Texas Instruments falls after cautioning on demand recovery speed

[Texas Instruments World Headquarters]
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Shares of Texas Instruments (NASDAQ:TXN [https://seekingalpha.com/symbol/TXN]) fell about 5% on Thursday after CFO Rafael Lizardi cautioned at the Citi TMT conference that recovery in semiconductor demand is not quite snapping back as some have hoped.

“It’s not quite happening... as maybe some people anticipated or as other recoveries have happened," said Lizardi at the conference, according to Bloomberg News.

Texas Instruments did not immediately respond to a request for comment from Seeking Alpha.

The company sees a broad-based recovery underway across four of five end markets, but automotive remains the exception, recovering more slowly. Recovery is not a sharp snapback but steady, with secular growth opportunities in industrial, automotive content, enterprise, and data centers, the company added.

The company noted that automotive remains the slowest to recover, likely impacted by macro uncertainty. However, long-term content growth in automotive is expected to expand Total addressable market, or TAM, for the company's products.

Texas Instruments maintained low lead times by design, leveraging catalog-based business, higher internal manufacturing, and reduced reliance on distributors. Inventory days were about 21 to 25 last quarter, aligned with expected revenue scenarios.

Mike Beckman, vice president and head of Investor Relations, noted that industry wide, global shipments are recovering, but “probably at a different pace than historical cycles," according to the Bloomberg report.

The company noted that capital expenditure remains high (about $5B for 2025, three consecutive years), focused on multi-year, phased expansion in the U.S. and modular scaling to meet demand.

For 2026, CapEx is expected between $2B and $3B if revenue is at the lower end of guidance, with a $2B floor to complete ongoing projects, according to the company.

Texas Instruments added that it has received CHIPS Act support and expects about $6B to $9B from the Investment Tax Credit, now more favorable due to a 35% investment tax credit, or ITC, rate.

The company noted that no government equity stakes are planned.

Texas Instruments routinely adjusts prices for market alignment and noted that the long-term base case assumes low-single-digit price decline (2% to 3%).

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