Texas Instruments (NASDAQ:TXN) reported third-quarter 2026 revenue of $6.1 billion, up 11% sequentially and 28% from a year earlier, as broad demand growth across end markets and regions supported results. The company said semiconductor content growth and a cyclical recovery are occurring simultaneously, while its manufacturing investments have positioned it to expand output.
Chief Executive Officer Haviv Ilan said Analog revenue increased 32% year over year, while Embedded Processing revenue rose 21%. Revenue in the company’s other segment declined 6% from the prior-year period.
End-market growth broadens
Industrial revenue increased more than 40% from a year earlier and about 10% sequentially. Automotive revenue rose in the mid-teens year over year and approximately 10% from the second quarter. Data center revenue climbed about 95% year over year and 20% sequentially, while personal electronics was roughly flat year over year but increased by upper-single digits sequentially.
Ilan said the company expects industrial, automotive and data center demand to be the principal drivers of its fourth-quarter outlook. He noted that data center revenue represented about 13% of third-quarter revenue and said the market’s growth has not been influenced by typical seasonal patterns.
Within industrial, Ilan said third-quarter revenue exceeded the segment’s prior peak reached in the third quarter of 2022. He attributed the growth to higher semiconductor content in customer systems, an expanded company portfolio and demand in areas including aerospace and defense, energy infrastructure, test and measurement, robotics and industrial automation.
Management also described data center as a broad opportunity spanning power, telemetry, cooling and efficiency applications. Ilan said Texas Instruments sells about 10,000 generic part numbers into the data center market, with that number increasing each quarter. The company is investing in both broad foundational-chip offerings and more application-specific products, he added.
Profitability and cash generation
Gross profit was $3.9 billion, or 64% of revenue, with gross margin rising 280 basis points sequentially. Chief Financial Officer Julie Knecht said the improvement was driven primarily by higher revenue, with additional benefits from pricing, factory loadings and product and end-market mix.
Operating expenses totaled $1 billion during the quarter. Operating profit reached $2.9 billion, or 47% of revenue, and was up 73% from the year-ago period. Net income was $2.4 billion, or $2.62 per share. Earnings per share included a one-cent reduction related to discrete tax items that had not been included in the company’s original guidance.
- Cash flow from operations: $3.4 billion in the quarter
- Trailing-12-month cash flow from operations: $9.9 billion
- Trailing-12-month free cash flow: $8.4 billion, including $1.6 billion of CHIPS Act incentives
- Third-quarter capital expenditures: $463 million
- Cash and short-term investments at quarter-end: $8.1 billion
The company paid $1.3 billion in dividends during the quarter and increased its quarterly dividend 7% to $1.52 per share in September, marking its 23rd consecutive annual dividend increase. Texas Instruments returned $5.8 billion to shareholders over the past 12 months, according to Knecht.
The company repaid $500 million of debt during the quarter. Total debt outstanding was $13.65 billion, carrying a weighted average coupon of 4.11%. Inventory ended the quarter at $4.7 billion, up $67 million sequentially, while inventory days declined by two days to 194.
Capacity, pricing and supply conditions
Management said demand strength has put some upward pressure on lead times, though Ilan said Texas Instruments remains competitively positioned to serve customers because of its inventory and manufacturing capacity investments. The company is ramping factories and plans to continue adding equipment to available clean-room space as demand requires.
Ilan said the company saw some pricing improvement, primarily in Analog, during the second half of 2026 after pricing was flat year over year in the first half. He said Texas Instruments is conducting annual pricing discussions with customers for 2027 and expects to provide more detail with its January results and outlook.
In automotive, Ilan said customer demand strengthened in the third quarter, particularly in China and the United States. He said customers had not maintained substantial inventory levels and Texas Instruments has been working to support production ramps. Hybrid-electric and powertrain systems grew about twice as fast as the overall automotive business, according to management.
The company also said it is expanding internal assembly and test capacity, including at a new site in Malaysia. Ilan said equipment delivery timing can affect near-term capital spending, but characterized the situation as an execution issue rather than a structural capacity constraint.
Fourth-quarter outlook
For the fourth quarter, Texas Instruments projected revenue of $5.8 billion to $6.3 billion and earnings per share of $2.45 to $2.79. The company expects its fourth-quarter effective tax rate to be about 13%, and forecast a 2027 tax rate of roughly 13% to 14%.
Management expects fourth-quarter operating expenses to be flat to slightly higher sequentially. Knecht said the company continues to use a long-term model of 75% to 85% fall-through excluding depreciation when assessing margin performance over longer periods.
For 2026, Ilan said capital expenditures are expected to remain within the company’s previously stated $2 billion to $3 billion range, potentially toward the high end if equipment deliveries proceed as planned. He said Texas Instruments will provide additional detail on 2027 capital spending during its February capital-management update.
About Texas Instruments (NASDAQ:TXN)
Texas Instruments Incorporated (NASDAQ:TXN) designs and manufactures analog and embedded semiconductor products used in industrial, automotive, personal electronics, communications equipment, and enterprise systems. Its analog products help manage power, sense and measure real-world signals, and support signal processing, while its embedded processing products provide computing and control functions within electronic systems.
The company offers a broad portfolio of semiconductors, including power-management devices, amplifiers, data converters, microcontrollers, processors, and connectivity products.
