---
title: "Texas Instruments' revenue rose 28% and CHIPS Act cash made up nearly a fifth of its free cash flow"
description: "Texas Instruments put up the analog cycle's loudest receipt yet: revenue up 28% to $6.06 billion, with industrial, automotive and data center all growing at once. The trailing 40.6% free-cash-flow margin is real, and nearly a fifth of the cash trail runs through Washington."
publisher: "The Inference"
section: "Chips"
published: 2026-10-21T21:22:40.051Z
modified: 2026-10-21T21:22:40.051Z
canonical: https://theinference.org/article/texas-instruments-revenue-rose-28-and-chips-act-cash-made-up-nearly-a-fifth-of-its-free-cash-flow
language: en
keywords: "Texas Instruments, Earnings, Semiconductors, CHIPS Act, Free Cash Flow"
---

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

> Texas Instruments put up the analog cycle's loudest receipt yet: revenue up 28% to $6.06 billion, with industrial, automotive and data center all growing at once. The trailing 40.6% free-cash-flow margin is real, and nearly a fifth of the cash trail runs through Washington.

## The analog turn, printed in Dallas

[Texas Instruments](https://theinference.org/markets/companies/texas-instruments), 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](https://finance.yahoo.com/markets/stocks/articles/texas-instruments-nasdaq-txn-q3-201351709.html) [1][2].

The Analog segment, roughly four-fifths of revenue, grew 32% [1]. Chief executive [Haviv Ilan](https://theinference.org/markets/people/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 [2][3]. UBS, the Swiss bank, had forecast a 10.7% sequential rise, six points above normal seasonality, and made [TI](https://theinference.org/markets/companies/texas-instruments) its top analog pick; TI delivered 11% [1][5].

*Chart: **Seven straight quarters of year-over-year growth, and the Q4 guide holds revenue flat** Line chart of Texas Instruments quarterly revenue from Q2 2024 to Q3 2026, with the Q4 2026 guidance midpoint marked as an estimate*

*Seven straight quarters of year-over-year growth, and the Q4 guide holds revenue flat [1][2][9]*

## 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 [1][9]. 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].

*Chart: **Nearly a fifth of TI's trailing free cash flow came from Washington** Pie chart splitting Texas Instruments' trailing-12-month free cash flow of $8.42 billion into CHIPS Act incentive proceeds of $1.10 billion, investment-tax-credit benefit of $0.47 billion and all other sources of $6.85 billion*

*Trailing-12-month free cash flow through Q3 2026, split by source. The two federal items together total $1.57 billion, about 19% of the $8.42 billion whole. [1]*

The Inference [traced that dependence](https://theinference.org/article/texas-instruments-5-8-billion-payout-needed-1-2-billion-of-chips-act-cash) 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](https://theinference.org/markets/companies/silicon-labs), the wireless-chip maker TI [agreed in February to buy for $231 a share](https://theinference.org/article/china-s-merger-list-skips-silicon-labs-231-texas-instruments-buyout-leaving-a-4-spread), about $7.5 billion in total [1][4][7]. The deal [awaits a phase-two antitrust review in China](https://seekingalpha.com/news/4641671-silicon-labs-ticks-lower-on-report-texas-instruments-deal-will-go-into-phase-2-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 [1][4][7].

*Chart: **Capex has fallen five straight quarters while operating cash climbs** Line chart of Texas Instruments quarterly operating cash flow versus capital expenditures, with capex falling five straight quarters*

*Capex has fallen five straight quarters while operating cash climbs [1][9]*

## Flat at the midpoint, but the channel points higher

The fourth-quarter outlook stops the snapback. [Revenue guidance of $5.80–6.30 billion](https://www.prnewswire.com/news-releases/ti-reports-third-quarter-2026-financial-results-and-shareholder-returns-302915896.html) puts the midpoint within $5 million of Q3, and the EPS midpoint of $2.62 matches the quarter just printed to the penny [1][2]. 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](https://www.kucoin.com/news/flash/ubs-report-analog-chip-cycle-continues-upward-distributor-inventory-hits-low), analog prices up 9–12%, restocking not yet begun, and 73% of buyers locked into advance orders or long-term supply agreements [5][6].

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 [1][5].

## A flat quarter would be a pause, not the end

Next readings: TI's call tonight, UBS's restocking surveys, and [Analog Devices](https://theinference.org/markets/companies/analog-devices), the other large analog chipmaker UBS singles out, which [reports on November 19 off a 39% growth quarter](https://www.ad-hoc-news.de/boerse/news/corporate-news/analog-devices-stock-gains-after-earnings-beat-and-3-billion-notes-offering/70130966) [5][8]. 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 [2][5].

## Takeaway

Industrial, automotive and data center all grew at once, but $1.57 billion of the $8.42 billion trailing free cash flow is federal CHIPS Act money, and a flat Q4 guide leaves the upcycle case resting on UBS's low-inventory channel data.

## Sources

1. [Texas Instruments via PR Newswire, TI reports third quarter 2026 financial results and shareholder returns, 21 October 2026](https://www.prnewswire.com/news-releases/ti-reports-third-quarter-2026-financial-results-and-shareholder-returns-302915896.html)
2. [StockStory via Yahoo Finance, Texas Instruments's (NASDAQ:TXN) Q3 sales top estimates, 21 October 2026](https://finance.yahoo.com/markets/stocks/articles/texas-instruments-nasdaq-txn-q3-201351709.html)
3. [24/7 Wall St., Texas Instruments and Lam Research Report Earnings: AI Equipment Boom Meets Analog Rebound, 20 October 2026](https://247wallst.com/investing/2026/10/20/texas-instruments-and-lam-research-report-earnings-ai-equipment-boom-meets-analog-rebound/)
4. [Seeking Alpha, Silicon Labs: The Acquisition Hit A Snag; Is It Worth Waiting It Out?, 7 October 2026](https://seekingalpha.com/article/4952601-silicon-labs-the-acquisition-hit-a-snag-is-it-worth-waiting-it-out)
5. [KuCoin News (TechFlow), UBS Report: Analog Chip Cycle Continues Upward, Distributor Inventory Reaches Low Levels, 18 October 2026](https://www.kucoin.com/news/flash/ubs-report-analog-chip-cycle-continues-upward-distributor-inventory-hits-low)
6. [KuCoin News, UBS Identifies TXN as Top Pick Amid Upswing in Analog Chip Cycle, 19 October 2026](https://www.kucoin.com/news/flash/ubs-identifies-txn-as-top-pick-amid-analog-chip-cycle-upswing)
7. [Seeking Alpha News, Silicon Labs ticks lower on report Texas Instruments deal will go into phase 2 in China, 10 September 2026](https://seekingalpha.com/news/4641671-silicon-labs-ticks-lower-on-report-texas-instruments-deal-will-go-into-phase-2-in-china)
8. [AD-HOC-NEWS, Analog Devices stock gains after earnings beat and $3 billion notes offering, 19 September 2026](https://www.ad-hoc-news.de/boerse/news/corporate-news/analog-devices-stock-gains-after-earnings-beat-and-3-billion-notes-offering/70130966)
9. [Texas Instruments, quarterly figures from its SEC filings (company_series), retrieved 21 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000097476)


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Texas Instruments' revenue rose 28% and CHIPS Act cash made up nearly a fifth of its free cash flow — The Inference. Canonical: https://theinference.org/article/texas-instruments-revenue-rose-28-and-chips-act-cash-made-up-nearly-a-fifth-of-its-free-cash-flow