Texas Instruments (TXN): $60B Fab Build Meets Falling Revenue and Heavy CapEx

Strategic inflection: $60 billion factory program lands as FY2024 revenue drops#

Texas Instruments [TXN] has pushed the industry narrative forward with a $60 billion U.S. manufacturing build-out anchored by a supply relationship with [AAPL], even as the company reported FY2024 revenue of $15.64 billion (-10.72%) and net income of $4.80 billion (-26.28%). The contrast is stark: management is committing multidecade capital to secure domestic, high-volume analog capacity while the near-term income statement reflects the cyclical trough in end markets and a heavy cash outflow profile driven by expanded capital expenditure. That tension — enormous forward-facing capital commitments against a currently compressed earnings base — sets the terms for TI’s next chapter of execution and risk management.

What the recent financials actually show#

Texas Instruments' FY2024 results formalize a multi-year downshift from the revenue peak in FY2022. Revenue declined to $15.64B in 2024 from $17.52B in 2023, a year-over-year change of -10.72% calculated from the reported figures. Operating income fell to $5.46B, and operating margin compressed to 34.94%. Net income declined to $4.80B, or a net margin of 30.68%. These margin levels remain healthy by historical semiconductor industry standards, but the direction — double-digit revenue contraction and a larger percentage decline in net income — signals a classic cyclical trough rather than structural margin collapse.

Beneath the top line, cash generation remains robust but is being materially redirected to build capacity. Net cash provided by operating activities in FY2024 was $6.32B, which is ~+31.67% higher than reported net income (6.32 / 4.80 = 1.32x), indicating strong cash conversion before capital spending. Free cash flow fell into the mid-single-digit billions at $1.50B, however, after $4.82B of capital expenditures. Compared with FY2023 free cash flow of $1.35B, this is an increase of +11.11% (our independent calculation from the two reported FCF numbers). That improvement in FCF year-over-year masks the larger pattern: capex is being staged upward and will continue to pressure free cash flow until the new fabs reach steady utilization.

Reconciled metrics and a few data discrepancies#

When reconciling multiple summary metrics in the dataset, two items merit explicit callouts. First, the reported payout ratio field shows 97.2%, while cash-flow arithmetic using reported dividends paid ($4.79B) divided by reported net income ($4.80B) produces a cash payout ratio of ~99.79%. Separately, comparing dividend per share TTM $5.44 to net income per share TTM $5.55 yields a payout of ~98.02%. These differences arise from two calculation bases (cash dividends vs. accounting EPS vs. TTM aggregates) and timing; investors should note the practical reality that dividends are consuming nearly the entirety of reported earnings in 2024.

Second, the dataset lists a TTM current ratio of 5.81x, while the snapshot balance-sheet line-items for FY2024 produce total current assets $15.03B / total current liabilities $3.64B = 4.13x. The variance likely reflects differing quarter-end versus year-average inputs used to compute the TTM metric. For transparency we report both and prioritize the line-item ratio for period-end balance-sheet analysis while noting the TTM figure as an alternative view.

Income statement and balance-sheet trends (2021–2024)#

The table below summarizes the core income statement lines and key margins across the last four fiscal years to show the amplitude of the revenue cycle and margin durability.

Source: FY2021–FY2024 consolidated financial statements (reported figures).

Cash-flow and balance-sheet snapshot (2021–2024)#

The following table highlights capex, free cash flow, debt and liquidity to illustrate how TXN is funding the strategic build.

Source: FY2021–FY2024 cash-flow statements and balance-sheet footnotes.

These tables make the dynamic clear: operating cash generation remains a structural strength even as free cash flow has compressed relative to the peak years because of elevated capex and a substantial, recurring dividend payout.

Strategic transformation: what the $60B fab program aims to solve#

TI’s announced U.S. expansion — a multi-site plan to build seven fabs across Texas and Utah and migrate much mature-node analog production to larger 300mm wafer platforms — is both tactical and strategic. Tactically, moving mature-node, high-volume analog lines to 300mm wafers promises material per-unit cost improvements through scale: management projects per-unit cost reductions that can be on the order of ~20–30% as throughput and material efficiencies improve. Strategically, the program answers a different problem: supply-chain security for customers who prize onshore sourcing for foundational components. That combination of cost and commercial differentiation is the rationale for a long-duration, capital-intensive program.

The build is already anchored by an important commercial relationship with [AAPL], which is a practical demand underwriting mechanism for capacity that otherwise would be risky to underwrite with only cyclical industrial and automotive customers. The presence of anchor commitments helps underwrite utilization assumptions and increases the odds that capital spending will translate into durable incremental revenue rather than excess idle capacity. TI has also identified government support as a material economics offset: up to $1.6B in CHIPS Act grants plus an expected $6–8B of investment tax credits materially reduce the net capital required to execute the plan and improve projected IRR profile from a corporate finance standpoint Texas Instruments — Press Releases and context on CHIPS Act support is provided by the U.S. Congress legislation text U.S. Congress — CHIPS Act.

Execution signals and timing#

Operational rollout is phased. SM1 in Sherman, Texas has been highlighted as the lead facility with initial production expected to begin by late 2025 (management timelines and press coverage describe a multi-year ramp). Early indicators to track in subsequent quarters will be site-level equipment install rates, initial yield curves for mature-node 300mm lines, and the cadence of revenues attributable to onshore production. The company’s near-term capital spending profile — capex of $4.82B in FY2024 and similar levels projected in near years — is consistent with the front-loaded nature of fab builds.

Competitive dynamics and moat implications#

TI is not pursuing the same product or node set as advanced logic foundries like TSMC or Intel. Instead, the firm is doubling down on mature-node analog and embedded components, markets where it benefits from scale, product breadth, and design wins embedded in customers’ BOMs. This is a defensible position because analog content is sticky and scales with device count across automotive, industrial, and consumer electronics markets. TI’s vertically integrated manufacturing model gives it a potential cost and reliability advantage versus competitors who rely more heavily on outsourced foundry capacity. That said, the expansion increases exposure to execution risk: rivals that elect to expand domestic capacities or customers that demand alternative sourcing could erode some of the pricing flexibility that TI historically enjoyed.

Capital-allocation trade-offs: dividends, buybacks and balance sheet posture#

TI’s capital allocation in FY2024 shows a company attempting to balance aggressive capex deployment with a legacy shareholder-return commitment. Management returned $4.79B in dividends in 2024 and repurchased $929M of stock as investments increased, yielding a payout profile that—by cash-flow math—consumed virtually all of FY2024 reported net income. Despite the high dividend cash draw, leverage remains moderate: total debt of $13.60B and reported net debt of $10.40B against FY2024 EBITDA of $7.54B gives a net-debt-to-EBITDA of ~1.38x, a conservative position that preserves financial flexibility while supporting large-scale capex.

This combination — near-term dividend cash drain and an elevated capex plan — means that TI will likely prioritize preserving investment-grade balance-sheet metrics while phasing buybacks and maintaining dividends at levels management deems sustainable. Investors should monitor the sequencing of repurchases, dividend declarations, and explicit commentary on utilization targets for the new fabs.

Earnings quality and recent quarterly cadence#

Quarterly surprise data in 2025 shows a string of modest beats: four recent quarters all exceeded consensus estimates (for example, 2025-07-22 actual EPS 1.41 vs estimate 1.36). This pattern suggests that management’s near-term operational control — pricing, cost discipline and product-mix management — remains intact. Cash quality appears solid: operating cash flow consistently exceeds net income, which in typical years provides a cushion against cyclical earnings weakness. However, the ultimate test of earnings quality will be the conversion of fab investment into incremental, accretive cash flow when utilization reaches design targets.

Key risks to watch#

Execution risk on the fab build is primary: delays, yield shortfalls or slower-than-expected customer ramp would materially stretch the period during which capex drags on free cash flow. Market cyclicality remains a second-order risk: much of TI’s revenue is exposed to industrial, automotive and consumer cycles; prolonged weakness would magnify capital-intensity stress. Finally, shareholder-return expectations are another risk vector: given dividends consume nearly all reported earnings under current accounting, sustained share-repurchase activity will be constrained unless operational cash generation meaningfully outpaces capex.

What this means for investors (data-driven implications)#

Investors should view TI’s strategy as a long-duration, capital-allocation story. The $60 billion build is purposeful: it aims to secure durable, onshore analog capacity that customers will pay a premium for in terms of supply security and logistics simplicity. Financially, the near term looks like heavy capex, elevated dividends relative to earnings, and a deliberate trade-off between capacity expansion and near-term free cash flow. Credit metrics remain healthy (net-debt-to-EBITDA ~1.38x), but the company will be judged on execution metrics: fab ramp timing, capacity utilization, per-unit cost improvements from 300mm migration, and the extent to which anchor customers such as [AAPL] deliver committed volumes. Progress on these fronts will determine whether the strategic expansion converts into margin and free-cash-flow expansion or simply extends a period of capital intensity.

Featured snippet opportunity: How is TI funding the $60B expansion?#

TI is funding the expansion with a mix of internal operating cash flow, expected government incentives (up to $1.6B in CHIPS Act grants plus $6–8B of projected investment tax credits), and conservative use of debt, leaving the company with total debt $13.60B and net debt $10.40B as of FY2024. Phased capex smooths the cash burden and anchors in customers like [AAPL] improve utilization visibility — both mechanisms reduce the probability of outright funding shortfalls while the build progresses Texas Instruments — Press Releases U.S. Congress — CHIPS Act.

Key takeaways#

Texas Instruments is executing a consequential strategic pivot toward onshore, high-volume analog manufacturing with a $60B multi-year build. The company is trading immediate cash-flow flexibility for long-term supply security and cost advantages derived from 300mm wafer economics. FY2024 shows revenue contraction (-10.72%) and compressed net income (-26.28%), but margins remain robust in absolute terms and operating cash flow remains healthy. Capital intensity is the central theme: free cash flow is currently modest after capex, dividends consume nearly all reported earnings by cash math, and balance-sheet leverage remains conservative but will be tested by ongoing investment. Execution milestones to monitor will be fab yields, utilization, timing of revenue recognition from onshore capacity, and government incentives realization. These variables will determine whether the large capital outlay translates into durable margin expansion and higher free cash flow at scale.

Conclusion#

TI’s plan is a clear, binary-style capital bet: deliver national-scale, cost-efficient analog capacity that customers need for supply resilience and reap the returns through higher utilization, lower per-unit cost and scale-driven margin expansion. The near-term trade-off is evident in FY2024 numbers — falling revenue, heavy capex, and dividend levels that consume most reported earnings — but the company retains strong cash-generation ability and conservative leverage that should support execution if management hits reported timelines and customer commitments. The story for stakeholders is now execution risk versus structural opportunity: if TI converts its capex into the forecasted 300mm efficiencies and maintainable utilization, the long-term economics change substantially; if the build is delayed or utilization underwhelms, the company will face an extended period of capital intensity and constrained free cash flow.

All financial figures and ratios presented are independently calculated from the provided FY2021–FY2024 consolidated line items. Specific program and incentive figures are reported by Texas Instruments and summarized in public statements and press coverage.