Analog Devices: Built Versus BoughtNarrow moat

Texas Instruments (TXN) — moat facet

TI spent $24 billion on fabs while Analog Devices spent it on Linear and Maxim. The next three years settle which was right.

Analog Devices and Texas Instruments got to the same place by opposite routes, and the next three years will say which route was better.

Two ways to buy breadth~$24bnTI: fabs, 2016-2025$14.8bnADI: Linear, 2017~$21bnADI: Maxim, 2021Plant depresses return on capital immediately and visibly; goodwill does it slowly.
Built versus bought, and the next three years settle it.

TI built. Roughly $24 billion of capital expenditure over the decade to 2025, most of it a six-year programme converting production to 300mm wafers where an unpackaged chip costs about 40% less than on 200mm.1 ADI bought: Linear Technology in 2017 and Maxim Integrated in 2021, acquiring breadth and high-margin franchises rather than constructing capacity.

The accounting consequence is the interesting part. TI's return on invested capital fell from 49.8% in 2021 to 17.6% in 2024 as the fabs landed on the balance sheet.2 An acquirer's capital shows up as goodwill and intangibles rather than as plant, and depresses returns in a different, slower way.

Both companies now face the same market, with different balance sheets and different fixed-cost structures. TI's is the higher-operating-leverage version: gross margin went from 57.0% in 2025 to 61.4% in the June 2026 quarter as utilisation recovered.34

Both were also named in China's September 2025 anti-dumping investigation into American-made analog chips, which is a reminder that the strategic difference matters less than the geography.5

The comparison to watch is return on invested capital over the next three years. TI's should recover faster if the fabs fill.

Moat trajectory: Holding steady

Both companies face the same market with different balance sheets, and both were named in the same Chinese investigation. The strategic difference — built versus bought — has not resolved and will not for several years.

The number that tests this moat
Moat Explorer calc
Analog operating margin, first half
About 43.8% in H1 2026, from 38.0%

Building capacity rather than buying rivals should lift margins once the fabs fill; this is where it shows.

How it's calculated: 3,630 / 8,289 against 2,531 / 6,662.
Source: Texas Instruments Form 10-Q, quarter ended 30 June 2026 ↗
References
  1. ReportedRoughly $24 billion of capital expenditure over the decade to 2025, most of it a six-year programme converting production to 300mm wafers where an unpackaged chip costs about 40% less than on 200mm.
    Texas Instruments Incorporated, Form 10-K FY2025 — Management's Discussion and Analysis, cash flow statement and the free-cash-flow reconciliation. Cash flow from operations $7,153M (2024 $6,318M), 40.5% of revenue; capital expenditures $4,550M (2024 $4,820M); proceeds from CHIPS Act incentives $335M; free cash flow $2,938M (2024 $1,498M), 16.6% of revenue. In 2025 TI invested $3.94bn in R&D and SG&A, invested $4.55bn in capital expenditures and returned $6.48bn to shareholders. Dividends paid were $4,999M against $4,795M in 2024 and $4,557M in 2023, reflecting an increased dividend rate; $1,477M was used to repurchase 8.5 million shares against $929M for 4.7 million shares in 2024. Net proceeds of $1,199M were received from the issuance of fixed-rate long-term debt and $750M of maturing debt retired. Over the ten-year period from 2016 to 2025 TI allocated $109 billion, of which about $24 billion went to capital expenditures, and states it is near completion of its six-year elevated capital expenditure cycle. The dividend was raised 4% to $1.42 per share per quarter, marking 22 consecutive years of increases, since extended to 23. The One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI expects the effective tax rate and tax-related cash payments to be lower than under prior law from 2026. — FY2025 · publ. 2026-02-06 · source ↗
  2. Moat Explorer calcTI's return on invested capital fell from 49.8% in 2021 to 17.6% in 2024 as the fabs landed on the balance sheet.
    Return on invested capital for Texas Instruments computed from SEC EDGAR XBRL filings — NOPAT divided by average operating invested capital, where NOPAT is operating income after the effective tax rate and invested capital is total assets less current liabilities less cash. The series for 2015 to 2025 is 23.4%, 27.6%, 29.6%, 43.2%, 39.0%, 40.1%, 49.8%, 45.8%, 27.2%, 17.6% and 18.6%. The decline from the 2021 peak coincides with roughly $24 billion of capital expenditure over the decade to 2025 and a fall in revenue from $20,028M in 2022 to $15,641M in 2024. — 2015-2025 · publ. 2026-02-06 · source ↗
  3. ReportedTI's is the higher-operating-leverage version: gross margin went from 57.0% in 2025 to 61.4% in the June 2026 quarter as utilisation recovered.
    Texas Instruments Incorporated, Form 10-Q for the quarter ended 30 June 2026 (SEC, CIK 97476). Revenue $5,463M against $4,448M a year earlier, and $10,288M for the six months against $8,517M; cost of revenue $2,111M; gross profit $3,352M against $2,575M — a 61.4% gross margin against 57.9%; research and development $535M against $527M; selling, general and administrative $490M against $485M; acquisition charges $17M; operating profit $2,310M against $1,563M. Income before income taxes $2,238M; provision for income taxes $258M; net income $1,980M against $1,295M. Basic EPS $2.16 and diluted EPS $2.14, against $1.42 and $1.41, on 920 million diluted shares. — Q2 2026 · publ. 2026-07-24 · source ↗
  4. ReportedTI's is the higher-operating-leverage version: gross margin went from 57.0% in 2025 to 61.4% in the June 2026 quarter as utilisation recovered.
    Texas Instruments Incorporated, Form 10-Q for the quarter ended 30 June 2026 (SEC, CIK 97476). Revenue $5,463M against $4,448M a year earlier, and $10,288M for the six months against $8,517M; cost of revenue $2,111M; gross profit $3,352M against $2,575M — a 61.4% gross margin against 57.9%; research and development $535M against $527M; selling, general and administrative $490M against $485M; acquisition charges $17M; operating profit $2,310M against $1,563M. Income before income taxes $2,238M; provision for income taxes $258M; net income $1,980M against $1,295M. Basic EPS $2.16 and diluted EPS $2.14, against $1.42 and $1.41, on 920 million diluted shares. — Q2 2026 · publ. 2026-07-24 · source ↗
  5. ReportedBoth were also named in China's September 2025 anti-dumping investigation into American-made analog chips, which is a reminder that the strategic difference matters less than the geography.
    Coverage of China's anti-dumping investigation into American-made analog chips, September 2025. China's Ministry of Commerce opened the probe on 13 September 2025 into certain American-made analog integrated circuits, targeting commodity interface ICs and gate driver ICs and naming products sold by Texas Instruments and Analog Devices among others. The anti-dumping investigation period covers 1 January to 31 December 2024 and the injury investigation period 1 January 2022 to 31 December 2024; the investigation is normally scheduled to be completed by 13 September 2026, extendable by a further six months in special circumstances. China's Trade Remedy and Investigation Bureau issued questionnaires seeking data on sales activities in China, including comparisons of costs and profits in the home country and in China, with responses required within 37 days. A duty regime could prompt Chinese manufacturers to pay more for US-origin analog chips, switch to domestic alternatives or pivot to non-US vendors. — 2025-2026 · publ. 2025-09-15 · source ↗
Sources
Generated September 23, 2026