✦ Price, the Lever That Needs No WaferNarrow moat

Texas Instruments (TXN) — the future bets

Margin rose 4.4 points on volume alone before a single price increase landed.

Price is the lever that needs no additional wafer, and TI started pulling it in the third quarter of 2026.

Gross margin, and what is still to come (%)57.0%202561.4%Q2 2026, on volumefrom Q3 2026, on topPrice increasesA point of gross margin is worth roughly $195M a year at current revenue.
Four and a half points before a single price increase landed.

After holding prices flat through the first half, TI began executing customer-by-customer increases from the third quarter, extending into the fourth and into 2027, concentrated in the Analog segment.1 Industry reporting places it among several such moves within six months, with Chinese analog manufacturers following the same direction.2

The financial leverage is direct. Gross margin was 57.0% in 2025 and reached 61.4% in the June 2026 quarter on utilisation recovery alone; price increases land on top of that with no incremental cost.34 In a business with TI's fixed-cost base, a point of gross margin is worth roughly $195 million a year at current revenue.

The structural reason it is possible is the customer base: more than 100,000 customers and none above the 10% disclosure threshold means no single negotiation is consequential.5

The constraint is competitive geography. Increases are concentrated in Analog rather than spread across the commodity end, because the commodity end is exactly where Chinese alternatives exist.

Watch gross margin over the next three quarters. It will show whether the increases stuck before any revenue number does.

Moat trajectory: Widening

Prices held flat through the first half of 2026 and began rising customer by customer from the third quarter, concentrated in Analog and extending into 2027 — on a gross margin that had already reached 61.4% on volume alone.

The number that tests this moat
Reported
Gross margin
61.4% in the June 2026 quarter, from 57.0% in 2025

A 4.4-point improvement on utilisation alone, before any of the price increases that began in the third quarter landed. In a business with TI’s fixed-cost base a point of gross margin is worth roughly $195M a year at current revenue, and price arrives with no incremental cost at all.

Source: Texas Instruments Form 10-Q, quarter ended 30 June 2026 ↗
References
  1. ReportedAfter holding prices flat through the first half, TI began executing customer-by-customer increases from the third quarter, extending into the fourth and into 2027, concentrated in the Analog segment.
    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 ↗
  2. ReportedAfter holding prices flat through the first half, TI began executing customer-by-customer increases from the third quarter, extending into the fourth and into 2027, concentrated in the Analog segment. Industry reporting places it among several such moves within six months, with Chinese analog manufacturers following the same direction.
    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 ↗
  3. ReportedGross margin was 57.0% in 2025 and reached 61.4% in the June 2026 quarter on utilisation recovery alone; price increases land on top of that with no incremental cost.
    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. ReportedGross margin was 57.0% in 2025 and reached 61.4% in the June 2026 quarter on utilisation recovery alone; price increases land on top of that with no incremental cost.
    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. ReportedThe structural reason it is possible is the customer base: more than 100,000 customers and none above the 10% disclosure threshold means no single negotiation is consequential.
    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 ↗
Sources
Generated September 23, 2026