Texas Instruments' revenue rose 28% and CHIPS Act cash made up nearly a fifth of its free cash flow

The analog turn, printed in Dallas

Texas Instruments▲+3.32% — Texas Instruments, up 3.32 percent today, the Dallas maker of the analog chips that meter power in factories, cars and AI data centers, posted the quarter the cycle-turn crowd wanted. Third-quarter revenue was $6.06 billion, up 28% from a year ago and 11% sequentially, operating profit rose 73% to $2.87 billion, and EPS of $2.62 beat the $2.43 consensus↗ ¹².

The Analog segment, roughly four-fifths of revenue, grew 32% ¹. Chief executive Haviv Ilan cited "continued broad growth in industrial, automotive and data center," the very markets the market had dumped as AI losers during the slump ¹.

The stock traded flat at $285.54 right after the release, after rising 59% this year into the print ²³. UBS, the Swiss bank, had forecast a 10.7% sequential rise, six points above normal seasonality, and made TI its top analog pick; TI delivered 11% ¹⁵.

The free cash flow has a co-author

Trailing-12-month free cash flow hit $8.42 billion, 40.6% of revenue against 14.0% a year ago ¹. Two helpers did the lifting.

Capital spending fell to $463 million this quarter from $1.20 billion a year ago, the fifth straight quarterly decline ¹⁹. Federal money supplied the rest: $1.10 billion of CHIPS Act incentive proceeds plus $469 million of investment-tax-credit benefit run through the same 12 months, leaving nearly a fifth of the free cash flow with a Washington postmark ¹.

The Inference traced that dependence↗ on October 7; the Q3 tables extend it ¹. The payout shows the same restraint: buybacks fell 61% to $636 million over 12 months while dividends held near $5.2 billion ¹.

$7.5 billion for Silicon Labs, waiting on Beijing

The spare cash is aimed at Silicon Labs·+0.27% — Silicon Labs, up 0.27 percent as of its last quote, the wireless-chip maker TI agreed in February to buy for $231 a share, about $7.5 billion in total ¹⁴⁷. The deal awaits a phase-two antitrust review in China↗, with closing guided to the first half of 2027, and a $7 million acquisition charge already sits in this quarter's income statement ¹⁴⁷.

Flat at the midpoint, but the channel points higher

The fourth-quarter outlook stops the snapback. Revenue guidance of $5.80–6.30 billion↗ puts the midpoint within $5 million of Q3, and the EPS midpoint of $2.62 matches the quarter just printed to the penny ¹². That caps a run of seven straight quarters of year-on-year growth ².

The midpoint still beat consensus by 5.6% and implies 36.8% annual growth ². UBS still finds distributor inventories falling 7–10% a quarter↗, analog prices up 9–12%, restocking not yet begun, and 73% of buyers locked into advance orders or long-term supply agreements ⁵⁶.

The cash comes partly from customers absorbing those price increases, and partly from Washington: $1.57 billion of the $8.42 billion is CHIPS Act proceeds and tax credit ¹⁵.

A flat quarter would be a pause, not the end

Next readings: TI's call tonight, UBS's restocking surveys, and Analog Devices·+2.26% — Analog Devices, up 2.26 percent as of its last quote, the other large analog chipmaker UBS singles out, which reports on November 19 off a 39% growth quarter↗ ⁵⁸. If distributors start rebuilding shelves, a flat seventh quarter would look like a pause in an upcycle that typically runs eight to ten quarters, not the end of it ²⁵.