⚠ The Largest Line Has Not Earned Its Keep YetModerate threat

Texas Instruments (TXN) — threat to the moat

Twenty-four billion dollars has so far produced a halving of the return on capital. The verdict is due around 2028.

Publishing a ten-year capital-allocation total invites the question of whether the largest line was well spent.

Has the $24bn earned its keep?Return on capital, 202149.8%Return on capital, 202417.6%Q2 2026 revenue growth+23%Verdict dueAround 2028Anything settling below the mid-twenties three years after the cliff would say it was too large.
Six years of spending, and the answer is still three years away.

TI discloses that it allocated $109 billion from 2016 to 2025, with about $24 billion into capital expenditure.1 The transparency is admirable and it makes the current dispute concrete rather than philosophical.

The answer so far is unflattering. Return on invested capital fell from 49.8% in 2021 to 17.6% in 2024 as that capital landed while the cycle took revenue down 22%.2 Six years and $24 billion produced, to date, a halving of the return.

The defence is timing: fabs earn over decades and the cycle turned while they were being poured. The June 2026 quarter, with revenue up 23% and operating profit up 48%, is the first real evidence for it.3

The test is not whether returns recover but how far. Anything settling below the mid-twenties three years after the capex cliff would say the capacity was larger than the market needed.

Watch return on invested capital in 2028, not in 2026.

References
  1. ReportedTI discloses that it allocated $109 billion from 2016 to 2025, with about $24 billion into capital expenditure.
    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 calcReturn on invested capital fell from 49.8% in 2021 to 17.6% in 2024 as that capital landed while the cycle took revenue down 22%.
    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. ReportedThe June 2026 quarter, with revenue up 23% and operating profit up 48%, is the first real evidence for it.
    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 ↗
Sources
Generated September 23, 2026