Texas Instruments Incorporated (TXN) Q4 2025 Earnings Report, Transcript and Summary

Welcome to the Texas Instruments Fourth Quarter 2025 Earnings Conference Call. I'm Mike Beckman, of Investor Relations. I'm joined by our Chairman, President and Chief Executive Officer, Haviv Ilan, and our Chief Financial Officer, Rafael R. Lizardi. For any of you who missed the release, you can find it on our website at ti.com/ir. This call is being broadcast live over the web and can be accessed through our website. In addition, today's call is being recorded and will be available via replay on our website. This call will include forward-looking statements that involve risks and uncertainties that could cause Texas Instruments' results to differ materially from management's current expectations. We encourage you to review the notice regarding forward-looking statements contained in the earnings release published today as well as Texas Instruments' most recent SEC filings for a more complete description. I would like to provide you some information that is important for your calendars. On Tuesday, February 24 at 10 AM Central Time, we will have our capital management call. Similar to what we've done in the past, Haviv, Rafael, and I will share our approach to capital allocation and summarize our progress as we prepare for the opportunity ahead. Moving on, today, we'll provide the following updates. First, Haviv will start with a quick overview of the quarter. Next, he will provide insight into fourth quarter revenue results and some details of what we are seeing in our end markets. Haviv will then provide the annual summary of revenue breakout by end market. Lastly, Rafael will cover the financial results and our guidance for the first quarter of 2026. With that, let me turn it over to Haviv.

Thanks, Mike. Let me start with a quick overview of the fourth quarter. Revenue came in about as expected at $4.4 billion, a decrease of 7% sequentially and an increase of 10% from the same quarter a year ago. Analog revenue grew 14% year over year. Embedded processing grew 8%, and our other segment declined from the year-ago quarter. The overall semiconductor market recovery is continuing, and we are well-positioned with inventory and capacity to meet immediate customer demand. Before I walk through our results, I'd like to share an update we've made to our end markets. To better reflect the growth opportunities we see for our analog and embedded products, we reorganized our end markets to include data center, which includes sectors related to data center compute, data center networking, and rack power and thermal management. As such, our end markets are now industrial, automotive, data center, personal electronics, and communications equipment. With that as a backdrop, I'll now provide some insight into our fourth quarter revenue by end market. First, the industrial market was up high teens year on year, with recovery continuing broadly across sectors and was down mid-single digits sequentially. The automotive market increased upper single digits year on year and was down low single digits sequentially. Data center grew around 70% year on year and mid-single digits sequentially. Personal electronics declined upper teens year on year and mid-teens sequentially. Lastly, communications equipment declined low single digits year on year and mid-teens sequentially. In addition, as we do at the end of each calendar year, I'll describe our estimated 2025 revenue by end market. Industrial was $5.8 billion, up 12% year on year and was 33% of revenue. Automotive was $5.8 billion, up 6% year on year and was 33% of revenue. Data center was $1.5 billion, up 64% year on year and was 9% of revenue. Personal electronics was $3.7 billion, up 7% year on year and was 21% of revenue. Communications equipment was about $500 million, up about 20% year on year and was 3% of revenue. In summary, industrial, automotive, and data center combined made up about 75% of Texas Instruments' revenue in 2025, up from about 43% in 2013. We see good opportunities in all of our markets, but we place additional strategic emphasis on industrial, automotive, and data center. Our customers across all regions are increasingly turning to analog and embedded technology to make their end products more reliable, more affordable, and lower in power. This drives growing chip content per application or secular content growth, which will likely continue to drive faster growth in these end markets. Rafael will now review profitability, capital management, and our outlook.

Thanks, Haviv, and good afternoon, everyone. As Haviv mentioned, fourth quarter revenue was $4.4 billion. Gross profit in the quarter was $2.5 billion or 56% of revenue. Sequentially, gross profit margin decreased 150 basis points. Operating expenses in the quarter were $967 million, up 3% from a year ago and about as expected. On a trailing twelve-month basis, operating expenses were $3.9 billion or 22% of revenue. Operating profit was $1.5 billion in the quarter or 33% of revenue and was up 7% from the year-ago quarter. Net income in the fourth quarter was $1.2 billion or $1.27 per share. Earnings per share included a 6¢ reduction not in our original guidance related to the non-cash impairment of goodwill in our other segment and other tax-related items. Let me now comment on our capital management results starting with our cash generation. Cash flow from operations was $2.3 billion in the quarter. Capital expenditures were $925 million in the quarter. In the quarter, we paid $1.3 billion in dividends and repurchased $403 million of our stock. We also increased our dividend per share by 4% in the fourth quarter, to $1.42 per share, marking our twenty-second consecutive year of dividend increases. In total, we have returned $6.5 billion in the past twelve months to owners. The balance sheet remains strong with $4.9 billion of cash and short-term investments at the end of the fourth quarter. Total debt outstanding was $14 billion with a weighted average coupon of 4%. Inventory at the end of the quarter was $4.8 billion, down $25 million from the prior quarter. Days were 222, up seven days sequentially. Let's look at some of these results for the year. In 2025, cash flow from operations was $7.2 billion, and capital expenditures were $4.6 billion as we continue to make progress on our capacity expansions. We're nearing the end of a six-year elevated CapEx cycle that uniquely positions Texas Instruments to deliver dependable low-cost 300-millimeter capacity at scale. Free cash flow for 2025 was $2.9 billion or 17% of revenue, representing an increase of 96% from 2024. Our free cash flow growth reflects the strength of our business model as well as our decisions to invest in 300-millimeter manufacturing assets and inventory. This supports our overall objective to maximize long-term free cash flow per share growth, which we believe is the primary driver of long-term value. In 2025, we received a $670 million cash benefit related to CHIPS Act incentives. Turning to our outlook for the first quarter, we expect Texas Instruments' revenue in the range of $4.32 billion to $4.68 billion and earnings per share to be in the range of $1.22 to $1.48. We continue to expect our effective tax rate in 2026 to be about 13 to 14%. In closing, we will stay focused in the areas that add value in the long term. We continue to invest in our competitive advantages, which are manufacturing and technology, a broad product portfolio, reach of our channels, and diverse and long-lived positions. We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities, which we believe will enable us to continue to deliver free cash flow per share growth over the long term. With that, let me turn it back to Mike.

Thanks, Rafael. Operator, you can now open the lines for questions. In order to provide as many of you as possible an opportunity to ask your questions, please limit yourself to a single question. After our response, we'll provide you with an opportunity for an additional follow-up. Operator?

Thank you. We will now be conducting a question and answer session.

If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up their handset before pressing the star keys. One moment, while we poll for questions. Our first question comes from the line of Ross Seymore with Deutsche Bank. Please proceed with your question.

Hi, thanks for letting me ask a question. I guess my first question is, the first quarter guidance is significantly stronger than seasonal. If my math is right, it seems like it's the first time you've been up sequentially since right after the financial crisis, fifteen years ago, roughly. So is there anything unique going on by either end market or geography that's given you such an optimistic view versus relative or normal seasonality?

Ross, thanks for the question. I'll take it, and I'll let Mike add some more color as needed. First, let's start with the fourth quarter. We have seen a typical fourth quarter; revenue came in as expected. But if you look at the year-on-year results, we are seeing recovery continuing in industrial. It grew close to 20%. I think it was 18% year over year. And remember that in the industrial market, we still have a lot of room to go when you think about the previous peak. So if you will, the compare is still easy for industrial to continue to recover. The other market that I will highlight is the continued strength in data center. We are seeing this market now becoming a little bit more substantial as a percentage of our revenue. I expect this market to continue to grow in Q1. It's been growing for now seven quarters in a row for us. And we left the year at about $450 million a quarter revenue footprint, and I think that continues as we move forward. The last point I would say, we did see orders improving throughout the quarter. And what guides our guidance is the stronger booking. Mike, I don't know if you want to add anything.

Yeah. And so we did see linearity revenue linearity through the quarter improve. So month one to month two to month three, we did see it continue to build. Same with backlog. We saw that continue to build through the quarter, and also, as we've talked in previous quarters, you know, turns business or what a customer comes in and wants an order shipped right away, we continue to see that run as well at higher levels. So, you know, that's factored into the guide. Have a follow-up, Ross?

Yeah, I do. Just a question on the gross margin implications. Given what you guys are talking about with revenue, it seems like you had a nice beat at least versus what I was expecting in the fourth quarter. Rafael, can you just talk a little bit about the puts and takes on gross margin in your first quarter guide and maybe throughout the year if utilization is changing, inventory levels are where you want it or if they need to rise? Anything on that would be helpful. Thank you.

Yeah, sure. Let me start with the fourth quarter. It came in a little better than expected. And once you account for that 6¢ reduction that we talked about in the prepared remarks. And that was a combination of revenue was a little better, mix end market mix was a little better, loadings was a little better, and OPEX was a little better. So it was a combination of multiple things there. On the first quarter, you know, we give you the range on EPS and the range on revenue. I would tell you, OPEX is up low single digits, and you should get into a reasonable number for gross margin. And the loadings will depend on demand, and we'll adjust those as needed.

Thank you.

Thanks for the questions, Ross. We'll move on to our next caller, please.

Thank you. Our next question comes from the line of Jim Schneider with Goldman Sachs. Proceed with your question.

Good afternoon. Thanks for taking my question. I was wondering if you could maybe relative to your prior comments, maybe address inventory levels and where you expect those to go. You talked about taking loadings down a little bit to bring inventories down, and you accomplished that in the quarter. Do you think inventories are at a pretty good place either from a days or dollars basis? Or would you expect to want to take them down a little bit further at this point?

Let me start, and I'll let Rafael add some color on this, Jim. So, again, I think we said it along the fourth quarter when we had the chance that we are very pleased with the inventory position we have built. We are very proud of how we got there. It's across all of our technologies at the right level. So from a high level, the inventory we have right now, that's an asset that allows us to serve customers, especially in the current environment when, you know, we have a lot of real-time just-in-time demand that turns business, as Mike mentioned before, is high. And it allows us to support customers at a high level. Rafael, any more color on how we want to manage inventory moving forward?

No. That's it.

Alright. Jim, do you have a follow-up?

Yes. I mean, clearly, industrial and automotive are doing right. Very well right now, that plus data center are your main focus. Can you maybe talk about sort of the prospects of a return to growth or a turnaround in the personal electronics and communications end markets and maybe some of the product areas like embedded processing associated with those? Thank you.

Yes. So just on the maybe on the electronics market, it did grow for the year. Right? The business grew for the full year at around, I think, 7% for PE. And we just saw a little bit of a weak Q4, I would say, below seasonality. Maybe, Mike, you can add a little bit more color on what you've seen there in Q4.

Yeah. If you look inside the sectors there, home theater, entertainment, TV declined the most. On the other end of the spectrum, mobile phones actually performed the best out of that group. So it varied within probably not inconsistent with what you've probably seen around subsidies expiring, around in China for things like appliances and TV. So it's also if you think about where personal electronics is and its timing of the cycle and where it is, it was one of the first to correct and also go through its recovery. So there's also a tougher compare than it probably has compared to some of the other end markets.

Alright. Well, thanks for the question, Jim.

Move on to the next caller, please.

Thank you. Our next question comes from the line of Harlan Sur with JPMorgan. Please proceed with your question.

Good afternoon. Thanks for taking my question. Good to see the strong double-digit year-over-year growth in Industrial. Haviv, last quarter, you talked about seeing some hesitation by customers in your industrial business, especially around manufacturing activity, things like factory automation, is one of the larger segments of your industrial business. Are you still seeing that hesitancy, that sort of wait-and-see posture by customers? Or is the order activity there starting to now pick up, especially among your China-based industrial customers?

Yeah. Harlan, it's a great question. I think from a high-level perspective, let's remember, Industrial and I look at the quarterly revenue, even if I go back to Q3, which was, I think, the highest industrial quarter for 2025, it was still about 25% from the previous peaks in year 2022. Right? So I do believe that secular growth continues in industrial. We are looking at equipment and generation to generation. We see just more content growth per system. So I expect industrial to establish new highs in the future. This is why I talked in the last quarter about maybe a more moderate recovery, especially on the industrial side. And it did behave, you know, kind of seasonally in Q4. But as Mike alluded to, we are seeing a little bit of a pickup on orders, including in industrial. And, you know, I can't tell you why. We'll have to see how it plays out. But, you know, we have seen some, you know, noise in the last several months on issues regarding a certain supplier, and sometimes, you know, we all know about the memory shortages. So I don't know what makes the customers order more. We'll just have to look and see. I do want to remind us all that earlier in 2025, I say the '25, we saw a pickup of industrial, and then it kind of calmed down. We don't want to see how sustainable this wake-up in orders is. And, Mike, anything to add on the industrial side?

I think you covered it well. I wouldn't add anything to that. Harlan, do you have a follow-up?

Yeah. Thank you. Thanks for answering the last question. You guys have previously mentioned the team is ahead on the Sherman fab build-out, and on track to complete the build-out of fab two this year. Can you guys just give us an update here? And then on the potential $2 billion to $3 billion of gross CapEx this year, not if you guys are willing to articulate what that could be, but what is the size of the potential offsets? Right? You've got ITC, goes up 35%. And you still have $1.6 billion in direct funding or grant to capture. Just wondering if you can maybe quantify that capture this year.

Yeah. I'll start regarding the build-up of the fabs, and I'll let Rafael comment on the rest of the topics. Although, we want to save something for the February call. But first, the top, yeah, we are very pleased about the execution in Sherman. It's actually ramped ahead of schedule, high yield. We also see with the new equipment that we have, really, the factory is more capable than we originally hoped. So a high level of throughput is being planned for this factory. So I'm very pleased with that execution. And that will help us, you know, support our customers for the next five and ten years. We have a clean room in Sherman one that already has some production lines running. But remember, we also have Shell instrument two, and we can build into this capacity if we want if demand wants to be very strong, we can be in a great position to support it. On the Lehigh side, also on schedule, I'm very pleased with the transition. Or the insourcing progress from our foundry wafers into Lehigh. That's mainly an embedded process comment that that tailwind will continue for us in 2026. I think I've mentioned in '25, we've completed our 65-nanometer transition, and they are yielding at the same level as they used to in the foundries. And now we are busy with our 45-nanometer technology, mainly supporting our automotive radar business. That's also progressing well in Lehigh. Rafael, anything on the ITC or Yeah. No. So, Harlan, you asked about five or six in one, but let me see if we can

I've addressed a couple. Let me address the next few. First on CapEx. We continue to expect CapEx for 2026 between $2 and $3 billion. So that's consistent with what we said before. On depreciation for '26, let me give you a new number. We now expect $2.2 to $2.4 billion on depreciation in 2026. And for 2027, we expect an upward pressure on that number, but at a slower rate of increase. So if you look at what we've increased the last few years, just it'll increase again, but slower. You asked about ITC and direct funding. Direct funding not changed. We expect up to $1.6 billion as we reach several milestones. And on ITC, investment tax credit, it is now 35% as of 01/01/2026. So anything that we put in place, any CapEx we put in place, both equipment, building, clean room, in 2026, we get back 35% on the ITC credit.

Great. Thanks. Oh, thank you. We'll move on to our next caller, please.

Thank you. Our next question comes from the line of Vivek Arya with Bank of America Securities. Please proceed with your question.

Thanks for taking my question. For the first one, Haviv, what do you think is, you know, driving this above seasonal Q1? First of all, how much above seasonal is it? And then what role is the pricing playing in that? Because there is some discussion about price increases from some of your peers. So is Texas Instruments raising prices in Q1? Is that part of what's driving it? And how would you characterize this? You know, how much above seasonal is it, and what's kind of the main driver of that?

Yeah. Let me just say for the second part of the question, the answer is no. It's not pricing related. Regarding the seasonality, no, it's more or less, you know, maybe a little bit above seasonal. Right? We usually see kind of a low single-digit to flat quarter. I think we've guided what Yeah. Low single-digit decline to flattish. And, again, the reason, Vivek, is the orders. We are just seeing growing orders, and it behaved the same through the quarter. I can't speculate on what, but I do know the industrial market, you know, there needs to be a correction. And the second point is data center is now a bigger part of our business. It starts to move the numbers for us. Right? This is a market that is now growing every quarter, and it's not insignificant. So I think that also helps change the guide compared to previous years. Mike, anything else on seasonality? No. I think you called it out. On seasonality. So Vivek, do you have a follow-up?

Yes. Thank you. For my second question, there's a lot of talk of higher memory pricing impacting demand for consumer electronics, you know, PCs, phones, automotive. Have you seen it already? Have you heard that as a concern from your, you know, from your customers? And how are you thinking about the auto market right now? And just is memory pricing a headwind at all for your businesses that are exposed to consumers? Thank you.

High level, I would say that we haven't seen any implications although, you know, then that would be a speculation on my side, but it could be that when customers are seeing some issues on the memory side, do they want to, you know, replenish some of their inventory? That could be always the case. And, Mike, I don't know if you've seen any examples. Or Yeah. What I would add, though, is and, you know, we've heard about it, obviously. And I think not necessarily specifically that scenario, but it could be that. But, also, when a customer doesn't necessarily have everything they need to complete their bill of materials, when they finally have those parts they need, sometimes we'll come in very quickly and want to order parts. We did see some of that where customers come in at the last minute, want product shipped right away because they've just completed the bill of materials. Could be related to that or other different things. So with that, thank you, Vivek, for questions. We will move on to the next caller, please.

Thank you. Our next question comes from the line of Timothy Arcuri with UBS. Please proceed with your question.

Thanks a lot. Rafael, I wanted to also ask on CapEx and sort of quickly it's going to fall off. I think you said this year, $2 billion to $3 billion. But the math would then say you're gonna kinda exit the year, like, run rating something like a billion 5. So the question is then, can it go lower than that? Because I seem to recall a comment at our conference in December that it could go, like, lower than 5% of revenue next year. So that would put it down to, like, a billion dollars, and that you'd like, that kinda being a floor. So you kinda talk about that? Could it go that low next year?

Tim, let me start with the second half, and then I'll let Rafael answer the first part. I made a comment because I was asked about maintenance CapEx. What is maintenance? We always have to spend money or to, you know, to fix equipment, to buy replacement parts, etcetera. So I characterize it as kind of mid-single-digit revenue. That's always kind of a run rate you can think about. There's never zero. In a company like Texas Instruments. That's what that was my point. This is when you don't have growth. Right? Now I'll let Rafael talk about CapEx beyond the maintenance.

No. So you know, for this year, for 2026, $2 to $3 billion, and there you know, it's a range there. So if we go through the year, we'll update you on that number. And then beyond that, what we've said is it's about 1.2 times long-term revenue growth. So you take, you know, take a number for revenue growth. You do 1.2 times. So 10%, you get to 12% CapEx intensity. But that's a gross number before ITC benefits. So once you get those ITC benefits, you essentially get back to one to one. On that growth rate. So whatever growth rate you assume, you kinda get back to a net capital intensity of about the same level.

Tim?

I do, Mike. Thanks. So I also wanted to ask about loadings. It looks like cash gross margin is up, like, 50 basis points or something in March. That would kinda suggest that loadings are going up just a smidge. The bigger question is sort of are you thinking about loadings that you wanna keep inventory sort of in this four eight range? And you just wanna match loadings with demand from here, or do you wanna bring inventory down, you know, over time versus that point eight number? Thanks.

You know, as Haviv said earlier, we're very pleased with inventory levels. That's a good inventory in a number of fronts. The buffers that we have, and the position that we have to support potential revenue growth. The same goes with capacity. We are well-positioned with capacity. So we'll adjust loadings as needed depending on what we see for demand for the rest of the year.

Alright, Tim. Thank you so much for the questions. We'll move on to our next caller.

Thank you. Our next question comes from the line of Thomas O'Malley with Barclays. Proceed with your question.

Hey, guys. Thanks for taking my question. Haviv, in your outlook for March, you talked about strength in data center, recovery in industrial continues and bookings are improving, turns are good. There was no mention of auto there. You guys have said previously, maybe the auto business is a little bit slower off the bottom than industrial. Any update on the auto business and how that trended through the quarter and kind of your updated view there?

Yeah. Great question. On the automotive market, I think we I think in Q4, we were slightly down. That looks digits. Low single digits. And we did see strength in automotive in Q3 and Q4. It's back to the level more or less of the peaks somewhere in 2023. This is an automotive peak. Remember, automotive was last into the cycle. Right? If you go back all the way back to the COVID cycle, they're the last ones to pick. They picked in Q3 2023. But I think what's happening in automotive, and it continues to happen, is secular growth continuing. So generation to generation, model to model, we just see more content per vehicle. Even if it's an ICE, a combustion engine vehicle rather than EVs, strength in China continued in Q4. And, typically, in Q1, if I need to comment about Q1, typically, Q1 is a quarter where at least in China, we see always with Chinese New Year, we always see a seasonally down quarter. I expect that to be the same in Q1. But, again, we are we've seen a single-digit drop versus the peak in automotive back to the same level. And I think secular growth continues into the foreseeable future, at least for the next five years. Okay. You have a follow-up, Tom?

I just wanted to clarify a comment earlier. You mentioned that pricing didn't have anything to do with the above seasonal margin. You talked more about these end market trends. Is that because you raised pricing previously? You plan to in the future? The reason the question comes from your competitors are talking about an increase in pricing early in 2026 and being very clear about that. You guys feel like you don't wanna do that, or is it just something you'd rather not comment on? Appreciate it.

No. I think we've been clear along the year, and I just repeat it. And then, Mike, you can add a little bit more color. But we said that we expect the pricing hello. Pricing's price, we have 80,000 products. Prices always go up and down. But for the company, the overall price effect like for like in '25, we expected it to be low single digits down. Now we finished '25. It was exactly there. When you say low single digit, think about two or 3% down. That's my assumption for 2026. That's what we expect the market conditions to be. If anything changes with pricing, if, you know, we'll see a you know, of course, Texas Instruments will respond. But right now, that's our assumption moving forward. That's why I was so convinced that the Q1 you know, I think we have a little sequential growth there. It's not due to pricing. Mike, anything to add there on the pricing side? No. I think you called it out in that base case assumption of low single digit.

Decline over time. You know, we'll have to see what the market presents to us, but continue to expect. Definitely no step function planned in Q1. I usually in Q1, pricing usually goes down a little because of yearly negotiations. That's usually what we see in Q1. We have a follow-up. No. That was a follow-up. Okay. Sorry about that. Yeah. Thanks, Tom, for the question. Move on to our next caller. Okay.

Thank you. Our next question comes from the line of Joshua Buchalter with TD Cowen. Please proceed with your question.

Yeah. Thank you for taking my question. Wanted to build in a sort of business a little bit more. Any details you can give us on the exposure across power embedded and then maybe non-power analog parts and then and any, you know, 70% is a growth is a pretty big number. Any sort of handicap you're able you're willing to give us on what that business could grow over the medium to long term? Thank you.

Yes. Definitely. I can take that. So, again, data center has grown nicely, as you said, in 2025. You know, as CapEx continues to be invested in data centers, we expect that growth to continue. In terms of our position, our business is based on the analog side. And there is also there is between power and signal chain, I would say it's kind of maybe a little bit more power, but both power and signal chain are very strong in data center. We see a lot of opportunity, a lot of diversity, of parts. I know most people like to talk about, you know, socket, if you call it the VRM or the VCORE voltage regulator, that's always a large a very large socket. But if you look at the rack and you open it up, there are thousands of different parts, and many of them are analog embedded parts. And Texas Instruments plays across the board there. As I've mentioned over the years, we have invested in our technology to be able to support the higher power, call it, rails. Think about the VCore. This is where a lot of the current going into an accelerator, accelerated computer or a CPU come from and Texas Instruments is building the technology in Sherman, Texas. This is where our BCD process is serving us very well there. That product is sampling, and we expect our opportunity in data center to further expand in the coming years. So Texas Instruments plans to play across the different sockets in data center, and I see it as long as the CapEx continues into this market, I see the opportunity as an attractive one. Alright. You have a follow-up, Josh?

Yeah. Thank you for all the color there. I mean, I think it's been good William, and an interesting several years for the analog industry. And for a while, you've about the benefits of your US-based, you know, commercial, military, capacity. You feel like we're having, you know, with the industry and your guys from a cyclical standpoint being from a lot of inventory, but are we at the point where we expect, you know, yeah, I can get back into sort of the shared behavior. Everything's normal enough yet. Thank you.

So Josh, I think there was a little trouble on the line, but I'm gonna repeat what I believe the was and then we'll answer it. So I think it was talking about the cycle and how it's been playing out. And with the capacity that we have in place are we in a position to be able to get back to market share gains? And maybe if you wanna start with the answer, I can also answer as well. Was that a question? I believe that was Josh?

Yep. Yeah. Close enough. Thanks, Glenn.

Yeah. As we said, look. The cycle is this cycle has recovered slowly. You know? We just forget about Texas Instruments. Just look at the overall unit trend. You can look at the unit without memory. You can look at the ICs. It's been one of the slowest, if not the slowest recovery ever in our history. At a time where I think more semis are used in our life. I mentioned the secular growth in automotive. We see that across many, many hand equipments industrial, across the board, just more content per system. That just and, of course, the investment in data center that are becoming more and more substantial even for the analog and embedded portfolio that we have. So I do believe that there is gonna be a point of time where you all this capacity we've put in place and the inventory that we've positioned is gonna serve us well. We have seen cases where it served us very well with an immediate response to customer needs, and our customers value that a lot. And I believe there is more to do here. So let's see how the market wants to continue and develop. One thing is very clear to me. End equipments are being redesigned with more semis every day. They'll continue to be the case in the future. This is why I'm continuing to stay very optimistic and encouraged by the investments we've made in the past several years.

Alright. Thanks, Josh. Move on to our next caller, please.

Thank you. Our next question comes from the line of William Stein with Truist. Please proceed with your question.

Great. Thanks for taking my questions. First, I'm hoping you can talk a little bit more about the strong bookings you referred to. Would you be able to disclose the book to bill to us? And maybe even more interesting, has the duration of your backlog changed at all in the quarter?

So maybe I'll take that one. So, Will, we did see throughout the quarter, you know, backlog did build, and I think, first of all, important to remember that we transact most of our revenue direct with our we don't sell through a channel. So we do see things typically pretty real-time. And that's part of the reason you heard us talk about the fact we have seen our turns business also exhibit strength over the last several quarters. You know, I don't have a number specifically to provide you for what bookings did, but it is reflected in our guidance. And I think, you know, going back to what Haviv said about where our end markets are, you know, industrial is going through recovery, and you saw that in the fourth quarter. You got data center end market that is growing for, I think, seven consecutive quarters. You know, those are all part of what factor into how we think about our guidance. Have a follow-up, Will?

Yes. I'll ask maybe the same question a little bit of a different way. Are you seeing either based on customer willingness to place the orders or of your own lead times to customers, have you seen an extension in the orders further out into the

The shorter answer is yes, but, again, not because of times. Our lead times are very competitive, unchanged think on average, below thirteen weeks. Many of our parts are weeks, part of our ambition and objective, as we prepare to the next cycle was to be to be able to maintain very competitively lead times across the cycle. So far, this cycle has not been very tough to meet. Right? It's, as I said, been a slow recovery, but our lead times continue to stay very, very competitive, probably the lowest in the industry, and our inventory position allows us to support customers. So I don't think customers are placing I mean, they are placing orders a little bit more forward, but they have the ability to change their opinion, even within this quarter. This is what Mike mentioned before. Our terms are very friendly, are very customer friendly. We want customers to be, you know, showing us their demand real-time and we are willing to carry this inventory, especially when it's so diverse and long-lived. To increase customer support. So that would be my high-level comment. Mike, anything else about what we see into the longevity of the inventory?

Well, the inventory that we have in place has incredible longevity. No. No. But on the orders that was asked. Yeah. I'd say that if you look at does the customer need to put long-term backlog out in place when lead times are stable? They probably don't feel like they have to necessarily. So I have nothing to spike out, I would say. But what we have seen is a lot of customers wanting to come in, want product quickly. That isn't something we seen built over the past several quarters. Alright. With that, we'll move on to our next caller. And our last caller. Our last one. Yeah.

Thank you. Our last question comes from the line of Chris Caso with Wolfe Research. Please proceed with your question.

Yes. Thanks. Good evening. I guess the first question is a clarification of somewhat you said about factory loadings. And you did say that you'd adjust loadings according to what you saw with demand. Take into consideration that you reduce those loadings more recently. Are there any plans in place now to increase those loadings? And, you know, what would you need to see in order to take those steps?

What I would tell you is that we had something significant changing like we did back in the third quarter, we would tell you. We are not making any disclosure right now on which way the loadings are going. So it's just it's nothing significant versus where we've been running in the fourth quarter.

And I just add a part of that is, you know, we have the ability to make those adjustments as we see things occur, and that's the flexibility we have in our manufacturing to be able to do that. Alright. Chris, you have a follow-up?

I do. And it's related to geographic revenue. You made some comments on China. Obviously, you have the New Year holiday. That hits in the first quarter. But, you know, if we look at the different regions, how does that stack up against what you would expect for normal seasonality each one of those regions in the first quarter?

Yeah. In general, I think we haven't seen anything specific on the only comment I've made, Chris, before was that typically Q1 in China for automotive is lower just because of Chinese New Year. But I think from the backlog comes through from, it's been pretty even, right, across the geographies. Mike? And then maybe I'll just talk about last quarter what we saw and, you know, we don't have a guidance by end by regions for the top level. But you know, China came in know, right about and on a sequential basis, much in line with what we saw at the top level, down about 7%. On a year-on-year for the fourth quarter, it was up about 16%. So you know, didn't see something on a sequential basis that stood out very differently there compared to the overall top-level results.

And I want to make a maybe before we let Mike finish the call, I want to make one more comment on the orders and everything. I just want to remind us all that Texas Instruments has invested in capacity and in the inventory over the last three or four years to be exactly ready for this type of environment. Right? We've seen a lot of real-time demand coming in in Q4 with we were able to support. We're seeing a little bit of strengthening in the orders right now in Q1. And we'll see how long-lived it will be. You know, the market has been jittery in the last twelve months. Sorry. And we'll just have to see how it plays out. This is also related to Rafael's comment about loading. We have the knobs to turn as needed, and we have the inventory to allow us time to adjust our loading, for example, as we go. So we are in a very good position as we come into 2026. We worked very hard to get here, and I'm very proud of our execution. And we'll be ready for any scenario that the market wants to present to us.

Aleth, anything to you, Mike? Yeah. Thank you, Haviv, and thank you all of you for joining us today. Again, as we mentioned earlier, we look forward to sharing with you our capital management call on Tuesday, February 24 at 10 AM Central Time. A replay of this call will be available shortly on our website. And with that, have a great evening.

Thank you. And this concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.