A：For the second quarter of 2026, Texas Instruments reported revenue of $5.5 billion, a 13% increase sequentially and 23% year over year. Gross profit was $3.4 billion, or 61% of revenue, with a sequential increase of 340 basis points. Operating profit was $2.3 billion, or 42% of revenue, marking a 48% increase from the year ago period. Net income was $2 billion, or $2.14 per share.

A：In the second quarter, revenue exceeded expectations as Texas Instruments saw continued growth in industrial and data center sectors, in addition to accelerated growth in the automotive market. Investments in inventory and capacity supported customer demand during this period of increased demand.

A：In the second quarter, industrial revenue increased around 30% year on year and was up about 10%, with growth across sectors and regions. Automotive revenue increased in the mid-teens year over year and grew upper single digits sequentially. The data center market doubled year on year and grew around 20% sequentially. Personal electronics was flat year on year but grew upper single digits sequentially, and communications equipment also grew year on year and sequentially.

A：For the third quarter, Texas Instruments expects revenue in the range of $5.65 to $6.15 billion and earnings per share to be in the range of $2.23 to $2.57 cents. The company will continue focusing on long-term value-adding areas and will invest in competitive advantages such as manufacturing and technology, product portfolio breadth, and channel reach.

A：Cash flow from operations was $2.7 billion in the quarter, with a 12-month total of $8.7 billion. Capital expenditures were $514 million in the quarter and $3.3 billion over the last 12 months. Free cash flow on a trailing 12-month basis was $6.5 billion, a significant increase from the second quarter of 2025. The company received $549 million in Investment Tax Credit (ITC) related payments and paid $1.3 billion in dividends, returning a total of $5.8 billion to owners in the past 12 months.

A：At the end of the second quarter, Texas Instruments had a strong balance sheet with $7 billion of cash and short-term investments and total debt outstanding of $14 billion with a weighted average coupon of 4%. Inventory was $4.6 billion, down from the prior quarter, with days inventory outstanding decreasing by 13 days to 196 days.

A：For the third quarter, Texas Instruments expects revenue in the range of $5.65 to $6.15 billion and earnings per share to be in the range of $2.23 to $2.57 cents. The company also expects an effective tax rate of about 13% for the third quarter.

A：Texas Instruments is seeing an acceleration in the automotive market, which is contributing to the robust financial performance. It is unclear from the provided information whether this growth profile will continue into the third quarter and the rest of the year, but the focus on growing automotive sectors indicates an area of strength for the company.

A：The current demand growth is being driven by stronger demand across various markets, notably the industrial, data center, and automotive sectors.

A：The recent uptick in the automotive market demand was led by China, with a particular increase in electric vehicles (EVs) and hybrids. Additionally, low inventory levels among automotive customers and the cost of fuel also played a role in driving this demand.

A：In response to rising input costs and strong demand, the Ti team has started executing price increases. These actions are customer-by-customer discussions and are expected to affect pricing in Q3 and continue into the fourth quarter.

A：The pricing increases are expected to be broad across all markets and segments, with a focus on analog products, especially in the automotive market. Embedded pricing discussions are anticipated to be more centered around next year.

A：Factory loadings have increased from the first to the second quarter and are expected to continue increasing in the third quarter based on current demand visibility. The company has the capability to adjust clean room spaces and can support a range of customer demand scenarios.

A：The company is on pace to meet the revenue and free cash flow guidance previously provided. The framework, which includes revenue growth and free cash flow expectations, remains valid for modeling purposes.

A：Other income and expense, including acquisition charges, are expected to be flat from the second quarter to the third quarter, which should assist in modeling the company's gross margins.

A：The outlook for personal electronics in the upcoming quarter is not as strong as previously indicated. While the business is expected to grow sequentially, the challenges in personal electronics (PE) and some shortages are putting pressure on customers. Growth in Q3 is anticipated to be broad across all markets, with personal electronics being a participant but not the sole driver.

A：The outlook for data center sales is positive, with strong demand expected to persist. As the industry transitions to 800 V, this will bring higher growth and more conversion stages, which is a tailwind to the market, particularly in the analog and embedded sectors. With the establishment of a standard data center input voltage at script volts, there will be further opportunities as technology progresses. The company is optimistic about its competitive position, given its foundational strength in the data center market.

A：Currently, the profitability of the data center business has been similar to the overall corporate average. There is no significant skew in either direction regarding future profitability expectations. However, it is noted that as the business ramps up, particularly in end markets like data center, it will utilize 300 mm assets with excellent cost falloff capabilities, which is anticipated to be positive for profitability.

A：The industrial recovery cycle is still ongoing, with the market currently lower than the peak but showing growth. It is described as being in the mid to high single-digit growth range on a market-to-opportunity basis. Sequential growth in the second quarter and over the first half of the year was mentioned, particularly in sectors like energy infrastructure and test and measurement. As customers are not yet building inventory, the setup for pricing is positive, with pricing contributing significantly to the growth but not yet reaching levels that would indicate a need for concern about the number of above seasonal quarters.

A：The company does not specify a particular growth rate but indicates that its opportunity in the data center market is growing due to investments and supply capabilities. The focus is on outgrowing the market, with the belief that it will achieve this growth in 2026 and continue into 2027. Visibility on achieving the growth rate is implied to be high, given the strength of the company's position and the opportunities in the market. Growth will depend on the build-out of data centers and the company's portfolio of chips, which is well-positioned to benefit from the increasing power requirements of data centers.

A：The assumption that CapEx will be at the low end of the guidance for the year is considered accurate. As for the ITC, it is expected to continue contributing in a similar manner to how it did in the first half of the year, despite potential choppiness due to its nature and the location of certain assembly test operations that do not receive ITC benefits.

A：The ITC has a choppier impact on CapEx because it is related to equipment placed in service from the prior year. In the first half of the year, net CapEx was higher due to ITC than CapEx, but in the future, a significant portion of CapEx will be disproportionately placed in assembly test operations outside the US, which do not get ITC. This means that while the US manufacturing front end will continue to benefit from ITC, its contribution might be less consistent and more subject to variability.

A：The company's strategy regarding inventory is to leverage available capacity and inventory to benefit from opportunities in the market. They are seeing examples where they are able to help customers and solve problems, leading to increased business. This approach is contributing to the company's business doubling year to date and plans to continue maintaining clean room inventory ahead of demand to react and respond to further opportunities.

A：The expected gross margins for the third quarter are not flat; they are anticipated to be higher. The factors influencing gross margins include pricing, increased loadings, and product mix, with the latter two offsetting some of the benefits from the former. Loadings will depend on revenue performance, but the model provided should give a close estimate of the expected results.

A：The company is excited about its position as it has overcome previous challenges with clean room availability and has significant brick and mortar capacity in Sherman and Lehigh. They are focused on executing the transfer of existing foundries into Lehigh and seeing growth in the embedded side. The company is also preparing for a range of scenarios in terms of equipment needs for the fabs. They intend to use the framework provided, keeping the exact number private until the capital management call in February, but are making decisions regarding CapEx now, considering not only script and Ed growth but also beyond.

A：The company is well-positioned to grow into its existing capacity, as the clean room issue that previously caused delays is now resolved. They have a full clean room available in Sherman one and a shell in Sherman one, which will facilitate growth. The transition from Lehigh to fully operational sites is anticipated to happen just in time, allowing for seamless growth without the need for new customer qualifications. Equipment will need to be equipped for the fabs, and the company is prepared with a range of scenarios. The exact number of CapEx will be shared in the capital management call in February, but the company is actively making decisions to support growth.

A：The speaker believes that the demand signal is very strong and broad, and the focus now is on execution, including ramping factories and dealing with inventory. They expect the team to execute well in Q3 as they did in Q2.

A：The speaker indicates that plans for capacity expansion are already in place and inventory levels will be taken up first. However, they suggest looking at utilization rates and revenue targets as potential metrics to understand when to add more capacity.

A：Regulatory approvals are moving forward, and the company still expects to close the transaction. The plan is to fund the transaction with cash on hand and debt.

A：The company has seen a build-up of backlog throughout the second quarter, with strength across core markets. While lead times are still competitive, they are slightly longer due to growing demand, but the company believes their lead times remain competitive.

A：During the current cycle, the company's strategy is to be a solution rather than a problem. They are seeing more opportunities for new designs, particularly when competitors have longer lead times. Market share from previous years will be assessed over time, and the peak of the cycle will provide visibility on performance.

A：The strength in the industrial market is attributed to broad-based secular content growth across various sectors and regions, rather than pricing. This growth is reflected in the company's results as they saw strength across their industrial portfolio in the second quarter. While some sectors grew at higher rates due to specific reasons, the overall growth is attributed to higher content growth in industrial automation.