The fabs are built, and the cash arrives

Texas Instruments reported third-quarter revenue of $6.06bn on Wednesday evening, up 28% on a year ago and 11% on the quarter, with net income of $2.43bn¹. Chief executive Haviv Ilan credited “continued broad growth in industrial, automotive and data center”¹. Analog chips, the unglamorous parts that manage power in everything from cars to servers, grew 32% to $4.91bn². Both revenue and earnings per share of $2.62 came in above the analyst figures the Wall Street Journal compiled, Quartz reported².

The dull line. The interesting number is not in the headline. Capital expenditure in the quarter was $463m, against $1.20bn a year earlier; over twelve months it fell to $2.58bn from $4.82bn¹. For years TI poured money into 300mm wafer plants. Now the plants are running, and the release says the “benefit of 300mm production” shows up in cash¹. Twelve-month cash flow from operations rose 43% to $9.90bn, and free cash flow to $8.42bn from $2.42bn¹.

The footnote. Read the definition. TI’s free cash flow is operating cash minus capex plus proceeds from US CHIPS Act incentives, which came to $1.10bn over the twelve months¹. A further $469m of CHIPS tax credit sits inside operating cash¹. Desk arithmetic: the two together are about 19% of the $8.42bn. TI does not hide this; it prints it in a reconciliation table. That is how a subsidy should look: visible, counted and separable from the business.

The constructive reading. The stockroom is getting leaner, not fatter: finished goods fell to $1.69bn from $1.94bn a year ago, while sales rose¹. TI guides to $5.80bn–$6.30bn for the fourth quarter¹. In a week when investors are asking whether AI spending will ever pay, here is a chipmaker past its spending phase showing what payback looks like: a lower capex line and a fatter cash line.

Nothing here is advice; it is a reading of a company’s own accounts.