Texas Instruments Inc Q1 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Timothy Arcuri - UBS - Analyst : Thanks much. So the guidance is up 7%. That's even better than normal, seasonal. I know this is a hard question to answer, but is there any way for you to know how much of this is pull-ins ahead of the tariffs? I mean, is there any way your discussions with customers, any of the tonality that's changed? Thanks.

Question: Timothy Arcuri - UBS - Analyst : I do, yeah. Is there a way to handicap sort of what your exposure is in China to these retaliatory tariffs? I know you report 19% as companies into China, but there's probably some added exposure from other companies that are domiciled beyond China that are building product in China. And I guess, can you offset some of that by having product on consignment? Do you have a lot of inventory on consignment in China to sort of offset some of that? Thanks.

Question: Vivek Arya - Bank of America - Analyst : Thanks so much. First, just wanted to say thanks and best wishes to Dave and his next ventures, and also good wishes to Mike. For my first question, maybe for Rafael, so inventory was up again, and I think on the last call you suggested that factory loadings would go down, so it seemed like maybe they did not. So how much was the gross margin benefit from that? And then how are you thinking about the direction of loadings and the pace of gross margins from here? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 8:30PM, TXN.OQ - Q1 2025 Texas Instruments Inc Earnings Call

Question: Vivek Arya - Bank of America - Analyst : Yes, thank you. So maybe for Q2, I think you mentioned that it is perhaps right in the range of seasonality or perhaps at the upper end. I know it tends to be a stronger quarter for your other calculator business, but when you look at your core segment, could you help us get a feel for what is going to be better or lower than the 7% or so sequential rate, whether it is by industrial or automotive or consumer markets or whether it's by analog or embedded, just so we get a better feel for what is driving Q2 to be at kind of the upper end of seasonality despite all these macro and tariff-related headwinds. Thank you.

Question: Stacy Rasgon - Bernstein - Analyst : Hi, guys. Thanks for taking my questions. You know, Haviv, you said at first that you didn't see any pull forward, but then you talked about customers wanting to hold more, which sort of seems like the definition of pull forward, and you seemed concerned about the second half. I mean, I guess my question is, if there was pull forward going on, would you care, or would you just ship? Like, is your typical plan -- I always thought it was if you can fulfill it, you ship it, and it doesn't really matter more than that. Is that how we should be thinking about how you're living in this environment right now, given some of the upside that you are seeing or clearly seeing?

Question: Stacy Rasgon - Bernstein - Analyst : I do, thank you. Maybe the follow-up on that, again, I know it's only been less than a month in the quarter. I know we're 23 days in. I think we're, what, about two weeks or so since Liberation Day. Just what have you seen on -- I guess, any acceleration in the order rate, you know, during those, kind of two weeks post-tariff versus, say, what you saw exiting Q1? Like, have orders, like, materially accelerated, the pace of orders materially accelerated over the last couple of weeks? Or is it consistent? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. APRIL 23, 2025 / 8:30PM, TXN.OQ - Q1 2025 Texas Instruments Inc Earnings Call

Question: Stacy Rasgon - Bernstein - Analyst : Thank you.

Question: Tore Svanberg - Stifel Institutional - Analyst : Yes, thank you, and congratulations to Dave on his retirement. Tremendous career, and you'll be sorely missed. My first question is on some of the activity that you've seen here the last few weeks. Is there any regional disparity here? I mean, I'm asking the question because, obviously there's variances on the potential tariffs by region. So is that also very consistent with what you typically would see?

Question: Thomas O'Malley - Barclays - Analyst : Hey, guys. Thanks for letting me ask a question. And again, I want to pass along the thanks to Dave. You will be missed. My first is just on the China -- for China strategy. So if you look at your global footprint versus your peers, clearly, you guys are really well positioned from the ability to serve different geographies with different capacity. But maybe just one on your China facility. If you were to look at demand that is coming from China specifically, can you meet all of that demand with your China facility in country? Or could you help me just understand how much of that demand you can meet with that facility? Is that something that you could entirely support with your footprint there?

Question: Thomas O'Malley - Barclays - Analyst : Yes, super helpful. This may be a silly question, but I just want to understand, too, because in your filings, you talk about front-end and back-end manufacturing at your different facilities. When you're doing production of a certain chip in a geography, is the back end always associated with that same foundry? Or are you shipping that to different places before it meets the end customer? Okay, where is the back end done? Is it pretty much aligned with your foundry footprint? Just because they're listed similarly in the filings. I just want to understand a little better.

Question: William Stein - Truist Securities - Analyst : Great. Thanks for taking my question. I wonder if you could talk to us about the breakup between -- in growth between pricing and volume, specifically as it relates to tariffs. Was there anything that helped, for example, the new tariff, you're passing the price along, and so you see some price benefit either in the Q1 results or in the Q2 guidance? Anything that we can quantify?

Question: William Stein - Truist Securities - Analyst : I wonder if you could give us an update on the competition in China. I think some people have observed greater competition there. One of your somewhat smaller competitors in Analog and Embedded with sort of similar product profile, perhaps a bit more narrow, but similar product profile, talked about no longer competing in standard products in China and instead of selling dies and having customers assemble, test, support, et cetera, which seems like a strange approach, but they said that the Chinese are becoming more intense or more capable competitors now. And I wonder if you could update that -- update us relative to what you see.

Question: Joseph Moore - Morgan Stanley - Analyst : Great. Thank you. I wonder if you could talk about the share repurchases in the quarter. I saw that $600 million-plus number. You've got $1.7 billion of trailing free cash and $5 billion dividend. I know the free cash is getting better, but can you just talk about what drives the timing of your buybacks? And how much are you willing to take on more debt to buy back more? Thank you.

Question: Joseph Moore - Morgan Stanley - Analyst : Yes, I do. And thank you for that. I guess with regards to the Chinese tariffs, I've talked to some of the customers, and people don't seem to have clarity on what exactly the tariff rate is. And yet I think the tariff is already being charged. Like do you have clarity on that? Are people immediately paying those tariffs? Is there just any way to sort of tell how much impact there is? Or is that something where the actual tariff is kind of calculated later? Just what are the mechanics of this being implemented so rapidly?