✦ Elliott, and the Number in PublicNarrow moat
Texas Instruments (TXN) — the future bets
An activist arguing in the company's own vocabulary, about the company's own published number.
An activist arrived in 2024 arguing that TI was building too much, and the company has been agreeing with it in instalments ever since.
Elliott Investment Management took a stake of more than $2.5 billion in May 2024 and sent a 13-page letter proposing a dynamic capacity-management strategy that would deliver free cash flow of as much as $9 a share by 2026.1 Its analysis: the 2022 plan took capital spending toward 23% of revenue from roughly 5% over the preceding decade, free cash flow per share had fallen from $6.40 in 2022 to $1.47 in 2023, and the plan would leave TI with capacity around 50% above consensus revenue expectations in 2026 and 2030.
TI's chief executive signalled alignment with the proposals rather than contesting them, and has since talked about $12 a share and then more conservatively about $8 or more in 2026.2
Capital expenditure guidance for 2026 is $2–3 billion, from $4.55 billion.3 Whether that is a response or a coincidence is unknowable and largely irrelevant: the capacity plan is smaller than it was.
What the episode changed permanently is the vocabulary. TI already stated free cash flow per share as its objective; it is now the number every question is asked in.4
Watch free cash flow per share against $8. That is the target management has put in public, and the one it will be measured against.
Elliott has been on the register since 2024 and the company has moved substantially toward its position on capacity. The pressure has neither escalated nor resolved; what it changed permanently is the vocabulary.
Elliott's case was that the build-out had crushed free cash flow per share. Capital spending falling while CHIPS Act money arrives has lifted it fast; the test is whether it holds once the incentives end.
Source: Texas Instruments Form 10-Q, Q2 2026 ↗- ReportedElliott Investment Management took a stake of more than $2.5 billion in May 2024 and sent a 13-page letter proposing a dynamic capacity-management strategy that would deliver free cash flow of as much as $9 a share by 2026.Coverage of Elliott Investment Management's stake in Texas Instruments, May 2024. Elliott took a stake of more than $2.5 billion and sent a 13-page letter to the board proposing a dynamic capacity-management strategy that would allow TI to achieve free cash flow of as much as $9 a share by 2026. Elliott's letter focused on the 2022 capital expenditure plan, which called for capital spending to ramp to as much as $5 billion a year from 2023 to 2026 — as much as 23% of revenues, against roughly 5% over the preceding decade — and argued that a reversal in demand since the plan was set would leave capacity levels around 50% above consensus revenue expectations in 2026 and 2030. By Elliott's analysis, free cash flow per share fell from $6.40 in 2022 to $1.47 in 2023. Texas Instruments' chief executive subsequently signalled alignment with the proposals rather than contesting them, and suggested the company could reach $12 per share in 2026. — 2024 · publ. 2024-05-28 · source ↗
- ReportedTI's chief executive signalled alignment with the proposals rather than contesting them, and has since talked about $12 a share and then more conservatively about $8 or more in 2026.Coverage of Texas Instruments' second-quarter 2026 results, July 2026 — revenue of $5.46 billion, up 23% year over year and 13% sequentially against consensus near $5.24 billion; net income of $1.98 billion, up 53%, and EPS of $2.14, up 52% and above the high end of guidance. By segment, Analog revenue was $4.37 billion (up 26%), Embedded Processing $788 million (up 16%) and Other $310 million (down 2%). Industrial revenue grew more than 30% year over year across all sectors and regions, automotive re-accelerated, and data centre revenue roughly doubled. Management guided third-quarter revenue to $5.65-6.15 billion and confirmed 2026 capital expenditure of $2-3 billion, declining to bias the range toward the lower end. After holding pricing flat through the first half, TI began executing customer-by-customer price increases from the third quarter, extending into the fourth quarter and into 2027, concentrated in Analog. Management has framed free cash flow per share of $8 or more as probable for 2026, having earlier suggested $12. The shares fell after hours. — Q2 2026 · publ. 2026-07-24 · source ↗
- ReportedCapital expenditure guidance for 2026 is $2–3 billion, from $4.55 billion.Coverage of Texas Instruments' second-quarter 2026 results, July 2026 — revenue of $5.46 billion, up 23% year over year and 13% sequentially against consensus near $5.24 billion; net income of $1.98 billion, up 53%, and EPS of $2.14, up 52% and above the high end of guidance. By segment, Analog revenue was $4.37 billion (up 26%), Embedded Processing $788 million (up 16%) and Other $310 million (down 2%). Industrial revenue grew more than 30% year over year across all sectors and regions, automotive re-accelerated, and data centre revenue roughly doubled. Management guided third-quarter revenue to $5.65-6.15 billion and confirmed 2026 capital expenditure of $2-3 billion, declining to bias the range toward the lower end. After holding pricing flat through the first half, TI began executing customer-by-customer price increases from the third quarter, extending into the fourth quarter and into 2027, concentrated in Analog. Management has framed free cash flow per share of $8 or more as probable for 2026, having earlier suggested $12. The shares fell after hours. — Q2 2026 · publ. 2026-07-24 · source ↗
- ReportedTI already stated free cash flow per share as its objective; it is now the number every question is asked in.Texas Instruments Incorporated, Form 10-K for the year ended 31 December 2025 (SEC, CIK 97476) — Item 1, Business. TI's two reportable segments are Analog and Embedded Processing, with remaining activities in Other; operations began in 1930 and it has design, manufacturing or sales operations in more than 30 countries. The product portfolio includes more than 80,000 products. TI states four sustainable competitive advantages: a strong foundation of manufacturing and technology, a broad portfolio of analog and embedded processing products, the reach of its market channels, and the diversity and longevity of its products, markets and customer positions, which in combination it describes as difficult to replicate. An unpackaged chip built on a 300mm wafer costs about 40% less than one built on a 200mm wafer; TI continued qualifying and ramping production at its newest 300mm fabs in Richardson and Sherman, Texas, and Lehi, Utah, supporting external foundry transfers and internal transfers from its legacy 150mm facilities, and expects to maintain sufficient internal capacity to meet the majority of its production needs, offering customers geopolitically dependable capacity. TI sells to over 100,000 customers, with about half of revenue derived from customers outside its largest 50; more than 80% of revenue was direct in 2025, including TI.com. End markets as a percentage of 2025 revenue: industrial 33%, automotive 33%, personal electronics 21%, data centre 9%, communications equipment 3%, and calculators about 1%. About 60% of revenue comes from customers headquartered outside the United States; revenue from end customers headquartered in China represented about 20% of revenue in 2025, while revenue from products shipped into China represented about 50%. The analog and embedded processing markets remain highly fragmented, with significant global competition from dozens of large and small companies including emerging companies, particularly in Asia. The company's stated objective is the growth of free cash flow per share over the long term. — FY2025 · publ. 2026-02-06 · source ↗
- Texas Instruments Form 10-K, FY2025 (SEC EDGAR)
- Elliott takes a $2.5bn stake in Texas Instruments and urges better free cash flow (May 2024)