Texas Instruments Financial Model
Semiconductors Company Financials Example (Free Excel Download)
Texas Instruments designs, manufactures, and sells semiconductors to electronics designers and manufacturers globally, focusing primarily on analog and embedded processing chips.
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About this model
This model provides a comprehensive 3-statement forecast and discounted cash flow valuation for Texas Instruments to help equity analysts assess the free cash flow inflection as the company exits its elevated 300mm fab capital expenditure cycle.
Texas Instruments designs, manufactures, and sells semiconductors to electronics designers and manufacturers globally, focusing primarily on analog and embedded processing chips. The company operates as an Integrated Device Manufacturer (IDM) that owns and operates its own wafer fabrication facilities, providing a structural cost advantage through 300mm wafer production.
The business is divided into three segments: Analog (79% of revenue), Embedded Processing (15% of revenue), and Other (6% of revenue). Geographically, the company has a global footprint, but its end markets are categorised by sector, with Industrial and Automotive each representing 33% of revenue, followed by Personal Electronics at 21%, Data Center at 9%, and Communications Equipment at 3%. Texas Instruments holds a dominant competitive position in the analog market, benefiting from a highly fragmented customer base and exceptionally long product lifecycles. Recently, the company announced a $7.5 billion all-cash acquisition of Silicon Labs expected to close in the first half of 2027, and it is currently completing a massive multi-year capital expenditure programme to build out 300mm manufacturing capacity in Texas and Utah.
The downloadable Texas Instruments financial model includes SEC-sourced historical financials, forecast assumptions, core operating schedules, and valuation outputs in an Excel workbook built for review and scenario analysis.
A turnkey financial model
Live formulas, no hardcoded values
Outputs are driven by live formulas, so the workbook updates from its assumptions instead of relying on hardcoded results.
All assumptions in one tab
Inputs are clearly marked in the Assumptions tab and separated from calculations, making it clear what to change and what to leave intact.
Statements always balancing
For integrated-statement models, the balance sheet, cash flow, and supporting schedules tie through properly.
Distinct schedules for clarity
Debt, working capital, taxes, and cash flow can get messy quickly. We group calculations in clear schedules, not across disconnected tabs.
No hidden macros or external links
There are no unexplained external workbook links or macros to undermine auditability or portability.
Changes flow through the model
Update a key driver and see the impact carry through the forecast, financing, and return outputs. We never use hardcoded numbers in formulas.
Historicals & AssumptionsTexas Instruments financial modelCompany, Historicals & Assumptions used
Source: SEC EDGAR · values in USD
| Line item | FY2021 | FY2022 | FY2023 | FY2024 | FY2025 |
|---|---|---|---|---|---|
| Revenue | $18.34B | $20.03B | $17.52B | $15.64B | $17.68B |
| Gross profit | $12.38B | $13.77B | $11.02B | $9.09B | $10.08B |
| Operating income | $8.96B | $10.14B | $7.33B | $5.46B | $6.02B |
| Net income | $7.77B | $8.75B | $6.51B | $4.80B | $5.00B |
Forecast assumptions
Defaults used in the downloadable model. Forecast horizon: FY2026–FY2030.
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How to build a detailed financial model for Texas Instruments
A complete walkthrough of every driver, margin, working-capital input, and capital-allocation assumption used in the downloadable model.
Revenue Deep Dive
Analog
- Segment name: Analog
- Revenue driver formula: Volume x Average Selling Price
- Historical growth rate: Cyclical, but recently grew 15% year-over-year in FY2025 to $14.01 billion.
- Key growth levers and headwinds: Driven by industrial automation, automotive electrification, and data center power management. Headwinds include cyclical inventory corrections at industrial distributors.
- Pricing dynamics: Generally stable with long product lifecycles; analog chips are highly proprietary and not heavily commoditised.
- Revenue recognition notes: Recognised upon shipment or delivery to customers and distributors.
- Seasonality: Typically stronger in the second and third quarters due to consumer electronics builds, though industrial and automotive end markets have smoothed this historically.
Embedded Processing
- Segment name: Embedded Processing
- Revenue driver formula: Volume x Average Selling Price
- Historical growth rate: Grew 6% year-over-year in FY2025 to $2.70 billion.
- Key growth levers and headwinds: Growth is driven by automotive and industrial applications requiring edge processing and microcontrollers.
- Pricing dynamics: Competitive but sticky once designed into a customer's hardware architecture.
- Revenue recognition notes: Recognised upon transfer of control to the customer.
- Seasonality: Follows broader semiconductor market trends with slight dips in the first quarter.
Other
- Segment name: Other
- Revenue driver formula: Unit Sales x Price per Unit
- Historical growth rate: Structurally declining, generating $979 million in FY2025.
- Key growth levers and headwinds: Consists of legacy DLP products, calculators, and custom ASIC revenue, which are not focus areas for future investment.
- Pricing dynamics: Mature pricing with minimal pricing power.
- Revenue recognition notes: Standard point-in-time recognition.
- Seasonality: Calculator sales peak in the third quarter ahead of the back-to-school season.
Cost Structure
Variable Costs / COGS
- COGS includes manufacturing labour, raw materials such as silicon wafers, factory overhead, and significant depreciation from owned fabrication plants.
- Gross margin has historically ranged from 65% to 68%, but dropped to 57.0% in FY2025 due to underutilisation charges and high depreciation from new 300mm fabs.
- Key input costs include silicon, precious metals, and energy costs for running fabrication plants.
- COGS scales with operating leverage; margins expand rapidly when factory utilisation is high and contract sharply during cyclical downturns.
Operating Expenses
- R&D: Approximately 11% to 12% of revenue ($2.08 billion in FY2025), expensed as incurred, focusing heavily on new analog and embedded product designs.
- SG&A: Approximately 10% to 11% of revenue ($1.86 billion in FY2025), covering a massive direct sales force and technical support staff.
- Depreciation & Amortisation: Highly material due to the IDM business model, embedded primarily within COGS.
- Stock-Based Compensation: Runs at approximately 2% to 3% of revenue.
- Restructuring / one-time charges: Infrequent, though the company occasionally records minor facility consolidation costs.
Margin Profile
- Gross margin ranges from 57% to 68%, operating margin from 34% to 45%, and net margin from 28% to 38%.
- Margins are currently compressed due to the cyclical downturn and the depreciation burden of the new 300mm fabs, but are expected to expand as revenue scales into the new capacity.
- Segment-level operating margins in FY2025 were 38.6% for Analog and 11.3% for Embedded Processing.
Balance Sheet Structure
- Total assets are in the $30 billion to $35 billion range.
- Property, Plant and Equipment is the largest asset class, reflecting the capital-intensive nature of owning semiconductor fabrication plants.
- Goodwill & intangibles represent a small percentage of total assets historically, though this will increase following the Silicon Labs acquisition.
- Working capital profile:
- Days Sales Outstanding (DSO): Typically 35 to 45 days.
- Days Inventory Outstanding (DIO): Intentionally high, targeting 150 to 250 days (actual was 222 days at the end of FY2025) to ensure high customer service levels.
- Days Payable Outstanding (DPO): Typically 40 to 50 days.
- Net working capital is positive and requires cash investment during growth phases due to the massive inventory buffer.
- PP&E consists of land, buildings, and highly expensive semiconductor manufacturing equipment with useful lives of 5 to 10 years.
Capital Expenditure & Investment
- Capex as a percentage of revenue has been elevated at 20% to 26% during the recent buildout phase ($4.55 billion in FY2025).
- The company is nearing the end of a six-year elevated capex cycle. Management expects capex to drop to $2.0 billion to $3.0 billion in FY2026.
- Long-term maintenance and growth capex is modelled at 1.2 times the revenue growth rate.
- The company receives significant cash benefits from the US CHIPS Act ($670 million in FY2025), which management treats as an offset to gross capex in its free cash flow calculation.
- M&A pattern has historically been organic, but the pending $7.5 billion acquisition of Silicon Labs represents a major transformational transaction for the connectivity portfolio.
Debt & Capital Structure
- Total debt is approximately $14.0 billion, with a weighted average coupon of 4.0%.
- Debt to EBITDA is currently around 1.2x but is projected to rise to approximately 1.8x pro forma for the Silicon Labs acquisition.
- The company holds an A+ credit rating from S&P Global Ratings.
- Key debt instruments consist primarily of fixed-rate unsecured senior notes.
- The maturity profile is well-laddered, with $500 million due in 2026 and $1.15 billion due in 2027.
- The share repurchase programme is highly active, with the company returning all free cash flow not paid as dividends to shareholders ($1.48 billion repurchased in FY2025).
- The dividend policy is aggressive, paying out $5.00 billion in FY2025 with a 22-year track record of consecutive annual increases.
Cash Flow Characteristics
- Operating cash flow conversion is exceptionally strong, typically exceeding 1.2x Net Income ($7.15 billion OCF versus $5.00 billion Net Income in FY2025).
- Free cash flow margin was 16.6% in FY2025, depressed by peak capex, but historically runs between 25% and 35%.
- Massive depreciation add-backs bridge the gap between net income and operating cash flow.
- Working capital cash flow impact is heavily influenced by inventory builds, which have been a major use of cash as the company restocked to its 150 to 250 day target.
- The cash tax rate is low, with management guiding to an effective tax rate of 13% to 14% for FY2026.
Sheet Structure
- Assumptions: Hardcoded inputs for segment growth rates, margin profiles, working capital days, and capital expenditure guidance.
- Scenarios: Toggles for Base, Bull, and Bear cases reflecting different semiconductor cycle recovery speeds.
- Revenue Build: Segment-level forecasts for Analog, Embedded Processing, and Other based on volume and pricing assumptions.
- Income Statement: Consolidated P&L projecting gross profit, R&D, SG&A, operating profit, and net income.
- Balance Sheet: Assets, liabilities, and shareholders' equity, ensuring the balance sheet balances in all periods.
- Cash Flow Statement: Operating, investing, and financing cash flows, explicitly calculating management's definition of free cash flow.
- PP&E & Capex: Detailed roll-forward of gross PP&E, accumulated depreciation, and CHIPS Act cash incentive offsets.
- Debt Schedule: Tranche-by-tranche debt build, interest expense calculation, and pro forma adjustments for the Silicon Labs acquisition financing.
- Working Capital: Schedules for receivables, inventory tracking against the 150 to 250 day target, and payables.
- DCF Valuation: Unlevered free cash flow calculation, WACC derivation, and terminal value assessment.
Key Financial Relationships
- Analog Revenue = Prior Year Analog Revenue x (1 + Analog Growth Rate)
- Embedded Processing Revenue = Prior Year Embedded Processing Revenue x (1 + Embedded Processing Growth Rate)
- Total Revenue = Analog Revenue + Embedded Processing Revenue + Other Revenue
- Gross Profit = Total Revenue x Gross Margin Percentage
- R&D Expense = Total Revenue x R&D Margin Percentage
- SG&A Expense = Total Revenue x SG&A Margin Percentage
- Operating Profit = Gross Profit - R&D Expense - SG&A Expense
- Depreciation Expense = Beginning Net PP&E x Blended Depreciation Rate
- Ending Inventory = (COGS / 365) x Target Days Inventory Outstanding
- Net Capex = Gross Capital Expenditures - CHIPS Act Cash Incentives
- Free Cash Flow = Cash Flow from Operations - Gross Capital Expenditures + CHIPS Act Cash Incentives
- Interest Expense = Average Debt Balance x Weighted Average Interest Rate
Cross-Sheet Dependencies
- The Revenue Build sheet feeds the top line of the Income Statement.
- The Income Statement generates Net Income, which serves as the starting point for the Cash Flow Statement.
- The PP&E & Capex sheet calculates depreciation, which feeds both the Income Statement (within COGS) and the Cash Flow Statement (as a non-cash add-back).
- The Working Capital sheet calculates changes in operating assets and liabilities, feeding directly into the Cash Flow Statement.
- The Debt Schedule calculates interest expense for the Income Statement and ending debt balances for the Balance Sheet. Circularity risk exists here if interest expense is based on average debt balances drawn from a revolving credit facility to fund cash shortfalls.
Sign Convention
- Revenue and profit figures are positive.
- Expenses on the Income Statement are negative.
- Assets are positive on the Balance Sheet.
- Liabilities and Equity are positive on the Balance Sheet.
- Cash inflows are positive on the Cash Flow Statement.
- Cash outflows, including Capital Expenditures and Dividends, are negative on the Cash Flow Statement.
Things Most Likely to Go Wrong
- Failing to account for the CHIPS Act cash incentives, which the company explicitly treats as an offset to capex in its free cash flow definition.
- Underestimating depreciation expense, which will remain elevated even as capex falls due to the recent multi-year fab buildout.
- Mismodelling inventory levels. The company intentionally holds 150 to 250 days of inventory; forcing a standard 60-day assumption will break the working capital forecast.
- Ignoring the pending $7.5 billion Silicon Labs acquisition, which requires pro-forma debt adjustments and interest expense modelling for FY2027.
- Overestimating gross margins in the near term. Underutilisation charges at new 300mm fabs will drag on gross margins until revenue scales fully.
- Miscalculating the dividend burden. The company pays out over $5.0 billion annually, which consumes a massive portion of operating cash flow.
- Assuming linear revenue growth. The semiconductor end markets are highly cyclical and prone to sharp inventory corrections.
- Double-counting restructuring charges, which should be excluded from non-GAAP operating margins but included in GAAP net income.
Validation Checks
- Gross margin should remain between 55.0% and 65.0%; flag if it exceeds historical peaks.
- Days Inventory Outstanding must stay within the management target range of 150 to 250 days.
- Capital expenditures should drop to the $2.0 billion to $3.0 billion range in FY2026, down from $4.55 billion in FY2025.
- Free Cash Flow margin should expand beyond 20.0% as the capex cycle concludes.
- The Balance Sheet must balance perfectly in all forecast periods.
- Analog segment revenue should consistently represent 75% to 80% of total consolidated revenue.
- Effective tax rate should remain between 13.0% and 14.0% based on management guidance.
- Dividend payout ratio should be monitored; flag if dividends exceed free cash flow for more than two consecutive years.
Key Assumptions (Default Values)
| Assumption | Default Value | Unit | Rationale |
|---|---|---|---|
| Analog Revenue Growth | 8.0 | % | Normalised growth following the 15% cyclical rebound in FY2025 |
| Embedded Processing Growth | 6.0 | % | Matches FY2025 actual growth rate |
| Other Revenue Growth | -5.0 | % | Reflects structural decline in legacy products |
| Gross Margin | 57.0 | % | Matches FY2025 actuals, reflecting new fab depreciation |
| R&D Margin | 11.8 | % | Based on FY2025 actuals ($2.08B on $17.68B revenue) |
| SG&A Margin | 10.5 | % | Based on FY2025 actuals ($1.86B on $17.68B revenue) |
| Effective Tax Rate | 13.5 | % | Midpoint of management guidance for FY2026 (13-14%) |
| Days Inventory Outstanding | 222 | Days | Matches Q4 FY2025 actuals, within 150-250 day target |
| FY2026 Gross Capex | 2,500 | $ Millions | Midpoint of management guidance ($2.0B to $3.0B) |
| CHIPS Act Cash Benefit | 670 | $ Millions | Assumes run-rate similar to FY2025 actuals |
| Weighted Average Interest Rate | 4.0 | % | Matches management disclosure for FY2025 debt portfolio |
| Dividend Per Share | 5.68 | $ | Annualised based on Q4 FY2025 quarterly dividend of $1.42 |
Data Sources & Benchmarks
- SEC EDGAR: Texas Instruments 10-K and 8-K filings.
- Investor Relations: TI.com/ir for Capital Management presentations and quarterly earnings supplements.
- Peers for benchmarking: Analog Devices (ADI), Microchip Technology (MCHP), NXP Semiconductors (NXPI), ON Semiconductor (ON).
- Industry data: Semiconductor Industry Association (SIA) monthly sales reports for macro cycle tracking.
Sources
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Frequently asked
What kind of semiconductors does Texas Instruments primarily produce?+
Texas Instruments primarily designs, manufactures, and sells analog and embedded processing chips to electronics designers and manufacturers globally. The company operates as an Integrated Device Manufacturer (IDM), leveraging its own 300mm wafer fabrication facilities for a structural cost advantage.
What are the main revenue drivers for Texas Instruments' business?+
Texas Instruments' revenue is primarily driven by its Analog and Embedded Processing segments, which constitute 79% and 15% of revenue respectively. Key end markets contributing to sales include Industrial and Automotive sectors, each representing 33% of the company's total revenue.
How is Texas Instruments' capital expenditure expected to change in the near future?+
Texas Instruments is nearing the end of a six-year elevated capital expenditure cycle related to its 300mm manufacturing capacity buildout. Management anticipates capex to decrease significantly from elevated levels (e.g., $4.55 billion in FY2025) to a range of $2.0 billion to $3.0 billion in FY2026.
What is Texas Instruments' approach to inventory management and its impact on working capital?+
Texas Instruments intentionally maintains a high Days Inventory Outstanding (DIO), targeting 150 to 250 days, to ensure high customer service levels. This strategy results in positive net working capital, which requires cash investment during growth phases due to the substantial inventory buffer.
What is the primary purpose of the Texas Instruments financial model and its forecast horizon?+
The Texas Instruments financial model provides a comprehensive 3-statement forecast and discounted cash flow valuation for the company. Its main purpose is to help equity analysts assess the free cash flow inflection as the company exits its elevated 300mm fab capital expenditure cycle, with a forecast horizon from FY2026 to FY2030.
Can I download an Excel financial model for Texas Instruments, and what type of model is it?+
Yes, an Excel financial model for Texas Instruments is available for download. It is a general corporate model family that includes a comprehensive 3-statement forecast and discounted cash flow valuation.
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