Texas Instruments NASDAQ: TXN reported first-quarter 2026 revenue of $4.8 billion, up 9% sequentially and 19% year-over-year, as the company pointed to continued recovery in the broader semiconductor market and accelerating demand in several end markets, particularly industrial and data center.
CEO Haviv Ilan said results came in above the top end of the company’s revenue range, driven by “continued acceleration in industrial and data center.” He added that the company believes it is “well-positioned with inventory and capacity” to support customers with competitive lead times through the cycle.
Silicon Labs acquisition agreement
Ilan opened the call by highlighting an agreement for TI to acquire Silicon Labs. He said the transaction is intended to “enhance our global leadership in embedded wireless connectivity,” expand TI’s portfolio, and leverage TI’s internally owned technology, manufacturing, and market channels. TI expects the deal to close in the first half of 2027, subject to required approvals.
End-market trends: industrial and data center led growth
In the quarter, TI reported sequential and year-over-year growth in both Analog and Embedded. Ilan said analog revenue rose 22% year-over-year and embedded processing increased 12%, while the company’s Other segment declined 16% from the year-ago quarter.
By end market, Ilan provided the following trends:
- Industrial: Up more than 30% year-over-year and up more than 20% sequentially, with growth “broadly across all sectors and regions.”
- Automotive: Up mid-single digits year-over-year and “about flat” sequentially.
- Data center: Up about 90% year-over-year and up more than 25% sequentially.
- Personal electronics: Flat year-over-year and up low single digits sequentially.
- Communications equipment: Up about 25% year-over-year and up more than 30% sequentially.
During Q&A, Ilan said first-quarter customer behavior looked like a continuation of the prior quarter, marking the “eighth quarter of sequential growth.” He described industrial demand as broader than before, with all sectors and geographies growing sequentially and demand “continued to accelerate through the quarter,” including after the Lunar New Year period.
On automotive, Ilan said the company was not seeing a meaningful change from the prior quarter. He noted that in the first quarter, China was down while the rest of the world was up, resulting in a flat sequential quarter overall. He said it was “too soon to call” how automotive develops in the second quarter, while emphasizing continued secular growth in automotive content across powertrains.
Profitability, cash flow, and capital returns
CFO Rafael Lizardi said gross profit was $2.8 billion, or 58% of revenue, with gross margin up 210 basis points sequentially. Operating expenses were $974 million. Operating profit was $1.8 billion, or 37% of revenue, and was up 37% from the year-ago quarter. Net income was $1.5 billion, or $1.68 per share, including a $0.05 per-share benefit “primarily due to discrete tax benefits.”
TI generated $1.5 billion in cash flow from operations in the quarter and $7.8 billion over the trailing 12 months. Capital expenditures were $676 million in the quarter and $4.1 billion over the last 12 months. Lizardi said trailing 12-month free cash flow was $4.4 billion, up from $1.7 billion in the first quarter of 2025, “trending up as growth returns and CapEx begins to moderate.”
Lizardi said trailing 12-month free cash flow included $965 million of CHIPS Act incentives, including a $555 million payment received in the first quarter tied to the start of production at TI’s newest 300 mm wafer fab in Sherman, Texas.
In the quarter, TI paid $1.3 billion in dividends and repurchased $158 million of stock, returning $6 billion to shareholders over the past 12 months. The company ended the quarter with $5.1 billion of cash and short-term investments and $14 billion of total debt with a weighted average coupon of 4%.
Inventory ended the quarter at $4.7 billion, down $109 million sequentially. Days of inventory were 209, down 13 days sequentially. Lizardi added that in an upturn, inventory days “should be draining” toward the lower end of the company’s 150–250 day range.
Guidance, capacity posture, and pricing commentary
For the second quarter of 2026, TI expects revenue of $5.0 billion to $5.4 billion and earnings per share of $1.77 to $2.05. The company expects an effective tax rate of about 13% for the quarter.
Executives repeatedly emphasized flexibility in capacity and inventory management. Lizardi said TI has the capacity and inventory to handle “a wide range of scenarios,” while Ilan said the company is “modulating starts real time” in analog manufacturing. Ilan also noted TI may make incremental investments in assembly and test, describing a “tighter environment” externally and pointing to the advantage of having brought more supply internally.
On gross margin dynamics and the outlook, Ilan told analysts to expect incremental fall-through in the company’s historical “75%–85%” range (excluding long-term depreciation). In response to a question on implied gross margin, Ilan also pointed to acquisition-related charges, saying TI expects those charges to continue “every quarter until we close” the Silicon Labs transaction and suggesting analysts model the second-quarter acquisition line “somewhere in the range of what we just reported” in the first quarter.
On pricing, Ilan said pricing was stable in the first quarter, coming in “better than our model,” and flat both sequentially and year-over-year on a like-for-like basis. He said he expects the second quarter to be similar. Looking further out, Ilan said that if demand remains strong and the company continues to observe an “average price increase” across the analog market in recent months, “it’s likely that prices may go up in the second half of the year,” though he described it as case-by-case and tied to the sustainability of demand.
Discussing spending, Ilan reaffirmed TI’s expectation of $2 billion to $3 billion of 2026 capital expenditures. He also referenced the company’s longer-term capex intensity framework of roughly 1.2x revenue growth.
On depreciation, Lizardi said there was no change to expectations: $2.2 billion to $2.4 billion in 2026, with continued upward pressure in 2027 but “likely at a slower rate.” On CHIPS Act direct funding, he said TI has received $630 million to date (including the recent payment) out of up to $1.6 billion, with the remainder expected “over the coming years” as the company meets contract milestones. He also emphasized the investment tax credit (ITC) as the more meaningful long-term benefit, noting it is 35% of qualifying manufacturing investments.
Closing the call, Ilan reiterated TI’s long-term focus on free cash flow per share, calling it “the best metric to measure progress and generate value to owners,” while management said it would continue investing in manufacturing and technology, a broad portfolio, and channel reach alongside disciplined capital allocation.
About Texas Instruments NASDAQ: TXN
Texas Instruments Inc NASDAQ: TXN is a global semiconductor company headquartered in Dallas, Texas, that designs and manufactures analog and embedded processing chips. The company's products are used across a wide range of end markets, including industrial, automotive, personal electronics, communications and enterprise equipment. TI's business emphasizes components that condition, convert, manage and move electrical signals—capabilities that are foundational to modern electronic systems.
TI's product portfolio includes a broad array of analog integrated circuits—such as power management, amplifiers, data converters and interface devices—as well as embedded processors and microcontrollers used to control systems and run real-time applications.
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