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    TXN
    Earnings call· Mar 2026(Q1 FY26)

    TEXAS INSTRUMENTS Q1 FY26 earnings call TXN

    Apr 22, 2026 Source

    Executive summary

    Texas Instruments Q1 FY26 — Strong Industrial and Data Center Growth Drives Beat and Raised Q2 Guidance

    Texas Instruments delivered a strong Q1 FY26, exceeding revenue expectations driven by robust growth in industrial and data center end markets. The company provided an above-seasonal Q2 outlook, reflecting continued demand strength. Management remains cautiously optimistic about the sustainability of this growth into the second half, emphasizing their strong inventory and manufacturing capacity to meet customer needs.

    Highlights

    5

    • Revenue of $4.8 billion, an increase of 19% year-over-year and above the top of the guidance range.

    • Industrial revenue increased more than 30% year-on-year and over 20% sequentially, growing broadly across all sectors and regions.

    • Data Center revenue grew about 90% year-on-year and more than 25% sequentially, marking its eighth consecutive quarter of sequential growth.

    • Q2 FY26 revenue guidance of $5.0 billion to $5.4 billion (midpoint $5.2 billion) is described as slightly above seasonal.

    • Strong balance sheet with $5.1 billion of cash and short-term investments and $4.4 billion in free cash flow on a trailing 12-month basis.

    Concerns

    3

    • Automotive revenue was about flat sequentially in Q1 FY26, with China down, though the market remains near peak levels.

    • Uncertainty regarding the sustainability of strong demand signals for the second half of FY26, following a prior year's deceleration.

    • Potential for higher memory costs and availability issues impacting consumer-oriented demand, though not yet observed by TI.

    Guidance & targets

    8
    CategoryTargetConfidence
    Q2 FY26 Revenue
    $5.0 billion to $5.4 billion
    high materiality
    High
    Q2 FY26 Earnings Per Share
    $1.77 to $2.05
    high materiality
    High
    Q2 FY26 Effective Tax Rate
    about 13%
    medium materiality
    High
    Full-year FY26 Capital Expenditures
    $2 billion to $3 billion
    high materiality
    High
    Long-term Capital Expenditures Intensity
    1.2x revenue growth rate
    medium materiality
    High
    Full-year FY26 Free Cash Flow Per Share
    $8
    high materiality
    High
    Full-year FY26 Depreciation
    $2.2 billion to $2.4 billion
    medium materiality
    High
    FY27 Depreciation
    continued upward pressure, likely at a slower rate
    medium materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Analog
    Analog revenue grew 22% year-on-year and grew sequentially.
    		—22%grew sequentially—
    Embedded Processing
    Embedded Processing grew 12% year-on-year and grew sequentially.
    		—12%grew sequentially—
    Other segment
    Our Other segment declined 16% from the year ago quarter.
    		—-16%——
    Industrial (End Market)
    Industrial increased more than 30% year-on-year and was up more than 20% sequentially, growing broadly across all sectors and regions.
    		—more than 30%more than 20%—
    Automotive (End Market)
    Automotive increased mid-single digits year-on-year and was about flat sequentially. China was down, the rest of the world was up. It's holding very nicely at a high level, close to peak levels.
    		—mid-single digitsabout flat—
    Data Center (End Market)
    Data center grew about 90% year-on-year and grew more than 25% sequentially, marking the eighth quarter of sequential growth.
    		—about 90%more than 25%—
    Personal Electronics (End Market)
    Personal Electronics was flat year-on-year and grew low single digits sequentially.
    		—flatlow single digits—
    Communications Equipment (End Market)
    Communications equipment grew about 25% year-on-year and grew more than 30% sequentially.
    		—about 25%more than 30%—

    Operational metrics

    28
    Operating expenses
    $974 million
    Q1 FY26

    Operating expenses in the quarter, about as expected.

    Operating expenses
    $3.9 billion
    TTM

    Operating expenses on a trailing 12-month basis.

    EPS benefit
    $0.05
    Q1 FY26

    Included in earnings per share, for items not in original guidance.

    Capital expenditures
    $676 million
    Q1 FY26

    Capital expenditures in the quarter.

    Capital expenditures
    $4.1 billion
    TTM

    Capital expenditures over the last 12 months.

    CHIPS Act incentives
    $965 million
    TTM

    Included in free cash flow on a trailing 12-month basis.

    CHIPS Act direct funding received
    $555 million
    Q1 FY26

    Payment received in Q1 as part of direct funding agreement related to Sherman fab production start.

    Dividends paid
    $1.3 billion
    Q1 FY26

    Dividends paid in the quarter.

    Stock repurchases
    $158 million
    Q1 FY26

    Stock repurchased in the quarter.

    Total capital returned to owners
    $6 billion
    past 12 months

    Total capital returned to owners in the past 12 months.

    Cash and short-term investments
    $5.1 billion
    end of Q1 FY26

    Balance sheet position at the end of the first quarter.

    Total debt outstanding
    $14 billion
    end of Q1 FY26

    Total debt outstanding at the end of the first quarter.

    Weighted average coupon on debt
    4%
    end of Q1 FY26

    Weighted average coupon on total debt outstanding.

    Inventory
    $4.7 billiondown $109 million sequentially
    end of Q1 FY26

    Inventory at the end of the quarter.

    Days of inventory
    209down 13 days sequentially
    end of Q1 FY26

    Days of inventory at the end of the quarter.

    Gross profit margin
    58%increased 210 bps sequentially
    Q1 FY26

    Gross profit margin in the quarter.

    Operating profit
    $1.8 billionup 37% YoY
    Q1 FY26

    Operating profit in the quarter.

    Net income
    $1.5 billion
    Q1 FY26

    Net income in the quarter.

    EPS
    $1.68
    Q1 FY26

    Earnings per share in the quarter.

    Pricing
    stable/flatsequentially and YoY
    Q1 FY26

    Pricing was stable and flat like-for-like, both sequentially (Q4 to Q1) and year-on-year (1Q '26 vs 1Q '25).

    Industrial revenue vs. 2022 peak
    15% lower
    Q1 FY26

    Despite strong growth, industrial revenue is still 15% lower than its peak in 2022.

    H1 FY26 YoY growth
    15% to 20%
    H1 FY26

    Midpoint estimate for year-over-year growth for the first half of the year.

    Gross margin fall-through rate
    75% to 85%
    Long-term

    Expected fall-through rate for gross margin.

    Implicit Q2 FY26 Gross Margin
    low to mid 59%up from 58% in Q1 FY26
    Q2 FY26

    Analyst estimate for Q2 gross margin, confirmed by management's response on drivers.

    Investment Tax Credit (ITC)
    35%
    Long-term

    ITC provides 35% of qualified manufacturing investments, expected to provide more money over the long term.

    Total CHIPS Act direct funding
    up to $1.6 billion
    Multi-year

    Total potential direct funding from the CHIPS Act.

    Total CHIPS Act direct funding received to date
    $630 million
    as of Q1 FY26

    Total direct funding received from the CHIPS Act, including the $555 million in Q1 FY26.

    Part cost example
    $0.30
    Current

    Example used to illustrate that customers prioritize supply and support to avoid production stoppages due to a low-cost part.

    Industry KPIs

    7
    MetricValueDetails
    Lead timesstable
    Ai data center revenueabout 90%%
    Market share commentarygained share
    Fab capacity utilizationmodulating start
    Design wins socket pipelineseeing momentum
    Inventory channel inventory$4.7 billionUSD
    End market segment revenue mixIndustrial increased more than 30% YoY, more than 20% QoQ; Automotive increased mid-single digits YoY, about flat QoQ; Data center grew about 90% YoY, more than 25% QoQ; Personal Electronics flat YoY, low single digits QoQ; Communications equipment grew about 25% YoY, more than 30% QoQ%

    Deals & partnerships

    1
    Silicon Labsacquisition

    TI announced an agreement to acquire Silicon Labs, subject to necessary approvals. The transaction aims to enhance TI's position in embedded wireless connectivity and expand its portfolio.

    Capital programs

    1
    CHIPS Act Direct Funding Agreementunderwayup to $1.6 billion
    Period spend: $555 million
    Spent to date: $630 million
    Funding: CHIPS Act incentives

    Benefit: related to the start of production at our newest 300-millimeter wafer fab in Sherman, Texas

    This includes a $555 million payment received in the first quarter as part of our direct funding agreement, related to the start of production at our newest 300-millimeter wafer fab in Sherman, Texas. The remaining, we should get that over the coming years as we continue fulfilling the various milestones stipulated in the contract.

    Risks & headwinds

    5
    Sustainability of DemandSecond half of FY26

    Uncertainty regarding the sustainability of strong demand signals for the second half of the year.

    Mitigation: Playing it 'quarter-by-quarter,' monitoring market, leveraging inventory and capacity to support a range of scenarios.

    Geopolitical and Macro BackdropOngoing

    General geopolitical tensions and macro environment could impact growth.

    Mitigation: Being mindful of the overall macro backdrop and watching how sustainable the growth is.

    Automotive Market ChoppinessQ2 FY26 and beyond

    Automotive market was flat sequentially in Q1 FY26, with China down, indicating some choppiness.

    Mitigation: Expectation of continued secular growth in automotive content; market holding at high levels near peak.

    Memory Price Inflation / Availability

    Concerns about consumer-oriented and marketing demand destruction due to higher memory costs and availability.

    Mitigation: Not seeing direct evidence of impact; customers are aware and preparing.

    OSAT World TightnessCurrent

    Bottlenecks and tightness observed in the OSAT (Outsourced Semiconductor Assembly and Test) market.

    Mitigation: Internalizing more back-end assembly and test capacity to control destiny and support customers at a higher level.

    Q&A highlights

    8

    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

    2 min read6 chapters

    Detailed Narrative

    01

    Market Recovery and Positioning

    TI observed a continued semiconductor market recovery in Q1 FY26, with revenue exceeding the top end of guidance. The company is well-positioned with inventory and capacity to support customers with competitive lead times, leveraging its internally owned technology and manufacturing. This strategic positioning allows TI to fulfill customer demand at the highest level without shortages, potentially leading to market share gains.

    02

    Industrial and Data Center Momentum

    Industrial revenue showed broad-based growth across all sectors and regions, increasing over 30% year-on-year and 20% sequentially. Data center revenue also saw significant growth, up 90% year-on-year and over 25% sequentially, marking its eighth consecutive quarter of sequential growth. Management noted that industrial is still 15% below its 2022 peak, suggesting significant room for continued expansion driven by secular trends.

    03

    Automotive Market Dynamics

    While the overall automotive market was flat sequentially in Q1 FY26, it remained near peak levels, with China experiencing a sequential decline while the rest of the world saw an increase. Management expects secular growth in automotive to continue for the foreseeable future, driven by increasing content per vehicle across various powertrains. This segment has maintained elevated levels without the steep correction seen in other end markets.

    04

    Pricing Environment and Outlook

    Pricing was stable and flat both sequentially and year-on-year in Q1 FY26, which was better than the typical seasonal decline. Management anticipates similar stability in Q2 but suggests prices may increase in the second half if strong demand persists, given observed average price increases in the Analog market. Any price adjustments would be case-by-case discussions with customers, prioritizing supply and customer support.

    05

    Inventory and Capacity Management

    TI maintains a strong inventory position to ensure customer service and stable lead times, with days of inventory at 209, down 13 days sequentially. The company is modulating wafer starts in its 300-millimeter fabs and making incremental investments in assembly and test (AT) capacity to address potential bottlenecks and internalize more back-end supply. This strategy ensures readiness for a wide range of demand scenarios, from rapid growth to sustained expansion.

    06

    Silicon Labs Acquisition

    TI announced an agreement to acquire Silicon Labs, a transaction expected to close in the first half of 2027, pending necessary approvals. This acquisition aims to enhance TI's global leadership in embedded wireless connectivity, expand its product portfolio, and leverage TI's internal technology, manufacturing capabilities, and market channels. The deal is expected to be accretive on a non-GAAP basis.

    AI-generated summary of the company’s earnings call. Not investment advice.