Texas Instruments: Promising Industry, Better Business Model

Summary:

  • Texas Instruments is the industry leader in lagging edge chips.
  • I believe the lagging edge is an attractive market with its lower capital requirements and strong tailwinds for growth.
  • My DCF results in a base case price of $186, but I believe the stock to be attractive when below $170 to allow for a margin of safety (use volatility).

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Texas Instruments Inc (TI) HQ in Silicon Valley

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Texas Instruments’ Production Footprint (Company Website)

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Texas Instruments 2023 Capital Management Presentation

Fab Expansion Plan outlay

Texas Instruments 2023 Capital Management Presentation

Non-linear growth

Texas Instruments 2023 Capital Management Presentation

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Citi Research

EV Semi Chart

idTech/Infineon

EV Adoption

BCG

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Operating Statistics Comp Table for the Top 10 Analog Semiconductor Companies (Author, Company 10K’s/20F’s)

COR for TXN Graph

Author’s Calculation with 10K’s

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300mm Fab Benefits (Texas Instruments’ 2021 Capital Management Presentation)

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Author’s Calculations

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Author’s Calculations

Operating Margins for TXN Graph

Author’s Calculation from 10K’s

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FactSet

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Historical 2yr NTM EV/EBITDA (TXN is top blue for both) (FactSet)

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Historical 2yr NTM P/E (FactSet)

Assumption Summary of DCF

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Bull DCF

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DCF

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DCF Base

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DCF Base

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DCF Bear

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DCF Bear

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Disclosure: I/we have a beneficial long position in the shares of TXN either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.


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