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    TXN
    Earnings call· Dec 2025(Q4 FY25)

    TEXAS INSTRUMENTS INC TXN

    Jan 27, 2026 Source

    Executive summary

    Texas Instruments Q4 FY25 — Strong Q1 Guidance Driven by Industrial Recovery and Data Center Growth

    Texas Instruments reported Q4 FY25 results largely as expected, with strong year-over-year growth in Analog and Embedded Processing, driven by continued recovery in the industrial market and robust growth in data center. The company issued Q1 FY26 guidance that is notably above seasonal trends, citing improving orders and the increasing contribution from the data center segment. Management emphasized its strategic inventory position and advanced manufacturing capacity, particularly the ahead-of-schedule Sherman fab, to meet real-time customer demand and support long-term growth.

    Highlights

    7

    • Q4 FY25 revenue of $4.4 billion increased 10% year-over-year.

    • Analog revenue grew 14% year-over-year, and Embedded Processing grew 8% year-over-year in Q4 FY25.

    • Industrial market revenue was up high teens year-on-year, and Data Center revenue grew approximately 70% year-on-year in Q4 FY25.

    • FY25 revenue from Industrial, Automotive, and Data Center combined made up about 75% of total revenue, up from 43% in 2013.

    • Q1 FY26 revenue guidance of $4.32 billion to $4.68 billion is significantly stronger than typical seasonality, driven by improving orders and data center strength.

    • Cash flow from operations was $2.3 billion in Q4 FY25 and $7.2 billion for FY25.

    • The dividend per share was increased by 4% to $1.42, marking the 22nd consecutive year of increases.

    Concerns

    6

    • Q4 FY25 revenue decreased 7% sequentially.

    • The Other segment declined year-over-year in Q4 FY25.

    • Personal electronics revenue declined upper teens year-on-year and mid-teens sequentially in Q4 FY25.

    • Communications equipment revenue declined low single digits year-on-year and mid-teens sequentially in Q4 FY25.

    • Q4 FY25 EPS included a $0.06 reduction related to noncash goodwill impairment and other tax items.

    • Inventory days increased by 7 sequentially to 222 days at the end of Q4 FY25.

    Guidance & targets

    6
    CategoryTargetConfidence
    Revenue
    $4.32B to $4.68B
    high materiality
    High
    Earnings Per Share
    $1.22 to $1.48
    high materiality
    High
    Effective Tax Rate
    13% to 14%
    medium materiality
    High
    Capital Expenditures
    $2B to $3B
    high materiality
    High
    Depreciation
    $2.2B to $2.4B
    medium materiality
    High
    Depreciation
    upward pressure, slower rate of increase
    low materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Analog
    Grew 14% year-over-year in Q4 FY25.
    		—14%——
    Embedded Processing
    Grew 8% year-over-year in Q4 FY25.
    		—8%——
    Other
    Declined from the year-ago quarter in Q4 FY25.
    		—declined——
    Industrial
    Up high teens year-on-year in Q4 FY25 and down mid-single digits sequentially. For FY25, revenue was $5.8 billion, up 12% year-on-year, representing 33% of total revenue.
    Percentage of revenue (FY25): 33%
    		$5.8B12%——
    Automotive
    Increased upper single digits year-on-year in Q4 FY25 and was down low single digits sequentially. For FY25, revenue was $5.8 billion, up 6% year-on-year, representing 33% of total revenue.
    Percentage of revenue (FY25): 33%
    		$5.8B6%——
    Data Center
    Grew around 70% year-on-year and mid-single digits sequentially in Q4 FY25. For FY25, revenue was $1.5 billion, up 64% year-on-year, representing 9% of total revenue. This market has grown for 7 consecutive quarters.
    Percentage of revenue (FY25): 9%
    		$1.5B64%——
    Personal Electronics
    Declined upper teens year-on-year and mid-teens sequentially in Q4 FY25. For FY25, revenue was $3.7 billion, up 7% year-on-year, representing 21% of total revenue. Mobile phones performed best within this segment in Q4.
    Percentage of revenue (FY25): 21%
    		$3.7B7%——
    Communications Equipment
    Declined low single digits year-on-year and mid-teens sequentially in Q4 FY25. For FY25, revenue was approximately $500 million, up about 20% year-on-year, representing 3% of total revenue.
    Percentage of revenue (FY25): 3%
    		$500M20%——

    Operational metrics

    18
    Non-GAAP gross margin
    56%down 150 bps sequentially
    Q4 FY25

    Gross profit in the quarter was $2.5 billion or 56% of revenue.

    Operating expenses
    $967Mup 3% from a year ago
    Q4 FY25

    Operating expenses in the quarter were $967 million, up 3% from a year ago and about as expected.

    Operating expenses
    $3.9B
    TTM

    On a trailing 12-month basis, operating expenses were $3.9 billion or 22% of revenue.

    Operating profit
    $1.5Bup 7% from the year-ago quarter
    Q4 FY25

    Operating profit was $1.5 billion in the quarter or 33% of revenue and was up 7% from the year-ago quarter.

    Non-GAAP EPS
    $1.27
    Q4 FY25

    Net income in the fourth quarter was $1.2 billion or $1.27 per share. Earnings per share included a $0.06 reduction not in our original guidance related to the noncash impairment of goodwill in our Other segment and other tax-related items.

    Capital expenditures
    $925M
    Q4 FY25

    Capital expenditures were $925 million in the quarter.

    Capital expenditures
    $4.6B
    FY25

    In 2025, cash flow from operations was $7.2 billion and capital expenditures were $4.6 billion.

    Dividends paid
    $1.3B
    Q4 FY25

    In the quarter, we paid $1.3 billion in dividends.

    Stock repurchases
    $403M
    Q4 FY25

    and repurchased $403 million of our stock.

    Dividend per share
    $1.42increased 4%
    Q4 FY25

    We also increased our dividend per share by 4% in the fourth quarter to $1.42 per share, marking our 22nd consecutive year of dividend increases.

    Total capital returned
    $6.5B
    past 12 months

    In total, we have returned $6.5 billion in the past 12 months to owners.

    Cash and investments balance
    $4.9B
    end of Q4 FY25

    Our balance sheet remains strong with $4.9 billion of cash and short-term investments at the end of the fourth quarter.

    Total debt outstanding
    $14B
    end of Q4 FY25

    Total debt outstanding was $14 billion with a weighted average coupon of 4%.

    Inventory
    $4.8Bdown $25M from prior quarter
    end of Q4 FY25

    Inventory at the end of the quarter was $4.8 billion, down $25 million from the prior quarter.

    Inventory days
    222up 7 days sequentially
    end of Q4 FY25

    and days were 222, up 7 days sequentially.

    CHIPS Act incentives
    $670M
    FY25

    In 2025, we received that $670 million cash benefit related to CHIPS Act incentives.

    Investment Tax Credit (ITC)
    35%
    as of Jan 1, 2026

    investment tax credit, it is now 35% as of January 1 of '26. So anything that we put in place, any CapEx we put in place, both equipment, building, cleanroom in 2026, we get back 35% on the ITC credit.

    Pricing assumption
    low single digits down
    FY26

    That's my assumption for 2026. That's what we expect the market conditions to be. If anything changes with pricing, if we'll see -- of course, TI will respond. But right now, that's our assumption moving forward.

    Industry KPIs

    9
    MetricValueDetails
    Lead timesbelow 13 weeksweeks
    Backlog order bookdid build
    Book to bill ratio—
    Ai data center revenue$1.5BUSD
    Fab capacity utilizationramped ahead of schedule
    Bookings net order intakeimproving orders
    Inventory channel inventory$4.8BUSD
    Node platform ramp schedule65-nanometer transition completed
    End market segment revenue mixIndustrial: $5.8B (33% of revenue, up 12% YoY); Automotive: $5.8B (33% of revenue, up 6% YoY); Data Center: $1.5B (9% of revenue, up 64% YoY); Personal Electronics: $3.7B (21% of revenue, up 7% YoY); Communications Equipment: ~$500M (3% of revenue, up ~20% YoY)USD

    Orderbook & backlog

    3
    Backlogdid buildQ4 FY25

    built through the quarter

    Reflected in Q1 FY26 guidance.

    Bookingsstronger bookingsQ4 FY25

    improving throughout the quarter

    Main driver for above-seasonal Q1 FY26 guidance.

    Turns businesshigher levelsQ4 FY25

    Customers wanting orders shipped right away, indicating real-time demand.

    Capital programs

    2
    Sherman Fab Build-outsramped ahead of schedule

    Benefit: high level of throughput

    Execution in Sherman is ahead of schedule with high yields. The factory is more capable than originally hoped, with a high level of throughput planned. Sherman 1 has production lines running, and Sherman 2 has a shell for future capacity.

    Lehi Fab Expansionon schedule

    Benefit: 65nm and 45nm technology production

    The Lehi fab is on schedule with its transition and in-sourcing progress from foundry wafers, mainly for Embedded Processing. The 65-nanometer transition was completed in FY25, yielding at foundry levels. The 45-nanometer technology, supporting automotive radar, is progressing well.

    Risks & headwinds

    4
    Goodwill impairment and tax-related itemsQ4 FY25

    $0.06 reduction to EPS

    Weakness in Personal Electronics marketQ4 FY25

    declined upper teens YoY and mid-teens sequentially

    Mitigation: Mobile phones performed best within the segment, indicating some internal resilience.

    Weakness in Communications Equipment marketQ4 FY25

    declined low single digits YoY and mid-teens sequentially

    Market jitteriness and uncertaintypast 12 months

    The market has been jittery in the last 12 months

    Mitigation: TI has invested in capacity and inventory to be ready for various market scenarios, allowing flexibility to adjust loadings as needed.

    What to watch in Q1 FY26

    5

    Industrial market recovery sustainability

    next quarter
    CurrentUp high teens YoY in Q4 FY25
    TargetContinued sustainable pickup in orders

    Why it matters

    The industrial market is a key growth driver for TI, and its sustained recovery is crucial for overall revenue performance.

    We want to see how sustainable this wake-up in orders is.

    Q&A highlights

    6

    Why is Q1 FY26 guidance significantly stronger than seasonal trends, and what specific end markets or geographies are driving this optimism?

    Management attributed the stronger-than-seasonal Q1 guidance to continued recovery in industrial, sustained strength in data center (growing for 7 consecutive quarters), and improving orders throughout Q4 FY25. They noted that the industrial market still has significant room to recover to previous peaks, and data center is becoming a more substantial part of revenue.

    “The other market that I will highlight is the continued strength in data center. We are seeing this market now becoming a little bit more substantial as a percentage of our revenue. I expect this market to continue to grow in Q1. It's been growing for now 7 quarters in a row for us.”

    asked by Ross Seymore · answered by Haviv Ilan

    2 min read5 chapters

    Detailed Narrative

    01

    End Market Reorganization and Strategic Focus

    Texas Instruments reorganized its end markets to better reflect growth opportunities for its Analog and Embedded products, now categorizing them as industrial, automotive, data center, personal electronics, and communications equipment. This strategic shift emphasizes the company's focus on industrial, automotive, and data center, which collectively accounted for 75% of TI's revenue in 2025, a significant increase from 43% in 2013. Management believes these markets will continue to drive faster growth due to increasing chip content per application.

    02

    Industrial Market Recovery and Data Center Strength

    The industrial market demonstrated strong recovery in Q4 FY25, growing high teens year-on-year, with management noting significant room for further recovery compared to previous peaks. The data center market continued its robust performance, growing approximately 70% year-on-year and mid-single digits sequentially in Q4 FY25, marking its seventh consecutive quarter of growth. Data center now represents 9% of FY25 revenue and is expected to continue its growth trajectory, moving the needle for overall company performance.

    03

    Advanced Manufacturing Capacity and Execution

    TI is nearing the completion of a 6-year elevated CapEx cycle, which has positioned the company with dependable, low-cost 300-millimeter capacity. The Sherman fab build-outs are ahead of schedule, exhibiting high yields and greater capability than initially anticipated, with production lines already running in Sherman 1. The Lehi fab is also on schedule, successfully transitioning 65-nanometer technology and progressing well with 45-nanometer technology, particularly for automotive radar applications.

    04

    Inventory Management and Customer Responsiveness

    Management expressed satisfaction with its inventory position, which stood at $4.8 billion (222 days) at the end of Q4 FY25. This inventory is viewed as a strategic asset, enabling TI to serve immediate customer demand and a high volume of 'turns business' (orders shipped right away). The company is willing to carry this diverse and long-lived inventory to enhance customer support, allowing flexibility to adjust factory loadings based on real-time demand signals.

    05

    Capital Allocation and Shareholder Returns

    Texas Instruments returned $6.5 billion to shareholders over the past 12 months. In Q4 FY25 alone, the company paid $1.3 billion in dividends and repurchased $403 million of its stock. The quarterly dividend per share was increased by 4% to $1.42, extending its streak of consecutive dividend increases to 22 years. This capital allocation strategy aims to maximize long-term free cash flow per share growth, which management considers the primary driver of long-term value.

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