德州儀器 (TXN) 2026 年第三季財報電話會議：營收成長 28%，第四季財測指引

德州儀器（Texas Instruments）2026 年第三季法說會強調了廣泛的需求、製造產能擴充，以及工業、汽車與資料中心市場的持續復甦。

重點摘要

• 營收達到 61 億美元，季增 11%，年增 28%，所有終端市場與區域均實現成長。
• 類比產品營收年增 32%，而嵌入式處理產品成長 21%。其他部門下滑 6%。
• 資料中心營收年增約 95%，季增 20%。管理層表示該市場約占 第三季營收的 13%。
• 工業領域營收年增超過 40%，季增約 10%，略高於先前 2022 年第三季的高點。
• 毛利率季增 280 個基點至 64%，主要得益於營收增加，並受到定價、產能利用率以及產品與終端市場組合的額外提振。
• 管理層預估 2026 年第四季營收為 58 億至 63 億美元，每股盈餘 (EPS) 為 2.45 至 2.79 美元。

重要財務數據

德州儀器在本季支付了 13 億美元的股利。9 月，該公司宣布股利調升 7% 至每股 1.52 美元，為連續第 23 年調升。過去 12 個月返還給股東的總資本為 58 億美元。

業務與營運績效

類比與嵌入式處理

類比產品仍是主要成長驅動力，營收年增 32%。管理層表示，類比產品的供需吃緊狀況更為顯著，部分原因是在過去四年中，中國和台灣以外地區新增的產能有限，且部分代工產能已轉離類比產品。

嵌入式處理產品營收年增 21%。德州儀器表示，其在猶他州利海 (Lehi) 的製造投資提供了空間，可將代工生產轉為內部生產，並隨著需求發展擴充產出。管理層亦指出，近期嵌入式產品毛利率每季改善約 2 個百分點，年增約 10 個百分點。

工業

工業領域營收年增超過 40%，季增約 10%。管理層指出，航太與國防、能源基礎設施、測試與測量、機器人以及工業自動化領域皆展現動能。

該公司表示，儘管四年來每個系統的半導體含量持續提升，但第三季工業領域營收才剛超越 2022 年第三季的水準。管理層將此復甦歸因於週期性改善、半導體含量提升，以及在客戶系統中的產品組合市佔率成長共同作用的結果。

資料中心

資料中心營收年增約 95%，季增 20%。管理層表示需求維持強勁，且受季節性模式影響小於其他終端市場。

德州儀器為資料中心市場提供約 10,000 種通用料號。管理層指出，功率密度、效率、散熱與遙測技術是推動其類比與嵌入式產品需求的主要因素。該公司亦正在擴展至更多特定應用的插槽 (sockets)，不過這些產品仍處於早期量產階段。

汽車

汽車領域營收年增 15% 左右，季增約 10%。成長主要由中國與美國引領，而油電混合車與動力總成系統的成長速度約為整體汽車業務的兩倍。

管理層表示，汽車客戶普遍保持低庫存，並隨著生產需求增強而增加訂單。德州儀器利用現有庫存支援部分客戶，不過較為特殊的零組件則需要額外的製造反應時間。

製造與產能

德州儀器表示，其現有的無塵室產能使其能夠每季添置設備並增加產量。該公司亦正在提升於馬來西亞新建封測廠的產能，並稱該廠為其同類型設施中規模最大者。

管理層預期 2026 年資本支出將保持在 20 億至 30 億美元 之間，若設備交付按計畫進行，可能偏向區間高標。該公司未提供 2027 年資本支出數字，表示支出將取決於其計畫支援的營收成長率。

管理層財務指引

針對 2026 年第四季，管理層預估：

• 營收： 58 億至 63 億美元
• 每股盈餘 (EPS)： 2.45 至 2.79 美元
• 有效稅率： 約 13%
• 營業費用： 季增持平至微幅增加
• 收購費用與淨營業外收支 (OI&E)： 與第三季水準相當

對於 2027 年，管理層預計有效稅率約為 13% 至 14%。

在長期利潤率模型方面，管理層重申不含折舊的邊際利潤轉化率 (fall-through) 架構為 75% 至 85%，同時指出單季結果可能因營收、定價、產能利用率及產品組合而異。

風險與關注領域

• 隨著廣泛需求回升，本季交貨週期 (lead time) 有所拉長，但管理層表示德州儀器在交貨時間上仍具競爭力。
• 製造設備（特別是後段設備）的交付時間已拉長，可能影響資本支出與產能擴充的時程。
• 部分汽車客戶的庫存有限，當需求快速變化時，可能帶來潛在的零組件組合與量產擴充挑戰。
• 管理層表示，供應緊張狀況尚無法與上個週期經歷的廣泛零組件短缺相比，但承認客戶已出現對能否備齊產品套件 (kits) 的早期擔憂。
• 2027 年的定價討論仍在進行中。管理層報告指出，在 2026 年上半年價格年增持平後，下半年僅有微幅調漲，主要集中在類比產品。
• 資料中心的成長部分取決於客戶持續的資本投資。管理層表示尚未看到放緩跡象，但未提供 2027 年的成長預測。

分析師問答重點

毛利率可持續性：管理層將毛利率的季擴增主要歸因於營收增加，並獲得定價、工廠利用率與產品組合的額外支持。管理層提醒，長期轉化率架構比單憑單一季度進行推算更具參考價值。

第四季需求驅動力：管理層指出工業、汽車與資料中心是第四季展望優於季節性表現的主要貢獻來源。資料中心需求維持強勁，而工業領域則受惠於週期性復甦與長期半導體含量成長。

供應與市佔率：德州儀器表示，其庫存與製造投資使其得以在產業交貨期拉長時支援客戶。管理層預估，若需求維持強勁，該優勢可轉化為市佔率提升，但表示應從完整週期來評估市佔率成長。

汽車庫存：管理層未看到客戶囤積庫存的情況。相反地，管理層表示部分汽車客戶庫存不足，無法快速回應更強勁的生產需求。

資料中心商機：管理層強調其產品參與度的廣度，而非僅依賴專用晶片。更高的功耗、更高的電壓以及上升的功率密度，被視為為德州儀器產品組合擴展商機的關鍵。

法說會逐字稿全文

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完整財報電話會議逐字稿

管理層陳述

Mike Beckman

Welcome to the Texas Instruments Third Quarter 2026 Earnings Conference Call. I'm Mike Beckman, Head of Investor Relations, and I'm joined by our Chief Executive Officer, Haviv Ilan; and our Chief Financial Officer, Julie Knecht. 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 TI's 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 TI's most recent SEC filings for a more complete description.

Today, we'll provide the following updates. First, Haviv will start with a quick overview of the quarter. Next, he will provide insight into third quarter revenue results with details on what we are seeing with respect to our end markets. And lastly, Julie will cover the financial results and give an update on capital management as well as share the guidance for fourth quarter 2026.

With that, let me turn it over to Haviv.

Haviv Ilan

Thanks, Mike. Let me start with a quick overview of the third quarter. Revenue was $6.1 billion, an increase of 11% sequentially and an increase of 28% year-over-year. Analog and Embedded Processing both grew sequentially and year-on-year. Analog revenue grew 32% year-on-year and Embedded Processing grew 21%. Our Other segment declined 6% from the year ago quarter.

During the quarter, we saw broad demand with revenue growth across all end markets and regions. Secular growth of semiconductor content is continuing alongside the strong cyclical recovery. We are working closely with our customers to support them during this time of increased demand. We are executing to our long-term manufacturing plan and our investments have positioned us to ramp our factories to support revenue growth. Now I'll share some additional insights into third quarter revenue by end market.

First, industrial increased more than 40% year-on-year and was up about 10% sequentially. Automotive increased mid-teens year-on-year and increased about 10% sequentially. Data center was up about 95% year-on-year and grew about 20% sequentially. Personal electronics was about flat year-on-year and grew upper single digits sequentially. And lastly, communications equipment grew both year-on-year and sequentially.

With that, let me turn it over to Julie to review profitability and capital management.

Julie Knecht

Thanks, Haviv, and good afternoon, everyone. As Haviv mentioned, third quarter revenue was $6.1 billion, gross profit in the quarter was $3.9 billion or 64% of revenue. Sequentially, gross profit margin increased 280 basis points. Operating expenses in the quarter were $1 billion, on a trailing 12-month basis, operating expenses were $4 billion or 19% of revenue. Operating profit was $2.9 billion in the quarter or 47% of revenue and it was up 73% from the year ago quarter. Net income in the quarter was $2.4 billion or $2.62 per share. Earnings per share included a $0.01 reduction not in our original guidance due to discrete tax items.

Let me now comment on our capital management results, starting with our cash generation. Cash flow from operations was $3.4 billion in the quarter and $9.9 billion on a trailing 12-month basis. Capital expenditures were $463 million in the quarter, and $2.6 billion over the last 12 months. Free cash flow on a trailing 12-month basis was $8.4 billion, up from $2.4 billion in the third quarter of 2025. Free cash flow in the trailing 12 months includes $1.6 billion of CHIPS Act incentives, which includes both the investment tax credit and direct funding. In the quarter, we paid $1.3 billion in dividends.

In September, we announced we would increase our dividend by 7% to $1.52 per share, marking our 23rd consecutive year of dividend increases. This reflects our continued commitment to return all free cash flow to owners over time. In total, we returned $5.8 billion to our owners in the past 12 months. Our balance sheet remains strong with $8.1 billion of cash and short-term investments at the end of the third quarter. In the quarter, we repaid $500 million of debt. Total debt outstanding is [ $13.65 billion ] with a weighted average coupon of 4.11%. Inventory at the end of the quarter was $4.7 billion, up $67 million from the prior quarter, and days were 194, down 2 days sequentially.

Turning to our outlook for the fourth quarter. We expect TI's revenue in the range of $5.8 billion to $6.3 billion and earnings per share to be in the range of $2.45 to $2.79. We expect our effective tax rate to be about 13% in the fourth quarter. And for 2027, we expect it 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.

Mike Beckman

Thanks, Julie. Operator, you can now open the line for questions. [Operator Instructions] Operator?

Operator

[Operator Instructions] And our first question comes from the line of Joe Moore with Morgan Stanley.

分析師問答

Joseph Moore

I was a little surprised that the gross margins kind of incremental gross margins of about 90% on incremental revenue. I know the long-term target is lower than that. Can you just give us a sense for what went right there and how sustainable that may be?

Julie Knecht

Sure. Thanks, Joe. Yes, our margin in third quarter were really driven by higher revenue. That's the largest reason for that increase. But we also did have some benefit from pricing, loadings and some product and end market mix.

Mike Beckman

Do you have a follow-up, Joe?

Joseph Moore

No, I'm good. So that looks like about comparable gross margins embedded in the guidance. Is that kind of the right way to think of it?

Julie Knecht

I think over the long term, the way to model continues to be looking at 75% to 85% ex depreciation fall through. It's better -- it's easier to look at that more of our longer time horizon, so year-over-year -- but of course, there's puts and takes in this. For modeling, I would also share that OpEx for the fourth quarter, we're expecting to be flat to slightly up. Acquisition charges should look at that similar to what we saw third quarter, same with net OI&E.

Operator

Our next question comes from the line of Harlan Sur with JPMorgan.

Harlan Sur

Great job on the quarterly execution. Both short time -- both short lead-time orders and longer-term duration orders have been positive for the TI team over the past few quarters. Lead times, I assume, are probably expanding of this getting a bit more orders placed further out in time as well. Did the TI team drive another quarter of positive book-to-bill in Q3? And was the order activity pretty broad-based?

Haviv Ilan

Harlan, this is Haviv. Let me say a few words, and I'll let Mike offer some more comments. So look, we are seeing, as I said, the broadening of the demand coming across the 3 main markets that we focus on for the long term, industrial, automotive and data center. But in general, demand was strong across the board, across markets, sectors and regions. That does put pressure on lead times, but I think they may be ticked a little bit higher. I'll let Mike comment. But I still believe that TI is best positioned to support that growing demand. I think we are still the most competitive supplier in terms of lead time.

Mike, I don't know if you can offer anything else here.

Mike Beckman

I think you characterized it right. And I'd just also add the investments that we've made in inventory and capacity do position us to support growing demand and we'll continue to ramp our factories to support revenue growth moving forward. Do you have a follow-up?

Harlan Sur

I appreciate the answer. Last quarter, have you talked about the potential for broader positive pricing initiatives as you hold your annual pricing negotiations for next year? That would overlay not just on your Analog and Power products, but also on your Embedded products as well. Can you give us an update here? I mean, industry supply dynamics feel like they're getting worse, not better. TI is in a great position to support customer supply requirements. And I think they do value the team's supply capability. And I assume they're willing to pay a premium for the assurance and predictability you offer, but I wanted to get an update from you there on annual pricing negotiations.

Haviv Ilan

Yes. First, a high-level picture, Harlan, as you mentioned, there is a stronger demand environment right now. And if you look at the area of foundation on CHIPS, as I call it, but specifically Analog, there hasn't been a lot of addition into capacity in the last 4 years since the previous peak of the market during the Coffee Day. So especially if you do care about geopolitically dependable capacity, meaning usually factories outside of China and Taiwan. So in that, TI has a good position. We are seeing our customers value our investment and also our capacity to continue to grow than not only in the next quarters, but also in the foreseeable future. So that's a good characterization of the situation we are in.

Regarding pricing, specifically, look, most of our pricing discussions are done once we're with our customers, but we did see some areas in the middle of the year where we had the opportunity to talk to customers that wanted more supply more urgently. And in this case, and Julie indicated in her answer, we did see some price movement, I would say, mainly on the Analog side, in the second half. I would just characterize it the second half of 2026. After a flat pricing environment year-over-year in the first half of '26. So we are seeing a little bit of an uptick, not very significant for this year. For '27, yes, we are now engaged in the discussions we just mentioned. We are looking at customer demand and what type of supply they want to guarantee if you will or to get supported from TI and that has a pricing element to it. So I think we'll report more of it when we provide our results, mainly our guidance during the January call.

Operator

Our next question comes from Stacy Rasgon with Bernstein Research.

Stacy Rasgon

I wanted to ask about the end-market outlook that's embedded in guidance. Usually, Q4 just seasonally is down, I don't know, mid-single to high single, even more sometimes. And I get it's calculators in personal electronics typically. You're guiding flattish, which is well above, it would be one of your stronger Q4s in quite a while, probably since the COVID cycle. What is embedded there are the puts and takes on end markets given those sort of typical seasonal patterns? And what are you seeing across the markets now that's driving things stronger?

Haviv Ilan

Yes. Stacy, I'll take a stab at the -- I'm not going to guide by market, as you know, we don't. But I will just give a little bit of color. The data center market, it's a market that we see strong secular growth. I don't think it's influenced by seasonality. The demand continues to be strong and growing. So -- and it's just a bigger part of our business now. I think it was about 13% of revenue in Q3 or so. So I think just you see that coming in and just helping if you will, the transition from Q3 to Q4.

But on top of it, I'm very excited about what we're seeing on the industrial market. We are seeing a very strong momentum is real across sectors, but specifically in areas like aerospace and defense, energy infrastructure, test and measurement, the robotics sector. So this is where we see a combination of secular road but also sequential or cyclical recovery, I would say. So this is why we are seeing an above seasonal forecast on TI. We also saw the automotive customers waking up, if you will, with higher demand in Q3, and I think that may continue into Q4. So again, the top 3 markets, industrial automotive and data center are the ones that are driving our guide into Q4.

Mike Beckman

Do you have a follow-up, Stacy?

Stacy Rasgon

I do. I wanted to ask about CapEx. So you've been talking about you'll be near the higher end of the $2 billion to $3 billion range for the year and are you still going to be tracking there in the one quarter that we have left? And I guess, in addition to that, you talked about continuing to invest in manufacturing to support demand. So like how do we think about CapEx in '27 relative to '26 given that statement?

Haviv Ilan

Yes. Let me start with the '26 right now, Stacy, of course, we'll give some more color during our February call for capital management about what we're seeing. But high level, you're right. We are aiming to continue to invest right now in '26, somewhere between $2 billion and $3 billion. And yes, we want to aim higher, but also we are seeing lead times extending on tools and everything, especially on the back-end side. So that is very tactical situation, but we do want to expand capacity.

As you know, we have plenty of clean room. And we are seeing strong demand, leaving this quarter, we grew in the high 20s. So you do want to make sure you continue to feel that clean room with tools, both on the back end, but also later on the front-end side. So we are leading in -- and again, now when you talk about CapEx, it's when tools are coming in, delivered by our suppliers, and that's what influences more or less the result. But you should expect somewhere between $2 billion to $3 billion this year and maybe on the higher end, if we get that execution as planned.

Now regarding '27, I won't say anything right now about the numbers, but I do think it's a function of demand and what our aspiration of growth is, Stacy. I think we've given a framework at a time of what CapEx will do as a function of the expected longer-term revenue growth. Of course, we are investing ahead of demand, right? So there is a certain CapEx level to support the 10% growth versus higher CapEx to support mid-teens growth, for example. And this is where we want to provide some more color in our February call.

I will say that we have the -- we are in a position to control our destiny. We have taken care of the long lead time investments on clean rooms, including all the subfab and all the -- to be fair, the equipment that takes right now a very long time to get and build and get qualified. So I'm very excited about that. We do have the slot reserved for '27 and beyond, and we are going to modulate the incoming rate based on the revenue growth we would like to support, okay?

Operator

Our next question comes from the line of Chris Caso with Wolfe Research.

Christopher Caso

First question was to dig in a little more on the industrial market. And market has been in recovery for some time now. You're seeing it up 40% year-on-year in the quarter. I guess the question is, what's your level of conviction that when this recovers, how much of that recovery do you think has been driven by cyclical factors as opposed to secular factors such as the growth in some of those individual segments?

Haviv Ilan

Yes. So let me start, and Mike, maybe you can offer some more color on the sectors inside the industrial. But high level, the excitement I have about industrial, it's growing very fast, but only now in Q3 2026, it reached the same level of revenue we had in Q3 2022. So this is the first time we created a new peak in industrial after 4 years. I do believe that systems that are being designed by our customers 4 years later than the COVID peak are much more rich with content. We are seeing -- and equipment by equipment, sector by sector that there is just more content per system as customers want to achieve higher precision, higher speed, higher quality, more throughput, whatever they want to drive, right? So that is there.

I also believe our portfolio has done very well in terms of -- we've built more and more parts in the last several years invested in R&D, and I think we want a larger share of a system based on our portfolio. So I'm excited about that as well. Now there was also some secular areas of growth like aerospace and defense and also data center induced sectors. I'll let Mike comment there about the different sector. Some of them, by the way, have not reached their previous peak yet. So we are in the early innings.

Mike Beckman

Right. So some of the sectors, as you probably know, that have had industry-level unit demand like aerospace and defense or the ones that are more closely adjacent to data center, like energy infrastructure, test and measurement, make all new highs over time. But even areas like industrial automation that are going through recovery have also had, as you described, 4 years of content increase gen-to-gen secular content growth. So as we look at the industrial end market, we see opportunity ahead there. And as you mentioned, it's just now reached a little bit above its previous peak, but again, that's 4 years of content expansion. So we look forward to serving that market well in the quarters ahead. So do you have a follow-up?

Christopher Caso

I do. The follow-up question is on Embedded. And now that I guess the second Lehi shell will be ready by the end of the year. Maybe you can talk about how you intend to deploy that as you go into next year? And as you said, it does seem like industry capacity is getting tighter. So what benefit does that bring to you? What are your plans for next year? And does that have any margin impact?

Haviv Ilan

Yes. So on the Embedded side, I am, we are seeing that our investment in Lehi. Lehi 1 and Lehi 2 is extremely beneficial. On Lehi 1, as you remember, we have transferred a lot of our foundry-based business into Lehi 1, but we still have plenty of clean room in Lehi 1. So we are going to grow into that. That will carry us at least in the following -- in the coming quarters. But we do have Lehi 2, as you mentioned there, to continue to grow Embedded the rate which demand will indicate. So we are right now looking at the numbers. I think that the Embedded business in general.

I think this is not only a TI comment, but in terms of the cyclical recovery, I would call it maybe a year later than Analog. We saw that the Embedded business peaked in 2023, while Analog for TI peaked in 2022. I also believe that the supply demand mismatch is higher in Analog because some of the Analog supply, to be fair, went offline in the last few years and more is coming out as some of the foundries are transitioning their supply base to support non-Analog portfolio parts. So with that sense, I think the pressure is now higher, and this is why you're seeing higher growth on Analog.

Having said that, Embedded is well positioned. Our portfolio is growing. We have a clean room in LFAB1. We have the shell in LFAB2 that is the last stages of completion. So we can modulate now tool installations according to what demand says. Last but not least, I want to mention our plan with the Silicon Labs acquisition. That's another clean room that will serve the transitioning the portfolio that right now is running in foundries into -- again, into Lehi. From a gross margin perspective, we are seeing strong progress. I think we've seen it in the last several quarters, Julie, right? Is it a couple of points per quarter that you are seeing lately?

Julie Knecht

Yes.

Haviv Ilan

And I think about 10 points year-over-year or something. So I do see that the embedded has room to grow in the sense of not only top line growth but also gross margins as well.

Operator

Our next question comes from the line of Joe Quatrochi with Wells Fargo Company.

Joseph Quatrochi

Yes. I wanted to ask about the auto demand commentary you provided talking about. You're seeing customers kind of wake up a little bit. Can you give a little bit more color? Is that broad-based your demand that you're seeing and you're seeing customers add more inventory? And is that across Analog and Embedded or more concentrated?

Haviv Ilan

Yes, I will start. But in automotive, I think I will describe the demand we are seeing in automotive as such that keeping -- demand is coming in pretty strong in Q3. We did see a nice sequential growth. we are seeing mid-teens year-over-year growth. But actually, customers have not kept a lot of inventory on their side. So when they saw maybe demand growing, maybe a little bit of more EV as fuel prices went up, they were not well positioned compared to customers we've seen in other markets. So we are now supporting these customers as they're trying to ramp their production.

I don't see any inventory buildup on the contrary, I wish they had a little bit more. But we are positioned to grow. Of course, the fact is you cannot switch -- flip a switch, sorry, to get the output at the right mix immediately. And this is where we help some customers with the existing inventory we've built ahead, but some of the parts are more unique, and we need to react to customer demand. So that's what I'm seeing right now in terms of region.

Can you add a little bit, Mike?

Mike Beckman

Yes. So similar to last quarter, you may recall that we saw in China and the U.S. averaging up the overall growth. We continue to see that in third quarter as well. And the comment around EV mix, you can see it clearly in our sectors as well. So the hybrid electric and powertrain systems sector grew about twice as fast as the overall did. So I just give you a sense of the mix that has shifted towards EV inside of that.

So with that, do you have a follow-up?

Joseph Quatrochi

Yes. And then just -- as you think about it, you talked about back-end tools, lead times kind of starting to extend and things capacity, obviously, tight. Does that change any of your plans and how you're thinking about just moving more of your capacity on the back end side to internal? Are you trying to flex some of your external capacity a bit more just given the pretty significant increase in demand you're seeing?

Haviv Ilan

Yes. I think I commented before earlier this year, we've done a lot throughout the year. So we are not getting as much as we wanted from our OSAT partners. And I think it's also just tightness of supply you mentioned. So we do have a new site in Malaysia that we are ramping very quickly. It's our largest AT site newly built. And I'm very glad we have it. The parts are being qualified and ramped. So we can continue to increase capacity every quarter, thanks for the cleaning we have.

The rate of which we could go is a function of how quickly we had tools, and that's also a function of the demand, I would say. But in general, I'm very pleased with our situation in both front and back end because we control our destiny here. And we have done the work during the down cycle. Again, when lead-times are very short on this type of equipment to get ahead and to be ready for a range of scenarios. This scenario right now is a very strong demand scenario.

Operator

Our next question comes from the line of Tore Svanberg with Stifel.

Tore Svanberg

Congratulations on the results. Just zooming in a little bit on data center, I think it almost doubled year-over-year. I think in the past, you've talked about your exposure to data center still kind of being more building block components. But I do know you have some newer products that are starting to get designed in. So how should we think about that in the context of the almost double year-over-year growth rate?

Haviv Ilan

Yes. Look, I'm very excited about the market in the sense of you guys know exactly what's going on there. But what I would like to share is that we see a very high breadth of opportunity, and we are continuing to invest. I mean, customers want new solutions to get more -- I mean, these are very expensive assets. If you think about the compute track or networking reg and it means a lot of telemetry and cooling and efficiency is critical, power density is critical. So we are seeing customers being very, very innovative on how they add part that are mainly coming from our portfolio of foundational CHIPS of Analog and Embedded CHIPS to do all of that.

So just a growing opportunity in terms of diversity of part numbers. We reviewed it earlier this week. And we have about 10,000 different GPMs or generic part numbers that we are selling into this market and it's growing every quarter. So that's a very exciting opportunity. Now our focus is, again, we are a company that is trying to breadth of our portfolio is one of our competitive advantages. But of course, we also pay attention to the more application-specific sockets. We have developed the technology for that. I think I've mentioned it. It's now early ramps in German. I think the execution is going well. So I'm excited about continuing to expand our portfolio in data center. Assuming the investments in data center continues in the U.S. And by the way, it's not only in the U.S. We are seeing it worldwide, but the U.S. is leading.

Do you have a follow-up, Tore?

Tore Svanberg

Yes. So in industrial, which is a little more than 1/3 year-over-year revenue. I know you talked about the cyclical growth and the cycle growth I'm just also curious, if you look at all the subsegments there, how much of that, let's say, 35% of revenue is potentially being impacted by the data center built out as well?

Haviv Ilan

So I think we have about 9 or 10 sectors over there in industrial. The last one is kind of what we call other, all other end agreements. But of the 9, I think 2 are very much data center specific energy infrastructure and also test and measurement. But I think I see a lot of robustness there. I mean, people are building memories and GPUs for the foreseeable future. They need to test them. That has been a very fast growing sector for us, and we're doing well over there.

And then the energy infrastructure, I think the world is rebuilding its grid and it's a very -- it's -- the content is very rich with semiconductors. So that has been a very good sector growth for us. I think data center influence it, but the world need more energy, I think, in general, if you think about automation later on physically in robotics and aerospace and defense, everything needs more energy, and I think that's going to continue. So I'm being -- I'm very excited about the progress over there.

Now we are seeing, as Mike mentioned before, we just see other secular trends that are not -- I don't think they may be related to data center because they have helped accelerate them. But what's going on in the aerospace and defense, with autonomous end equipment, if you will, that are very content rich in the type of parts we make. Very early on the robotics side, but I think '27 is going to be a great deal of ramps. Our content over there is actually, for example, per humanoid, it is very high, I would say, somewhere between $500 to $1,000 per content for TI on this type of system. So I don't know how many does build the next year, but definitely, the demand is -- they want to grow.

So all of that is putting a lot of -- providing a lot of tailwind on our industrial business, which I'm excited about because it also helps you -- there was a question before on margins. This is our best market in terms of diversity and longevity, but also in terms of margins. So a very lucrative market.

Operator

Our next question comes from the line of William Stein with Truist Securities.

William Stein

I'm hoping you can comment on customer inventory levels and their ability to complete kits. We've heard some feedback from industry contacts that this is becoming a challenge the way it was a few years ago in the so-called golden screw era. I wonder to what degree you're seeing this? And what is your ability to perhaps help customers deal with those challenges?

Haviv Ilan

Yes. First, we all hear -- I lived through the previous up cycle during the COVID date. I would not compare the situations. I think also we are earlier right now in terms of the cycle is, so we'll have to go to see. But again, from a TI perspective, we are much better prepared in terms of -- we have -- we can grow our capacity every quarter. And we've built inventory during the down cycle.

Now if you have a very rapid fast growth in some of the customers or market especially where customers have not prepared and did not have enough inventory on their side, you can run into situations, I think I gave an example before on the automotive market. That's the one place I would say that I see it right now versus in capital -- in the recovery cycle, we did see a much broader situation across almost every customer over every end market. So I would not compare them yet.

I will say that this, we have come for help many times. We have been the solution many times right now in other markets. So some of our industrial customers, some of our data center customers, they've asked for help. And many times, we had the inventory and could also commit capacity or growth into '27 and beyond. So we are seeing early anecdotal feedback that we can help our customers. But we need to see how the situation develops.

I will say, as I said before, in terms of capacity addition, outside of China, mainly on the Analog side, it's not -- we don't see a lot of clean room and a lot of new capacity added in the last 4 years. And as I mentioned, the cycle time to build from moving there to getting output from a fab, it's about 4 years, not to mention about full ramp of the fab. So I think TI is in an advantaged position here versus the rest of the market.

Mike Beckman

I do think that customers in the context of the question on kitting and making sure they have all the products they need, they will come to us and say, I need to make sure I have what I need from your portion to me -- as I get what I need it, I think maybe another area where they're having a challenge getting it. So this is all part of what we're seeing in our markets overall. But I think we are in a good position to be able to help work with our customers to help them as they grow.

So Will, do you have a follow-up?

William Stein

Appreciate that helpful answer. And the next one, you might have discussed already, but can you talk about where lead times might have changed in the last quarter? And what are your customers' willingness and ability to place backlog with you has been -- has the backlog duration extended materially in the last quarter?

Mike Beckman

So I'd characterize the backlog is consistent with the overall demand environment that we're seeing. And we have seen an uptick in lead times. And there are areas where you'll see just as you would expect in an environment like this where there may be more or less tightness in certain areas. But in terms of where we are from a lead time perspective, we're competitive right now. And again, we're in a position where we can make investments into the clean room and the assembly and test facilities that we have to be able to support growth for our customers, and we'll continue to ramp those as we move into the -- this quarter and beyond.

Operator

Our next question comes from the line of Nabeel Aziz with Rothschild & Company.

Nabeel Aziz

I just had a question on the supply-demand tightness through the quarter and what you're seeing in terms of socket wins and your engagements with customers there and whether you've started to see incremental market share gains through the quarter?

Haviv Ilan

Yes, Nabeel, I think when it goes to market share, we don't like -- of course, we look at the results internally. But I think we should look at it through the cycle again, if we are indeed better positioned than some of the competition to support demand. And if demand continues, we should be able to translate it to market share gains, but that -- we cannot measure it yet. So I think we have to wait through the cycle, see when the next peak is, we will arrive on day and then see where we are. But I'm pleased with the momentum we are building. I'm pleased with the ability to continue to ramp our supply and let's see how we do in the long term.

Mike Beckman

Do you have a follow-up, Nabeel?

Nabeel Aziz

Yes. Just to follow up on the back-end tool comments. Could you just confirm, is there a potential that back-end tool availability could at all bottleneck your growth and whether that is a gating factor for you? Over the next couple of quarters?

Haviv Ilan

I don't want to talk about the gating items because the gate is when you don't have the clean room, right? A gate when you are stuck for a couple of years to build your share and to build a clean room and all the infrastructure behind it. We don't have a gating item like that. I think this is just people are blocking and tackling as we say, our execution of getting the equipment on time, our suppliers also need -- their supply chain is complex and to get through it. It's just a period of high demand all over. And everybody is going through their challenges, but there is a very large opportunity to expand capacity, and we are.

I would say that I don't see between front end and back end, we are going to be balanced. Of course, the higher investment we need to make when you think about CapEx for the longer term is always on the front end. This is -- the CapEx is more expensive. And also the lead times are always longer with the supply chain over there. And why we are not planning only '27 and '28, we are actually thinking that through the rest of the decade, what is planned and how are we going to slot our future tools and even new clean rooms. so we can continue to support a range of scenarios that the market may present to us.

Operator

Our last question comes from the line of Vijay Rakesh with Mizuho Securities.

Vijay Rakesh

Just a quick question. I see your data center side is growing pretty strong. It's almost like a $2.5 billion run rate this year annualized. Just wondering, as you look at '27, do you expect that growth rate to continue under double from here? And a quick follow-up.

Haviv Ilan

Yes. I mean, we are watching like everyone, the CapEx investment in the data center market. It doesn't have -- it doesn't signal right now any -- we are not seeing any slowdown. We are seeing continuing demand actually growing demand. As I mentioned before, our portfolio is growing. That's my -- that's where I'm excited about our investment. We are not sitting still. We are creating new parts. We are continuing to attack new subsystems. So we want to continue not only to grow with the market, but also playing more sockets and ultimately gain market share. So so far, so good. We'll see how the demand continues to develop into the next year.

Mike Beckman

And Vijay, just zooming out. When there's more power there's more opportunity for TI and there's more power density. There's more opportunity for TI when there's higher voltages, there's more opportunity for TI. And obviously, these are things that are all being worked on very heavily in this end market. And again, we look forward to supporting.

So do you have a follow-up?

Vijay Rakesh

Great. And just a quick one on the commentary on the EV side, is this more of a -- does he have more exposure in China kind of China export EV market as well? Like how would you characterize the EV strength just globally across regions?

Haviv Ilan

No, as we -- I talked many times over in the last several years, China the automotive industry and especially EVs is leading in many ways, and they are not only building for their domestic market, which is why a supplier like TI was always something that it was very, very important to them. We are a global company, very diverse supply chain across the globe. And we've continued to design in our power to their systems.

I think I am excited about the fact that the China is growing faster than their export business because these are usually just -- in terms of content, just higher content and also higher share for us there. So that also is driving the growth. Mike has mentioned before that automotive business for TI in Q3 was driven by China and the U.S., and we are excited about our position there.

Mike Beckman

All right. With that, I'm going to have Haviv close this out for the call.

Haviv Ilan

Okay. So let me wrap up with what we've said previously at our core engineers and technology is the foundation of our company, but ultimately, our objective and the best metric to measure progress and generate value to our owners is the long-term growth of free cash flow per share. Thank you, and have a good evening.

Operator

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