charges (bankers, lawyers, regulatory fees) will impact gross margin, and these will continue until close. Post-close, TI will report GAAP but provide all necessary pieces for analysts to calculate non-GAAP, including acquisition charges and inventory write-ups.

“Thinking right now is we will do GAAP, but we'll give you all the pieces that you need to do your own non-GAAP in whichever way you want to do that.”

asked by Stacy Rasgon · answered by Rafael Lizardi

Asked about the biggest surprise in Q1 vs. guidance midpoint and if pricing contributed to strength. Also inquired about consumer-oriented demand destruction due to memory costs.

Haviv stated pricing was stable/flat in Q1 (better than typical seasonal decline), which helped. He expects Q2 pricing to be similar but noted that if strong demand continues, prices may increase in H2. Q1 strength was driven by broad demand across sectors, regions, and customer types, supported by data center. Mike noted PE was flat YoY, not showing evidence of consumer demand destruction.

“Pricing was stable, flat, if you will, like-for-like, both sequentially, Q4 to Q1, and also year-on-year, 1Q '26 versus 1Q '25. So that helped a little bit.”

asked by Ross Seymore · answered by Haviv Ilan

Asked about TI's competitive advantages in data center power, especially with manufacturing footprint, and if recent capacity investments are leading to share gains.

Haviv highlighted TI's unique combination of broad portfolio (general purpose and application-specific sockets like VRMs), ability to supply at scale, and geopolitically dependable manufacturing (Texas fabs). He noted increasing R&D in data center, GaN technologies, and advanced BCD nodes. He believes TI is gaining share due to supply availability and competitive pricing, especially in areas where other suppliers face shortages.

“I believe we are, yes. And we have gained share, of course, in Analog in 2025, but I think we have a lot of room to go.”

asked by Tore Svanberg · answered by Haviv Ilan

Confirmed FY26 CapEx of $2B-$3B, asked about timing for incremental equipment, strategic capacity thinking, and updates on depreciation and remaining CHIPS Act funding.

Rafael confirmed $2B-$3B CapEx for FY26, including incremental capacity for Phase III (fab and AT). He reiterated the long-term CapEx intensity of 1.2x revenue growth. Haviv added that some CapEx supports faster internalization of back-end AT capacity due to market bottlenecks. Rafael stated no change to FY26 depreciation ($2.2B-$2.4B) and confirmed $630M received from CHIPS Act direct funding (out of $1.6B total), with the remainder over coming years.

“Yes, I'll start. First, the answer to your question is yes. We're looking at $2 billion to $3 billion of CapEx for this year.”

asked by Matthew Prisco · answered by Rafael Lizardi

Asked about normal seasonality for the June quarter given resegmentation and an update on free cash flow per share for FY26.

Mike stated Q2 and Q3 are typically stronger. Haviv described the Q2 guide as 'slightly above seasonal' (8% sequential). Haviv reiterated that $8 FCF per share is 'very probable' for FY26 if revenue grows mid-to-high single digits, and with H1 growth at 15-20%, there's 'definitely an upside.'

“I think there is a very high -- very likely, we will be that will easily be that $8 free cash per share for 2026.”

asked by Joseph Quatrochi · answered by Haviv Ilan