Texas Instruments Inc (TXN) — Q2 2025 Earnings Call Transcript

Welcome to the Texas Instruments Second Quarter 2025 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, Rafael Lizardi. 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 second quarter revenue results with some details of what we are seeing with respect to our end markets. Lastly, Rafael will cover financial results, give an update on capital management as well as share the guidance for third quarter 2025. With that, let me turn it over to Haviv.

Thanks, Mike. Let me start with a quick overview of the second quarter. Revenue came in about as expected at $4.4 billion, an increase of 9% sequentially and an increase of 16% year-over-year. Both Analog and Embedded grew year-on-year and sequentially. Analog revenue grew 18% year-on-year and Embedded Processing grew 10%. Our other segment grew 14% from the year-ago quarter. Let me provide some comments on the current environment and what we saw in the second quarter. We continue to see two distinct dynamics at play. First, tariffs and geopolitics are disrupting and reshaping global supply chains. As we work closely with our customers, we are leveraging our global manufacturing capabilities to support their needs. We have flexibility and are prepared to navigate as things evolve. Second, the semiconductor cycle is playing out. Cyclical recovery is continuing while customer inventories remain at low levels. In times like this, it is important to have capacity and inventory, and we are well positioned. Now I'll share some additional insights into second quarter revenue by end market. First, the industrial market increased upper teens year-on-year and mid-teens sequentially with recovery across all sectors. The automotive market increased mid-single digits year-on-year and decreased low single digits sequentially. Personal electronics grew around 25% year-on-year and grew upper single digits sequentially. Enterprise systems grew about 40% year-on-year and grew about 10% sequentially. And lastly, communications equipment grew more than 50% year-on-year and was up about 10% sequentially. With that, let me turn it over to Rafael to review profitability and capital management.

Thanks, Haviv, and good afternoon, everyone. As Haviv mentioned, second quarter revenue was $4.4 billion. Gross profit in the quarter was $2.6 billion or 58% of revenue. Sequentially, gross profit margin increased 110 basis points. Operating expenses in the quarter were $1 billion, up 5% from a year ago and about as expected. On a trailing 12-month basis, operating expenses were $3.9 billion or 23% of revenue. Operating profit was $1.6 billion in the quarter or 35% of revenue and was up 25% from the year-ago quarter. Net income in the quarter was $1.3 billion or $1.41 per share. Earnings per share included a $0.02 benefit not in our original guidance. Let me now comment on our capital management results, starting with our cash generation. Cash flow from operations was $1.9 billion in the quarter and $6.4 billion on a trailing 12-month basis. Capital expenditures were $1.3 billion in the quarter and $4.9 billion over the last 12 months. Free cash flow on a trailing 12-month basis was $1.8 billion. In the quarter, we paid $1.2 billion in dividends and repurchased $302 million of our stock. In total, we returned $6.7 billion to our owners in the past 12 months. Our balance sheet remains strong with $5.4 billion of cash and short-term investments at the end of the second quarter. In the quarter, we issued $1.2 billion of debt. Total debt outstanding is $14.15 billion with a weighted average coupon of 4%. Inventory at the end of the quarter was $4.8 billion, up $125 million from the prior quarter, and days were 231, down 9 days sequentially. Turning to our outlook for the third quarter. We expect TI's revenue in the range of $4.45 billion to $4.80 billion and earnings per share to be in the range of $1.36 to $1.60. Our earnings per share outlook does not include changes related to recently enacted U.S. tax legislation and assumes an effective tax rate of about 12% to 13%. In closing, as we transition into the second half of 2025 and going into 2026, we're prepared for a range of scenarios. We are and will remain flexible to navigate, especially in the immediate term. 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.

Thanks, Rafael. Operator, you can now open the line for questions. In order to provide as many of you as possible an opportunity to ask your questions, please limit yourself to a single question. After our response, we'll provide you an opportunity for an additional follow-up. Operator?

First, when I think about how your tone was last quarter and even midway through that quarter, you seemed very confident that the cyclical recovery was happening and that we were about to see significant progress. Now, it sounds like you are expressing a need to remain flexible and consider a variety of scenarios. In this quarter, auto sales were down compared to the previous quarter. Can you explain what’s happening and how your outlook has changed over the past three months? Based on your tone, it doesn't seem as exuberant as it did a few months ago; can you clarify what's going on?

Stacy, I'll take this one. So first, as I said in my prepared remarks, we are seeing two dynamics at play, and one of them is the cyclical recovery. I think we talked through it in the second quarter call back in April. And the discussion was all about industrial is joining the pack. We are now one more quarter in, and this is the third quarter that we see a signal of industrial recovering, it's actually accelerated. So I can say we support five markets; we now have - it started with personal electronics, then enterprise and communications joined, and industrial is already in. We have four out of five markets recovering at a nice pace. And this is part of the reason we've added commentary on year-over-year performance to just show the dynamics over there. In terms of automotive, to your question, look, automotive, let's just remember that it's kind of a year delayed versus industrial, right? Industrial peaked for us at least in the third quarter of 2022. Automotive picked one year later in the third quarter of 2023. So one could expect automotive to be joining last. The automotive recovery has been shallow, meaning we are running single digits versus the peak, we are running year-over-year. We are actually having some growth in the second quarter from a year-over-year perspective, but at a very low level. So I will say that automotive has not recovered yet. But because of content growth, I think the cycle here is going to be less pronounced and more shallow. The second point related to getting ready. Look, we had some taste of it in the beginning of the second quarter, and we talked through it a lot during the call. But I think all the situation of tariffs and geopolitics disrupting supply chains, I think that's not over, right? It's true that we pause right now on the semiconductor tariffs, both in the U.S. and in China. But we have to be prepared for what the future may hold. So we want to make sure, and this is also the message to our customers, that we'll remain flexible, and we'll know how to support our customers whatever the environment is moving forward.

I do. Maybe just a follow-up. Actually, I think I want to ask you about gross margins. We'll go there. If I just back into the guidance for next quarter, it seems like you're guiding gross margins probably down sequentially implicitly on revenue growth. I guess is that the case? And like what is that? Is that just depreciation? I know depreciation went up in the quarter. Is it just depreciation going up further? Or is something else going on in the gross margin line or what?

Sure, I'll take that. To assist you and others with their models, our guidance suggests that gross profit margin percent will remain above flat, even with the increased depreciation we expect in the third quarter. Operating expenses will also be above flat. One aspect you may not be considering is the impact of other income and expense, along with interest expense, which is projected to be unfavorable by about $20 million due to lower cash levels; while interest decreases, debt interest expense continues to rise. This is likely the missing piece to complete your model.

One of the signs of cyclical recovery is improvement in your terms business. Did the team see terms business grow sequentially in Q2, both in dollars and percent of revenues? And was it broad-based across both your industrial and auto businesses?

Yes, I'll begin, and then Mike can add his thoughts afterward. From a terms perspective, we continue to see that trend. There was an acceleration in the second quarter. We are still investing in inventory, and our lead times are at their lowest; customer inventories remain very low. This trend has persisted. Mike, would you like to elaborate further?

Yes. I think as we've talked about in previous quarters, that's something that late last year and in the first quarter began to build; we continue to see that into the second quarter as well.

Perfect. And then for my follow-up question, good to see the continued sequential and year-over-year recovery in the industrial segment, it's quite diverse, right? 10 subsegments, but the largest subsegment industrial automation, which is tied to manufacturing activity, is pretty sensitive to trade and tariffs. So just wondering if this segment is relatively weaker due to tariff concerns. Or are you seeing shipment and order recovery here as well, especially among your China-based industrial customers?

Yes. Maybe I'll take that one. And what we actually saw in Industrial was recovery was broad, and it was across all sectors. So I'd say it's a continuation of the recovery we saw in the first quarter, and that's where we are. So, yes, move on to the next caller. Thank you.

Haviv, kind of going back to the first question just on kind of the tone, it seems like a little bit of a tone change on our side, maybe not so much to you, but maybe I'll try to ask it a different way. You highlighted the uncertainties about the tariff side of things, but then endorsed the cycle was coming. Last quarter, you guided significantly above normal seasonality. You seem to lean in on the cycle side and didn't really say that tariffs were doing much. So did something change in either the strength of the cycle or the uncertainty around the tariff to lead you to guide to more of a typical seasonal quarter for Q3?

Yes, let me elaborate on that. It's a great question. When we met in April, we were facing reciprocal tariffs from both sides. The U.S. was exempting semiconductors, while China had a 125% tariff on them at that time. The current situation is different as those tariffs are now on hold. With changes like these, it's common for customers to hold low inventories. I mentioned earlier that customers would likely want to increase their inventories, and we observed that in the early part of the quarter. There was a noticeable increase in demand, especially when inventories were low and concerns about tariffs were high. This trend has since normalized, and our operations are currently driven by a cyclical recovery. Looking ahead to Q3, considering that we are dealing with real-time business assessments, it's wise to remember that the demand we saw in Q2 was likely influenced by both the desire to build inventory in response to tariffs and the ongoing cyclical recovery. Customers do not always disclose their reasons for placing orders, but I suspect that part of their demand was to stock up on inventory as a precaution against tariffs. While I cannot predict precisely how Q3 will unfold, these are the factors we are considering in our forecast.

Ross, do you have a follow-up?

I do. Rafael, could you provide an update on the capital expenditures and depreciation framework that you've shared with us for this year and next year? Specifically, as we progress from Phase 2 to possibly Phase 3 regarding capital expenditures, any additional insights would be appreciated.

Yes, I'm happy to provide that information. The key point is that there are no changes, but let me clarify the details for everyone. For capital expenditures in 2025, we still anticipate spending $5 billion. For 2026, the expectation is between $2 billion and $5 billion, depending on revenue and growth outlook at that time. We will likely update you on refining that capital expenditure range later this year. Regarding depreciation, for 2025, we expect it to be between $1.8 billion and $2 billion. In 2026, we project it to be between $2.3 billion and $2.7 billion, and it will likely be at the lower end of that range.

Haviv, sorry to go back to this tone change because it's not just from the last earnings call. It's at the end of a conference at the end of May; I think you had suggested that every remaining quarter of '25 will accelerate from the first half up 13%, but your Q3 sales guide is up only 11%. So my question is that versus that reference point, which end market has softened? Is it that the industrial normalization is done? Is it that auto, right, was a little weaker? Or is that just extra conservatism on TI's part? Because the tone change is, as I mentioned, not just from earnings, but from the end of May.

Yes. And again, I don't control probably tone level, but that's you guys are hearing... Sorry, directly to your question, Vivek, I would say that in the second quarter, we have seen industrial, in my opinion, running very hot, right? What were the numbers sequentially? Mid-teens, I think.

Upper teens, yes.

It grew significantly year-over-year in the second quarter, close to 20%. In that respect, I believe it ran a little hot. Therefore, I want to be more cautious heading into Q3. We also noticed some increased demand from China in the second quarter. We will have that information available when it comes out. Mike, could you provide some insights about China, focusing on region and not just the behavior in Q2?

Sure. Yes. So China, it was up about 19% sequentially; it grew about 32% year-over-year. All end markets grew there with the exception of automotive, and auto was pretty consistent with our overall results there. And industrial did lead the growth there in China. And just as a reminder, our China headquarters customers represent about 20% of our overall revenue.

And Vivek, that information explains my cautious stance for Q3. We've noticed that China experienced some heated activity in Q2, but this wasn't consistent across all markets; in fact, the automotive sector aligned closely with global trends. Therefore, it's challenging to pinpoint whether the observed changes stem from 'pool-ins' or from cyclical recovery. I believe both factors are at play. This is the data we currently have, which informs our planning for the third quarter.

Do you have a follow-up, Vivek?

For my follow-up, given everything we've heard, Haviv, I know you usually don't provide guidance for the quarter, but how should we start thinking about Q4? Should we assume a similar conservative approach and that your seasonality will likely be down or flat sequentially? If you could remind us about that in Q4 and considering everything we've heard, how should we conceptually approach the transition into Q4?

Vivek, as you know, we are a one quarter of a time company, specifically on guidance. So I will just say let's let the third quarter play out. Mike, do you want to comment about seasonality?

Yes. So historically, second and third are typically stronger quarters; fourth and first are typically seasonally lower. But we'll have to let the third quarter play out before we're going to be ready to talk about fourth. So maybe we'll go on to move on to our next caller. Thanks, Vivek.

I was hoping to revisit gross margins. You indicated flat roughly sequentially, and I guess within that, could you speak to your plans for utilization? Are there any sort of changes in the mix? And if we were to normalize to kind of your typical, more typical 80% kind of fall through, that would be an incremental maybe $25 million, $27 million. So is the kind of the pause in gross margin uplift 100% due to that increase in depreciation? Or are there other factors that we should be thinking about?

Yes, to provide some additional information, we anticipate that the gross margin for the third quarter will be roughly the same as in the second quarter. This expectation comes with increased revenue alongside higher depreciation expenses. Regarding loadings and inventory, we plan to maintain loadings in the third quarter similar to those in the second quarter, as we are well-prepared with inventory to handle various cyclical recovery scenarios. I expect inventory levels to increase, but at a slower pace compared to the growth we experienced in the second quarter. As for the fall-through, we project it to be between 75% to 85% over the long term, assessed year-on-year rather than quarterly, and we should be nearing that target. We will discuss this in more detail when we have actual results and more accurate information to share. However, you should continue to consider 75% to 85% as a reliable figure for the long term.

C.J., do you have a follow-up?

I do. With the ITC going from 25% to 35%, curious if you can comment on your thoughts on impact to your net CapEx into '26, '27. And is there any sort of movement or thought process that we should have around the impact of depreciation?

Thank you for the question. Let's discuss the recently passed legislation. We are very pleased with the changes from the new U.S. federal tax law, which includes expensing of U.S. R&D and eligible capital expenditures, an increase in the Investment Tax Credit from 25% to 35%, and other tax provisions such as making FDII permanent. The effects of the new tax law are not reflected in our latest financial statements since the law was enacted in July. We are currently evaluating how these changes will affect future financial statements, which is why we did not incorporate them into our guidance. We need more time for a thorough assessment. However, based on our initial analysis, we anticipate that our GAAP tax rate will rise in the third quarter of 2025 but will decline in 2026 and beyond. Importantly, from a cash flow perspective, we expect to see significantly lower cash tax rates in the coming years. We are very pleased with this legislation. Regarding our CapEx plans, they remain in line with what we shared in February and will be dependent on revenue.

Maybe following up on some of the other questions that were asked. Could you maybe comment on some of the end markets, whether it be personal electronics or enterprise systems or otherwise, that you think may have gotten a little bit ahead of themselves or maybe run a little bit hotter into Q2 and which ones you think are sort of at risk of reverting a little bit in Q3 into Q4?

Yes. Let me address that. When discussing the personal electronics market and the enterprise sector, it's important to note that they are all progressing through different stages of a cyclical recovery. This cycle began with personal electronics, followed by enterprise, communications, and finally, industrial, which joined later on. As I mentioned earlier, the automotive market is experiencing a very shallow cycle, and we haven't observed sufficient signs of a genuine broad recovery there. If we look back at the second quarter, we did see some markets perform better than anticipated, particularly in the industrial sector. We had forecasted a cyclical recovery in industrial, and it grew 15% sequentially, which seems somewhat unusual. Considering the geographical factors, I approach this with a bit more caution. I wouldn't identify any other areas that exhibited different behavior in the second quarter; would you agree, Mike?

That's the right assessment.

Yes, we observed a trend in the market where customers seemed to prefer having more parts. Throughout the quarter, we experienced a normalization process. The beginning of the quarter was more active than the second half. We believe we finished the quarter at a typical rate, but it's challenging to determine at this moment. We will continue to monitor the situation, and I feel it is important to be cautious as we approach Q3.

Do you have a follow-up?

Yes, I do. Relative to capital allocation, you mentioned about the cash tax benefits that you expect that will positively impact free cash flow next year and beyond? You reiterated the CapEx guidance, but can you maybe kind of speak to the capital return portion of this? Obviously, your free cash flow is better than what might you do differently or more on buybacks or dividends?

Yes, that's a good question. It will depend on various factors. Currently, we are still in a high capital expenditure environment, and we will assess how long that continues. For next year, we expect a range of 2% to 5% in capital expenditures, which, even at the low end, is a significant amount that we need to prepare for. Other considerations include cash on the balance sheet and the stock price, which will influence our decisions. Ultimately, our goal remains consistent regarding returning capital to shareholders, specifically by returning all free cash flow through dividends and buybacks.

The question is about fab loading and what your intentions are as we go through the back end of the year into next year, I guess, in light of some of the caution that you expressed. Any changes you're making to fab loading and basically where you want your internal inventories to sit as you exit the year?

In an ideal scenario, we would manage operations to keep loadings relatively stable over time. During a cyclical upturn, we would reduce inventory, and during a downturn, we would increase inventory. This approach allows the factory to operate effectively at a constant pace. However, it is important to acknowledge that this is an ideal situation. We cannot precisely predict when we will hit peak or trough periods, so we will need to implement some safeguards to ensure we seize opportunities while maintaining flexibility. At a high level, this is how we would prefer to operate the company.

All right. Do you have a follow-up, Chris?

I do. And my follow-up if I could dig into auto a little bit more deeply. And it sounds like what you're saying there is auto hasn't really changed but hasn't recovered yet. That's a market where you've got a few customers that you speak to there; what's their tone right now, given all the macro uncertainty, what are they doing with inventory levels and preparing now? Is it just sort of in a holding pattern right now with regard to auto?

Yes, I believe that's a fair assessment. Looking at my graph, the automotive sector reached its peak for us in the third quarter of 2023. Over the past six quarters, it has fluctuated somewhat but has remained around a high single-digit decline compared to previous figures. Automotive customers shipping to the U.S. are dealing with tariffs, which makes them cautious. They seem to place orders only when absolutely necessary, with no significant inventory restocking happening at either the OEMs or Tier 1 suppliers. Everything is operating in real time, and our lead times are very short as most of our automotive customers operate on consignment, allowing us to respond quickly. As for the recovery, we haven't observed it yet. It's worth noting that the industrial sector peaked in the third quarter of 2022, with recovery starting in the fourth quarter of 2024. If automotive follows a similar pattern, we might expect a recovery in the second half of the year, but we'll have to monitor the situation closely.

Maybe following up on Chris' previous one. When you spoke about China, it was clear that auto was sort of the outlier there and was down in line with your broader auto business. I mean it seems like China auto trends have been positive year-to-date, including in Q2. It doesn't sound like there's de-stocking going on. Can you maybe explain what's going on specifically in China auto? Is there any element of share loss happening there? Or do you think it's more inventory dynamics?

Yes, I think it's a good question. I think it's more the latter. Automotive ran very hot last year in China, and there is enough news out there that there was a little bit of a caution coming or guidance, say, slowdown, some of the price wars over there. So I think we saw some of the dynamics. I think our automotive business in China is doing well. I think from a year-over-year perspective, we grew the automotive business in Q2, but China was ahead of the rest of the market simply because, again, first in, first out. So we saw the recovery in China starting in 2024. I think it takes a little bit of a breather right now, but I think it's related to inventory correction on their side.

If you examine the major regions for our automotive sector, including the U.S., Europe, and China, their performances were quite similar on a sequential basis, with no significant differences among them. However, when comparing year-on-year, China has seen some changes.

I would say China and Asia ahead, and then you go to Europe and Japan behind which is very coherent with what we've seen in other markets.

Do you have a follow-up, Josh?

Yes, when you mentioned China, it seems there were some potential pull-ins affecting the second quarter. You have spoken for some time about having a reliable supply for the West amidst geopolitical challenges. Are you noticing any changes in your customers outside of China? Have their behaviors shifted? Additionally, when should we anticipate the gains in market share that you expect from your U.S.-based manufacturing to begin impacting the model?

Yes, let me start by emphasizing that we are unsure about the pull-ins; we can only make assumptions since our customers don't disclose their ordering reasons. We analyze the data to gain insights. We cannot dismiss the possibility that the strong performance in Q2 compared to Q1 can be partially attributed to the tariff environment. Additionally, the automotive market in China is more about established accounts, where we interact with customers and clarify their options. We have numerous industrial customers, and reaching out to all of them takes time to communicate our diverse manufacturing capabilities and assure them of our support. This is part of what we observed in the second quarter, alongside the tariffs that eased after a month. Regarding the discussion on tariffs and our U.S. manufacturing, it's essential to recognize that the landscape is ever-changing. Tariffs and geopolitical factors will continue to evolve. As I highlighted earlier, they are significantly reshaping the supply chain, and some changes may become more permanent. Our customers are increasingly appreciating our reliable capacity amidst geopolitical shifts. While our global manufacturing setup is designed to support all customers worldwide, I believe U.S. semiconductor manufacturing will see increased incentives. We are in a distinctive position, having made investments over the past five years, not specifically because of tariffs, but to establish control over our manufacturing destiny. A few customers are aware of evolving plans and are already moving closer to us, yet there's considerable confusion among the broader customer base regarding tariffs and when changes will occur, leading to a wait-and-see approach. We too are uncertain about how the latter part of the year will unfold, but I believe our opportunities outweigh our challenges. We are well-equipped, and the diversity of our supply chain is robust, as demonstrated to our customers in Asia, particularly in China during the second quarter. TI stands out because of our U.S. manufacturing footprint. If U.S. semiconductors become more incentivized, TI has a unique advantage with our scale, capacity, and competitive cost structure. While this opportunity has yet to materialize fully, we are prepared to adapt to whatever changes arise in the second half of the year and beyond.

All right. Thanks, Josh. We'll move on to our last caller.

It's a continuation of the discussion we've had tonight. During the last call, or certainly in the recent quarter, Haviv described the environment as a cyclical recovery with tariffs and geopolitics being largely noise, leading to a high signal-to-noise ratio. There was an expectation that the positive momentum from the first half of the year would continue. However, the guidance seems confusing in light of that perspective, given you've reported a 16.5% year-over-year increase and are now guiding for an 11.5% increase. How do I make sense of this? Is the environment actually more disruptive than what you suggested a quarter ago, or did something else change? Can you explain what transpired in the last quarter?

No. I think regarding what happened in Q2, we were very transparent about it. We experienced some dynamics within the quarter that felt more variable in the latter half. It's difficult for us to quantify specifics right now, especially when making guidance for the third quarter based on current data; we want to approach this responsibly. The current data informs our perspective, and during the last call, there were questions about how TI could grow 7% sequentially, which we have exceeded. Currently, perhaps expectations are higher, but we are simply calling it as we see it and need to allow more time for things to unfold. I maintain that the cyclical recovery is strong, although it may be somewhat obscured by the tariff environment. Four out of the five markets are already showing improvement, and I anticipate automotive will join them soon, though I haven’t seen that yet. Once all five markets are aligned, we'll be in a better position. This recovery is distinctly different from previous ones, as evidenced by the slope of recovery. Looking at the overall WSTS trend without memory, there is a gradual return to the trend line, and we are still running about 12% or 13% below it. Typically, establishing a cycle requires first reaching a trend line, followed by establishing a peak, and we remain significantly below the trend in terms of unit percentage. I believe we are not experiencing anything different from the broader market, and we will need to continue observing how things develop. That addresses your question.

Do you have a follow up?

Yes. If I can follow up one area that I hope might be a little bit more optimistic. In enterprise, I think you had a good quarter. And I'm wondering if you can remind us or update us as to your current and maybe future anticipated exposure to the rapid growth AI markets.

Yes, very well. Our enterprise market is mainly, I think, the largest sector over there for us is data center, data center compute, but it's not only data center. We also have, for example, large printers or enterprise printers over there and also projection devices. So we probably want to clarify that over time. But if I just focus on data center, and it's mainly today inside the enterprise market for TI, but also a little bit of the optical communication inside comms. When I kind of cut out and I look at our data center story, that's behaving very well this year. It's growing very nicely. It's a very high level, above that 50% that I've mentioned before. And the future has a large opportunity for TI because we are seeing ourselves playing in more sockets over time. Currently, our footprint on the data center side is more with our general-purpose part. We have a large share over there. But we're also working closely with some key customers to expand our positions there to more application-specific opportunities. This is based on our new technology that is ramping right now in Sherman, Texas. We already have samples, and we are competing to win share over there, that's more of a tailwind, a potential tailwind for us in 2026 and beyond. So that's our data center story. And thanks for that question, Will.

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