Texas Instruments Inc
Business Description analysis.

Manufacturing Semiconductor manufacturing begins with a sequence of photolithographic and chemical processing steps that fabricate a number of semiconductor devices on a thin silicon wafer. Each device on the wafer is packaged and tested. The entire process takes place in highly specialized facilities that require substantial investments. We own and operate semiconductor manufacturing facilities in North America, Asia, Japan and Europe. These include both wafer fabrication (fab) and assembly/test facilities. We invest in manufacturing technologies and do most of our manufacturing in-house. This strategic decision to make manufacturing and technology a core competitive advantage provides us with tangible benefits of lower manufacturing costs and greater control of our supply chain, offering our customers geopolitically dependable capacity. We have focused on creating a competitive manufacturing structural cost advantage by investing in our 300mm capacity, as an unpackaged chip built on a 300mm wafer costs about 40% less than an unpackaged chip built on a 200mm wafer. We continue to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity plan to meet demand over time. Semiconductor growth in electronics, particularly in industrial, automotive and data center markets, is expected to continue well into the future. In 2025, we continued qualifying and ramping production at our newest 300mm wafer fabs in Richardson and Sherman, Texas, and Lehi, Utah. These fabs are well positioned to support customer demand, external foundry transfers and internal transfers from our legacy 150mm facilities. We expect to maintain sufficient internal manufacturing capacity to meet the majority of our production needs and to obtain manufacturing equipment to support new technology developments and revenue growth. In 2025, we sourced the majority of our wafer fabrication, as well as assembly and test, internally. To supplement our internal manufacturing capacity, we selectively use the capacity of outside suppliers, commonly known as foundries and subcontractors. We source materials, parts and supplies from a diverse set of suppliers globally. The materials, parts and supplies essential to our business are generally available. Our multisite, multiflow production strategy, paired with our business continuity program and global supplier network, supports supply continuity if shortages occur and if materials are available from limited suppliers or geographies. We assess and are careful to address potential health, safety and environmental risks presented by our operations, including our manufacturing operations, and our efforts are focused on improving how we responsibly and sustainably manufacture our products.

Our strategy to maximize long-term free cash flow per share growth has three elements: The first element of our strategy is a business model that is focused on analog and embedded processing products and built around four competitive advantages. This business model is the result of a series of strategic decisions made over the years and that continue today. The four sustainable competitive advantages are a strong foundation of manufacturing and technology, a broad portfolio of analog and embedded processing products, the reach of our market channels, and diversity and longevity of our products, markets and customer positions. In combination, these four competitive advantages provide tangible benefits, are difficult to replicate and ultimately separate us from our best peers. Together, these competitive advantages help position TI in a unique class of companies capable of generating and returning significant amounts of cash for our owners. We make our investments with an eye towards long-term strengthening and leveraging of these advantages. The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R& D projects, develop new capabilities, invest in manufacturing capacity or how we think about acquisitions and returning cash to our owners. Over a 10-year period from 2016 to 2025, we allocated $109 billion, which reinforces the importance of discipline in capital allocation. The largest allocation over this period was to drive organic growth, which includes investments in R& D, sales and marketing, capital expenditures and working capital for inventory. In this period, we allocated about $24 billion to capital expenditures to support future revenue growth, which will be a greater component of free cash flow per share growth going forward, as we are near completion of our six-year elevated capital expenditures cycle. Beyond that, we also allocated capital to dividends and share repurchases. Dividends are designed to appeal to a broad set of investors, and share repurchases are made with the goal of the accretive capture of future free cash flow for long-term investors. Lastly, for inorganic growth, we consider acquisitions that meet our financial and strategic objectives. The third element of our strategy is efficiency, which we think of as constantly striving for more output for every dollar spent. This is about investing in the most impactful areas to maximize the growth of long-term free cash flow per share; it is not just about optimizing cost cutting to get to the last dollar of expense. We bring this philosophy of efficiency and continuous improvement to all areas of the company, and this focus on efficiency contributes to revenue growth, improved gross margins, disciplined R& D and SG& A expense, free cash flow margins and ultimately to free cash flow per share growth. We believe that our business model with the combined effect of our four competitive advantages sets TI apart from our peers and will for a long time to come. We will invest to strengthen our competitive advantages, be disciplined in capital allocation and stay diligent in our pursuit of efficiencies. Finally, we will remain focused on the belief that long-term growth of free cash flow per share is the ultimate measure to generate value.

Markets for our products The table below lists the markets for our products in 2025 and the estimated percentage of our 2025 revenue that the market represented. In 2025, we realigned our markets to better reflect the growth opportunities for our analog and embedded products. The table also lists, in declining order of our revenue, the sectors within each market. Market Sector Industrial Industrial automation (33% of TI revenue) Aerospace & defense Energy infrastructure Building automation Medical & healthcare Test & measurement Other industrial equipment Appliances Power delivery Robotics Automotive Infotainment & cluster (33% of TI revenue) Advanced driver assistance systems (ADAS) Body electronics & lighting Hybrid, electric & powertrain systems Chassis control & safety Data center Data center compute (9% of TI revenue) Data center networking Rack power & thermal management Personal electronics Mobile phones (21% of TI revenue) PC & notebooks Portable electronics Home theater & entertainment Connected peripherals & printers TV Tablets Wearables (non-medical) Gaming Data storage Communications equipment Wireless infrastructure (3% of TI revenue) Wired networking Broadband fixed line access

In addition, we sell calculators, which was about 1% of our revenue. Market characteristics Competitive landscape Despite consolidation, the analog and embedded processing markets remain highly fragmented. As a result, we face significant global competition from dozens of large and small companies, including both broad-based suppliers and niche suppliers. Our competitors also include emerging companies, particularly in Asia. We believe that competitive performance in the semiconductor market generally depends on many factors, including the breadth of a company's product line, the strength and reach of its channels to market, technological innovation, product development execution, technical support, customer service, quality, reliability, price, and manufacturing capacity and capabilities, such as process and package technologies that provide differentiated levels of performance and a structural cost advantage. In addition, customers' prior investments in software development is also a competitive factor for our embedded processing products.

Semiconductor cycle The semiconductor cycle refers to the ebb and flow of supply and demand and the building and depleting of inventories. It has been characterized by periods of tight supply caused by strengthening demand and/or insufficient manufacturing capacity, followed by periods of surplus inventory caused by weakening demand and/or excess manufacturing capacity. These are typically referred to as upturns and downturns in the semiconductor cycle. Semiconductor cycles are affected by the significant time and money required to build and maintain semiconductor manufacturing facilities.

Inventory Our objectives for inventory are to maintain high levels of customer service, maintain dependable and competitive lead times, minimize inventory obsolescence and improve manufacturing asset utilization. To meet these objectives and to allow greater flexibility in periods of high demand, our strategy is to build ahead of demand our broad-based products that are used across a diverse set of applications and customers and have low risk of obsolescence. Inventory levels will vary based on market conditions and seasonality. We adjust factory loadings as needed to execute on this inventory strategy.

Information about our executive officers The following is an alphabetical list of the names and ages of the executive officers of the company and the positions or offices with the company held by each person named: Name Age Position ─────────────────────────────────────────────────────────────────────────────────────────────────────────── Ahmad Bahai 63 Senior Vice President Mark Gary 51 Senior Vice President Haviv Ilan 57 Director, Chairman of the Board, President and Chief Executive Officer Katie Kane 41 Senior Vice President, Secretary and General Counsel Hagop Kozanian 43 Senior Vice President Shanon Leonard 50 Senior Vice President Rafael Lizardi 53 Senior Vice President and Chief Financial Officer Mark Roberts 50 Senior Vice President Amichai Ron 48 Senior Vice President Christine Witzsche 41 Senior Vice President Mohammad Yunus 48 Senior Vice President The term of office of these officers is from the date of their election until their successor shall have been elected and qualified. All have been employees of the company for more than five years. Messrs. Bahai, Gary, Ilan, Kozanian, Lizardi and Ron have served as executive officers of the company for more than five years. Mr. Roberts and Ms. Witzsche became executive officers in 2021. Mr. Leonard became an executive officer in 2022. Ms. Kane and Mr. Yunus became executive officers in 2024.

Human capital management At December 31, 2025, we had about 33,000 employees worldwide. Of those, about 90% were in R& D, sales or manufacturing. Our objective for human capital management is to recruit, develop and retain the best talent possible. As a technology and manufacturing company, our success is grounded in having strong engineering talent and a reliable factory workforce. We have a promote-from-within culture and offer training and development programs that provide the opportunity to quickly gain experience in different areas. In 2025, our turnover rate was 10.1%. It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and more inclusive. We encourage you to review our Corporate Citizenship Report for more information. Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report.

Product information Semiconductors are electronic components that serve as the building blocks inside modern electronic systems and equipment. Semiconductors, generally known as "chips," combine multiple transistors to form a complete electronic circuit. We have a diverse product portfolio that is used to accomplish many different things, such as converting and amplifying signals, interfacing with other devices, managing and distributing power, and processing data. This broad portfolio includes more than 80,000 products that are integral to almost every type of electronic equipment. Our segments represent groups of products that have similar design and development requirements, product characteristics and manufacturing processes. Our segments also reflect how management allocates resources and measures results.

Analog Our Analog segment generated $14.01 billion of revenue in 2025. Analog semiconductors change real-world signals, such as sound, temperature, pressure or light, by conditioning them, amplifying them and often converting them to a stream of digital data that can be processed by other semiconductors, such as embedded processors. Analog semiconductors are also used to manage power in all electronic equipment by converting, distributing, storing, discharging, isolating and measuring electrical energy, whether the equipment is plugged into a wall or using a battery. As the digitization of electronics continues, there is a growing need and opportunity for analog chips to provide the power to run devices and the critical interfaces with human beings, the real world and other electronic devices. Our Analog products are used in many markets, including industrial, automotive, data center, personal electronics and communications equipment.

Sales of our Analog products generated about 79% of our revenue in 2025. Our Analog segment includes the following major product lines: Power and Signal Chain.

Signal Chain Signal Chain includes products that sense, condition and measure real-world signals and convert them into data that can be transferred or converted for further processing and control. Our Signal Chain products include amplifiers, data converters, interface products, motor drives, clocks, logic and sensing products.

Embedded Processing Our Embedded Processing segment generated $2.70 billion of revenue in 2025. Embedded Processing products are the digital "brains" of many types of electronic equipment. They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application. Our products vary from wireless connectivity and simple, low-cost devices such as microcontrollers to highly specialized devices such as radar and vision processing. Our Embedded Processing products are used in many markets, particularly industrial and automotive. An important characteristic of our Embedded Processing products is that our customers often invest their own R& D to develop software that operates on our products. This investment tends to increase the length of our customer relationships because many customers prefer to reuse software from one product generation to the next.

Customers, sales and distribution We sell our products to over 100,000 customers. Our customer base is diverse, with more than 40% of our revenue derived from customers outside our largest 100. We market and sell our products through direct sales channels, including our website and broad sales and marketing team, and, to a lesser extent, through distributors. Over the past several years, we have been investing in new capabilities to build closer direct customer relationships. As a result, in 2023 about 75% of our revenue was direct, which includes TI. com, as customers valued the convenience of purchasing online. Closer direct relationships with our customers help to strengthen our reach of market channel advantage and give us access to more customers and more of their design projects, leading to opportunities to sell more of our products into each design. Additionally, broader and deeper access gives us better insight and knowledge of customer needs. Our investments in new and improved capabilities to directly support our customers include website and e-commerce enhancements as well as inventory consignment programs and order fulfillment services. Our TI. com e-commerce channel offers a localized online experience in many countries, with convenience features such as immediate availability, local currency, payment methods, invoicing and importer of record. Our new application programming interfaces (APIs) give customers the ability to directly access real-time information about TI products from their own systems, enabling them to purchase available chips immediately to better support their supply needs, reducing cost and delays. In addition to doing business directly with TI, we offer customers the option of using a single worldwide distributor and a few region-specific distributors for order fulfillment.

ITEM 1. Business We design and manufacture semiconductors that we sell to electronics designers and manufacturers all over the world. Our operations began in 1930, and we are incorporated in Delaware. With headquarters in Dallas, Texas, we have design, manufacturing or sales operations in more than 30 countries. Our two reportable segments are Analog and Embedded Processing, and we report the results of our remaining business activities in Other. In 2024, we generated $15.64 billion of revenue. For decades, we have operated with a passion to create a better world by making electronics more affordable through semiconductors. We were pioneers in the transition from vacuum tubes to transistors and then to integrated circuits. As each generation has become more reliable, more affordable and lower in power, semiconductors are used by a growing number of customers and markets. Our passion continues to be alive today as we help our customers develop electronics and new applications. For many years, we have run our business with three overarching ambitions in mind. First, we will act like owners who will own the company for decades. Second, we will adapt and succeed in a world that is ever changing. And third, we will be a company that we are personally proud to be a part of and that we would want as our neighbor. Our ambitions are foundational to ensuring that we operate in a sustainable and environmentally responsible manner. When we are successful in achieving these ambitions, our employees, customers, communities and shareholders all win. As engineers, we are fortunate to work on exciting technology which helps our customers innovate to create a better world. Technology is the foundation of our company, but ultimately, our objective and the best metric for owners to measure our progress is through the growth of free cash flow per share over the long term.

Markets for our products The table below lists the major markets for our products in 2024 and the estimated percentage of our 2024 revenue that the market represented. The chart also lists, in declining order of our revenue, the sectors within each market. Market Sector Industrial Industrial automation (34% of TI revenue) Aerospace & defense Medical & healthcare Energy infrastructure Building automation Other industrial equipment Test & measurement Appliances Power delivery Robotics Automotive Infotainment & cluster (35% of TI revenue) Advanced driver assistance systems (ADAS) Hybrid, electric & powertrain systems Body electronics & lighting Passive safety Personal electronics Mobile phones (20% of TI revenue) PC & notebooks Portable electronics Tablets Connected peripherals & printers Home theater & entertainment TV Wearables (non-medical) Gaming Data storage Enterprise systems Data center & enterprise computing (5% of TI revenue) Enterprise projectors Enterprise machine Communications equipment Wireless infrastructure (4% of TI revenue) Wired networking Broadband fixed line access Datacom module Other (calculators and other) (2% of TI revenue)

• Continuing construction on LFAB2, another 300mm wafer fabrication facility in Lehi, Utah. Together, these investments are designed to strengthen our manufacturing and technology competitive advantage, provide us with lower costs and greater control of our supply chain, and support growth in the years ahead. We assess and are careful to address potential health, safety and environmental risks presented by our operations, including our manufacturing operations. We care for our environment and work to prevent pollution and the potential risks related to climate change. We invest to reduce emissions over the long term in several ways, including installing new factory equipment with state-of-the-art emissions reduction technology, as well as retrofitting existing factory equipment with advanced abatement technology, in addition to using alternative gases and increasing the use of renewable electricity. We also continue to implement practices such as recycling and reusing materials and properly handling hazardous and restricted substances. We expect to continue to maintain sufficient internal manufacturing capacity to meet the majority of our production needs and to obtain manufacturing equipment to support new technology developments and revenue growth. In 2024, we sourced the majority of our wafer fabrication, as well as assembly and test, internally. With our planned capacity expansions, we expect our internal sourcing to continue to increase. To supplement our internal manufacturing capacity, we selectively use the capacity of outside suppliers, commonly known as foundries and subcontractors.

Product information Semiconductors are electronic components that serve as the building blocks inside modern electronic systems and equipment. Semiconductors, generally known as "chips," combine multiple transistors to form a complete electronic circuit. We have a diverse product portfolio that is used to accomplish many different things, such as converting and amplifying signals, interfacing with other devices, managing and distributing power, processing data, canceling noise and improving signal resolution. This broad portfolio includes more than 80,000 products that are integral to almost every type of electronic equipment. Our segments represent groups of products that have similar design and development requirements, product characteristics and manufacturing processes. Our segments also reflect how management allocates resources and measures results.

Information about our executive officers The following is an alphabetical list of the names and ages of the executive officers of the company and the positions or offices with the company held by each person named: Name Age Position ───────────────────────────────────────────────────────────────────────────────────────── Ahmad Bahai 62 Senior Vice President Mark Gary 50 Senior Vice President Haviv Ilan 56 Director, President and Chief Executive Officer Katie Kane 40 Senior Vice President, Secretary and General Counsel Hagop Kozanian 42 Senior Vice President Shanon Leonard 49 Senior Vice President Rafael Lizardi 52 Senior Vice President and Chief Financial Officer Mark Roberts 49 Senior Vice President Amichai Ron 47 Senior Vice President Richard Templeton 66 Director and Chairman of the Board Christine Witzsche 40 Senior Vice President Mohammad Yunus 47 Senior Vice President The term of office of these officers is from the date of their election until their successor shall have been elected and qualified. All have been employees of the company for more than five years. Messrs. Bahai, Ilan, Kozanian, Lizardi, Ron and Templeton have served as executive officers of the company for more than five years. Mr. Gary became an executive officer in 2020. Mr. Roberts and Ms. Witzsche became executive officers in 2021. Mr. Leonard became an executive officer in 2022. Ms. Kane and Mr. Yunus became executive officers in 2024.

Human capital management At December 31, 2024, we had about 34,000 employees worldwide. Of those, about 90% were in R& D, sales or manufacturing. Our objective for human capital management is to recruit, develop and retain the best talent possible. As a technology and manufacturing company, our success is grounded in having strong engineering talent and a reliable factory workforce. We have a promote-from-within culture and offer training and development programs that provide the opportunity to quickly gain experience in different areas. In 2024, our turnover rate was 9.1%. It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and more inclusive. We encourage you to review our Corporate Citizenship Report for more information. Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report.

Available information Our internet address is www. ti. com. Information on our website is not part of this report. We make available free of charge through our Investor Relations website our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission. Also available through the TI Investor Relations website are reports filed by our directors and executive officers on Forms 3, 4 and 5, and amendments to those reports. Available on our website at www. ti. com/corporategovernance: (i) our corporate governance guidelines; (ii) charters for the audit, compensation, and governance and stockholder relations committees of our board of directors; (iii) our code of conduct; and (iv) our code of ethics for TI's chief executive officer and senior finance officers. Stockholders may request copies of these documents free of charge by writing to Texas Instruments Incorporated, Attention: Investor Relations, P. O. Box 660199, MS 8657, Dallas, Texas, 75266-0199.

Sales of our Analog products generated about 78% of our revenue in 2024. Our Analog segment includes the following major product lines: Power and Signal Chain.

Power Power includes products that help customers manage power in electronic systems. Our broad portfolio is designed to manage power requirements across different voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated DC/DC switching regulators, power switches, linear and low-dropout regulators, voltage references, multiphase controllers and power stages, and lighting products.

Sales of Embedded Processing products generated about 16% of our revenue in 2024. Our Embedded Processing segment includes microcontrollers, processors, wireless connectivity and radar products. Microcontrollers are self-contained systems with a processor core, memory and peripherals that are designed to control a set of specific tasks for electronic equipment and often integrate analog functionality. Our processors are designed for specific computing activity in embedded applications.

Information about our executive officers The following is an alphabetical list of the names and ages of the executive officers of the company and the positions or offices with the company held by each person named: Name Age Position ─────────────────────────────────────────────────────────────────────────────────────────────────────────────── Ahmad S. Bahai 60 Senior Vice President Kyle M. Flessner 52 Senior Vice President Mark S. Gary 48 Senior Vice President Haviv Ilan * 54 Director, Executive Vice President and Chief Operating Officer Hagop H. Kozanian 40 Senior Vice President Shanon J. Leonard 47 Senior Vice President Rafael R. Lizardi 50 Senior Vice President and Chief Financial Officer Mark T. Roberts 47 Senior Vice President Amichai Ron 45 Senior Vice President Richard K. Templeton * 64 Director, Chairman of the Board, President and Chief Executive Officer Cynthia Hoff Trochu 59 Senior Vice President, Secretary and General Counsel Christine A. Witzsche 38 Senior Vice President * On January 19, 2023, Mr. Ilan was elected by the board of directors to succeed Mr. Templeton as president and chief executive officer, effective April 1, 2023. Mr. Templeton will continue as chairman of the board. The term of office of these officers is from the date of their election until their successor shall have been elected and qualified. All have been employees of the company for more than five years. Messrs. Templeton, Ilan and Lizardi and Ms. Trochu have served as executive officers of the company for more than five years. Messrs. Bahai, Flessner and Kozanian became executive officers of the company in 2018. Mr. Ron became an executive officer in 2019. Mr. Gary became an executive officer in 2020. Mr. Roberts and Ms. Witzsche became executive officers in 2021. Mr. Leonard became an executive officer in 2022.

Our strategy to maximize long-term free cash flow per share growth has three elements: The first element of our strategy is a business model that is focused on analog and embedded processing products and built around four competitive advantages. This business model is the result of a series of strategic decisions made over the years and that continue today. The four sustainable competitive advantages are a strong foundation of manufacturing and technology, a broad portfolio of analog and embedded processing products, the reach of our market channels, and diversity and longevity of our products, markets and customer positions. In combination, these four competitive advantages provide tangible benefits, are difficult to replicate and ultimately separate us from our best peers. Together, these competitive advantages help position TI in a unique class of companies capable of generating and returning significant amounts of cash for our owners. We make our investments with an eye towards long-term strengthening and leveraging of these advantages. The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R& D projects, develop new capabilities like TI. com, invest in new manufacturing capacity or how we think about acquisitions and returning cash to our owners. Over a 10-year period from 2014 to 2023, we allocated $94 billion, which reinforces the importance of discipline in capital allocation. The largest allocation over this period was to drive organic growth, which includes investments in R& D, sales and marketing, capital expenditures and working capital for inventory. In this period, we allocated just over $15 billion to capital expenditures. Our increased capital expenditures are to support future revenue growth, which will be a greater component of free cash flow per share growth going forward. Beyond that, we also allocated capital to dividends and share repurchases. Dividends are designed to appeal to a broad set of investors, and share repurchases are made with the goal of the accretive capture of future free cash flow for long-term investors. Lastly, for inorganic growth, we allocate to acquisitions that meet our financial and strategic objectives. The third element of our strategy is efficiency, which we think of as constantly striving for more output for every dollar spent. This is about getting our investments in the most impactful areas to maximize the growth of long-term free cash flow per share; it is not just about optimizing cost cutting to get to the last dollar of expense. We bring this philosophy of efficiency and continuous improvement to all areas of the company, and this focus on efficiency contributes to revenue growth, improved gross margins, disciplined R& D and SG& A expense, free cash flow margins and ultimately to free cash flow per share growth. We believe that our business model with the combined effect of our four competitive advantages sets TI apart from our peers and will for a long time to come. We will invest to strengthen our competitive advantages, be disciplined in capital allocation and stay diligent in our pursuit of efficiencies. Finally, we will remain focused on the belief that long-term growth of free cash flow per share is the ultimate measure to generate value.

Markets for our products The table below lists the major markets for our products in 2023 and the estimated percentage of our 2023 revenue that the market represented. The chart also lists, in declining order of our revenue, the sectors within each market. Market Sector Industrial Factory automation & control (40% of TI revenue) Grid infrastructure Medical Aerospace & defense Test & measurement Building automation Motor drives Power delivery Appliances Pro audio, video & signage Industrial transport Retail automation & payment Lighting Automotive Infotainment & cluster (34% of TI revenue) Hybrid, electric & powertrain systems Advanced driver assistance systems (ADAS) Body electronics & lighting Passive safety Personal electronics Mobile phones (15% of TI revenue) PC & notebooks Portable electronics TV Connected peripherals & printers Tablets Home theater & entertainment Gaming Wearables (non-medical) Data storage Communications equipment Wireless infrastructure (5% of TI revenue) Wired networking Broadband fixed line access Datacom module Enterprise systems Data center & enterprise computing (4% of TI revenue) Enterprise projectors Enterprise machine Other (calculators and other) (2% of TI revenue)

Manufacturing Semiconductor manufacturing begins with a sequence of photolithographic and chemical processing steps that fabricate a number of semiconductor devices on a thin silicon wafer. Each device on the wafer is packaged and tested. The entire process takes place in highly specialized facilities that require substantial investments. We own and operate semiconductor manufacturing facilities in North America, Asia, Japan and Europe. These include both wafer fabrication and assembly/test facilities. We invest in manufacturing technologies and do most of our manufacturing in-house. This strategic decision to make manufacturing and technology a core competitive advantage provides us with tangible benefits of lower manufacturing costs and greater control of our supply chain, offering our customers geopolitically dependable capacity. We have focused on creating a competitive manufacturing structural cost advantage by investing in our advanced 300mm capacity. An unpackaged chip built on a 300mm wafer costs about 40% less than an unpackaged chip built on a 200mm wafer. We continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity plan to meet demand over time. Semiconductor growth in electronics, particularly in industrial and automotive markets, is expected to continue well into the future. Progress and investments include:

• Continuing construction on SM1 and SM2 in Sherman, Texas, where we are building four 300mm wafer fabrication facilities. • Starting construction on LFAB2, another 300mm wafer fabrication facility in Lehi, Utah. Together, these investments are designed to strengthen our manufacturing and technology competitive advantage, provide us with lower costs and greater control of our supply chain, and support growth over the next 10 to 15 years. We assess and are careful to address potential health, safety, and environmental risks presented by our operations, including our manufacturing operations. We care for our environment and work to prevent pollution and the potential risks related to climate change. We invest to reduce emissions over the long term in several ways, including installing new factory equipment with state-of-the-art emissions reduction technology, as well as retrofitting existing factory equipment with advanced abatement technology, in addition to using alternative gases and increasing the use of renewable electricity. We also continue to implement practices such as recycling and reusing materials and properly handling hazardous and restricted substances. We expect to continue to maintain sufficient internal manufacturing capacity to meet the majority of our production needs and to obtain manufacturing equipment to support new technology developments and revenue growth. In 2023, we sourced about 80% of our total wafers and about 65% of our assembly/test production internally. With our planned capacity expansions, we expect these percentages to increase. To supplement our internal manufacturing capacity, we selectively use the capacity of outside suppliers, commonly known as foundries and subcontractors.

Inventory Our objectives for inventory are to maintain high levels of customer service, maintain dependable and competitive lead times, minimize inventory obsolescence and improve manufacturing asset utilization. To meet these objectives and to allow greater flexibility in periods of high demand, our strategy is to build ahead of demand our broad-based products that are used across a diverse set of applications and customers and have low risk of obsolescence. Inventory levels will vary based on market conditions and seasonality.

Human capital management At December 31, 2023, we had about 34,000 employees worldwide. Of those, about 90% were in R& D, sales or manufacturing. Our objective for human capital management is to recruit, develop and retain the best talent possible. As a technology and manufacturing company, our success is grounded in having strong engineering talent and a reliable factory workforce. We have a promote-from-within culture and offer training and rotation programs that provide the opportunity to quickly gain experience in different areas. In 2023, our turnover rate was 8.1%. It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and more inclusive. Inclusion is one of our core values, and we have programs in place to promote diversity and inclusion. We encourage you to review our Corporate Citizenship Report for more information. Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report.

Sales of our Analog products generated about 74% of our revenue in 2023. Our Analog segment includes the following major product lines: Power and Signal Chain.

Power Power includes products that help customers manage power in electronic systems. Our broad portfolio is designed to manage power requirements across different voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated DC/DC switching regulators, power switches, linear and low-dropout regulators, voltage references and lighting products.

Embedded Processing Our Embedded Processing segment generated $3.37 billion of revenue in 2023. Embedded Processing products are the digital "brains" of many types of electronic equipment. They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application. Our devices vary from simple, low-cost microcontrollers used in applications such as electric toothbrushes to highly specialized, complex devices such as motor control. Our Embedded Processing products are used in many markets, particularly industrial and automotive. An important characteristic of our Embedded Processing products is that our customers often invest their own R& D to write software that operates on our products. This investment tends to increase the length of our customer relationships because many customers prefer to reuse software from one product generation to the next.

Information about our executive officers The following is an alphabetical list of the names and ages of the executive officers of the company and the positions or offices with the company held by each person named: Name Age Position ─────────────────────────────────────────────────────────────────────────────────────────────────────────────── Ahmad S. Bahai 60 Senior Vice President Kyle M. Flessner 52 Senior Vice President Mark S. Gary 48 Senior Vice President Haviv Ilan * 54 Director, Executive Vice President and Chief Operating Officer Hagop H. Kozanian 40 Senior Vice President Shanon J. Leonard 47 Senior Vice President Rafael R. Lizardi 50 Senior Vice President and Chief Financial Officer Mark T. Roberts 47 Senior Vice President Amichai Ron 45 Senior Vice President Richard K. Templeton * 64 Director, Chairman of the Board, President and Chief Executive Officer Cynthia Hoff Trochu 59 Senior Vice President, Secretary and General Counsel Christine A. Witzsche 38 Senior Vice President * On January 19, 2023, Mr. Ilan was elected by the board of directors to succeed Mr. Templeton as president and chief executive officer, effective April 1, 2023. Mr. Templeton will continue as chairman of the board. The term of office of these officers is from the date of their election until their successor shall have been elected and qualified. All have been employees of the company for more than five years. Messrs. Templeton, Ilan and Lizardi and Ms. Trochu have served as executive officers of the company for more than five years. Messrs. Bahai, Flessner and Kozanian became executive officers of the company in 2018. Mr. Ron became an executive officer in 2019. Mr. Gary became an executive officer in 2020. Mr. Roberts and Ms. Witzsche became executive officers in 2021. Mr. Leonard became an executive officer in 2022.

Manufacturing Semiconductor manufacturing begins with a sequence of photolithographic and chemical processing steps that fabricate a number of semiconductor devices on a thin silicon wafer. Each device on the wafer is packaged and tested. The entire process takes place in highly specialized facilities that require substantial investments. We own and operate semiconductor manufacturing facilities in North America, Asia, Japan and Europe. These include both wafer fabrication and assembly/test facilities. We invest in manufacturing technologies and do most of our manufacturing in-house. This strategic decision to make manufacturing and technology a core competitive advantage provides us with tangible benefits of lower manufacturing costs and greater control of our supply chain. We have focused on creating a competitive manufacturing structural cost advantage by investing in our advanced 300-millimeter capacity. An unpackaged chip built on a 300-millimeter wafer costs about 40% less than an unpackaged chip built on a 200-millimeter wafer. We continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning. Progress and investments include: • continuing construction of RFAB2 (Richardson, Texas), our next 300-millimeter wafer fabrication facility, to begin production in the second half of 2022; • purchasing a 300-millimeter wafer fabrication facility in Lehi, Utah, to support analog and embedded processing manufacturing, which is expected to begin production in early 2023; and • planning construction on our next two 300-millimeter wafer fabrication facilities in Sherman, Texas, to begin in 2022. This North Texas site has the potential for up to four fabrication facilities to meet demand over time, as semiconductor growth in electronics, particularly in industrial and automotive markets, is expected to continue well into the future. Production is expected to begin in 2025. Together, these investments are designed to strengthen our manufacturing and technology competitive advantage, provide us with lower costs and greater control of our supply chain, and support growth over the next 10 to 15 years. We assess and are careful to address potential health, safety, and environmental risks presented by our operations, including our manufacturing operations. We care for our environment and work to prevent pollution and the potential risks related to climate change by implementing practices such as recycling and reusing materials, controlling harmful emissions, and properly handling hazardous and restricted substances. We expect to continue to maintain sufficient internal manufacturing capacity to meet the majority of our production needs and to obtain manufacturing equipment to support new technology developments and revenue growth. To supplement our manufacturing capacity and maximize our responsiveness to customer demand, we selectively use the capacity of outside suppliers, commonly known as foundries, and subcontractors. In 2021, we sourced about 20% of our total wafers from external foundries and about 40% of our assembly/test services from subcontractors.

Raw materials We purchase materials, parts and supplies from a number of suppliers. In some cases we purchase such items from sole-source suppliers. The materials, parts and supplies essential to our business are generally available at present, and we believe that such materials, parts and supplies will be available in the foreseeable future.

ITEM 1. Business We design and manufacture semiconductors that we sell to electronics designers and manufacturers all over the world. Our operations began in 1930, and we are incorporated in Delaware. With headquarters in Dallas, Texas, we have design, manufacturing or sales operations in more than 30 countries. Our two reportable segments are Analog and Embedded Processing, and we report the results of our remaining business activities in Other. In 2022, we generated $20.03 billion of revenue. For decades, we have operated with a passion to create a better world by making electronics more affordable through semiconductors. We were pioneers in the transition from vacuum tubes to transistors and then to integrated circuits. As each generation became more reliable, more affordable and lower in power, semiconductors were used by a growing number of customers and markets. This passion is alive today as we help our customers develop electronics and new applications, particularly in industrial and automotive markets. For many years, we have run our business with three overarching ambitions in mind. First, we will act like owners who will own the company for decades. Second, we will adapt and succeed in a world that is ever changing. And third, we will be a company that we are personally proud to be a part of and that we would want as our neighbor. Our ambitions are foundational to ensuring that we operate in a sustainable, socially thoughtful and environmentally responsible manner. When we are successful in achieving these ambitions, our employees, customers, communities and shareholders all win. As engineers, we are fortunate to work on exciting technology which helps our customers innovate to create a better world. Technology is the foundation of our company, but ultimately, our objective and the best metric for owners to measure our progress is through the growth of free cash flow per share over the long term.

Our strategy to maximize long-term free cash flow per share growth has three elements: The first element of our strategy is a business model that is focused on analog and embedded processing products and built around four competitive advantages. This business model is the result of a series of strategic decisions made over the years and that continue today. The four sustainable competitive advantages are a strong foundation of manufacturing and technology, a broad portfolio of analog and embedded processing products, the reach of our market channels, and diversity and longevity of our products, markets and customer positions. In combination, these four competitive advantages provide tangible benefits, are difficult to replicate and ultimately separate us from our best peers. Together, these competitive advantages help position TI in a unique class of companies capable of generating and returning significant amounts of cash for our owners. We make our investments with an eye towards long-term strengthening and leveraging of these advantages. The second element of our strategy to maximize free cash flow per share growth is disciplined allocation of capital. This spans how we select R& D projects, develop new capabilities like TI. com, invest in new manufacturing capacity or how we think about acquisitions and returning cash to our owners. Over a 10-year period from 2013 to 2022, we allocated $87 billion, which reinforces the importance of discipline in capital allocation. The largest allocation over this period was to drive organic growth, which includes investments in R& D, sales and marketing, capital expenditures and working capital for inventory. In this period, we allocated just over $10 billion to capital expenditures. Going forward, we expect increased capital expenditures to be the largest driver of free cash flow growth over the next 10 to 15 years. Beyond that, we also allocated capital to dividends and share repurchases. Dividends are designed to appeal to a broad set of investors, and share repurchases are made with the goal of the accretive capture of future free cash flow for long-term investors. Lastly, for inorganic growth, we allocate to acquisitions that meet our financial and strategic objectives. The third element of our strategy is efficiency, which we think of as constantly striving for more output for every dollar spent. This is about getting our investments in the most impactful areas to maximize the growth of long-term free cash flow per share; it is not just about optimizing cost-cutting to get to the last dollar of expense. We bring this philosophy of efficiency and continuous improvement to all areas of the company, and this focus on efficiency contributes to revenue growth, improved gross margins, disciplined R& D and SG& A expense, free cash flow margins and ultimately to free cash flow per share growth. We believe that our business model with the combined effect of our four competitive advantages sets TI apart from our peers and will for a long time to come. We will invest to strengthen our competitive advantages, be disciplined in capital allocation and stay diligent in our pursuit of efficiencies. Finally, we will remain focused on the belief that long-term growth of free cash flow per share is the ultimate measure to generate value.

Markets for our products The table below lists the major markets for our products in 2022 and the estimated percentage of our 2022 revenue that the market represented. The chart also lists, in declining order of our revenue, the sectors within each market. Market Sector Industrial Factory automation & control (40% of TI revenue) Grid infrastructure Medical Building automation Test & measurement Aerospace & defense Appliances Motor drives Power delivery Pro audio, video & signage Industrial transport Retail automation & payment Lighting Automotive Infotainment & cluster (25% of TI revenue) Hybrid, electric & powertrain systems Advanced driver assistance systems (ADAS) Body electronics & lighting Passive safety Personal electronics PC & notebooks (20% of TI revenue) Mobile phones Portable electronics TV Connected peripherals & printers Home theater & entertainment Tablets Wearables (non-medical) Gaming Data storage Communications equipment Wireless infrastructure (7% of TI revenue) Wired networking Broadband fixed line access Datacom module Enterprise systems Data center & enterprise computing (6% of TI revenue) Enterprise projectors Enterprise machine Other (calculators and other) (2% of TI revenue)

Customers, sales and distribution We sell our products to over 100,000 customers. Our customer base is diverse, with more than 40% of our revenue derived from customers outside our largest 100. We market and sell our products through direct sales channels, including our website and broad sales and marketing team, and, to a lesser extent, through distributors. Over the past several years, we have been investing in new capabilities to build closer direct customer relationships. As a result, in 2022 about 70% of our revenue was direct, which includes TI. com, as customers valued the convenience of purchasing online. Closer direct relationships with our customers help to strengthen our reach of market channel advantage and give us access to more customers and more of their design projects, leading to opportunities to sell more of our products into each design. Additionally, broader and deeper access gives us better insight and knowledge of customer needs. Our investments in new and improved capabilities to directly support our customers include website and e-commerce enhancements as well as inventory consignment programs and order fulfillment services. Our TI. com e-commerce channel offers a localized online experience in many countries, with convenience features such as immediate availability, local currency, payment methods, invoicing and importer of record. Our new application programming interfaces (APIs) give customers the ability to directly access real-time inventory information about TI products from their own systems, enabling them to purchase available chips immediately to better support their supply needs, reducing cost and delays. In addition to doing business directly with TI, we offer customers the option of using a single worldwide distributor and a few region-specific distributors for order fulfillment.

Inventory Our objectives for inventory are to maintain high levels of customer service, maintain stable and competitive lead times, minimize inventory obsolescence and improve manufacturing asset utilization. To meet these objectives and to allow greater flexibility in periods of high demand, our strategy is to build ahead of demand our broad-based products that are used across a diverse set of applications and customers and have low risk of obsolescence. Inventory levels will vary based on market conditions and seasonality. As a result, we expect to increase our inventory levels over time.

Human capital management At December 31, 2022, we had about 33,000 employees worldwide. Of those, about 90% were in R& D, sales or manufacturing. Our objective for human capital management is to recruit, develop and retain the best talent possible. As a technology and manufacturing company, our success is grounded in having strong engineering talent and a reliable factory workforce. We have a promote-from-within culture and offer training and rotation programs that provide the opportunity to quickly gain experience in different areas. In 2022, our turnover rate was 12.1%. It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and more inclusive. Inclusion is one of our core values, and we have programs in place to promote diversity and inclusion. We encourage you to review our Corporate Citizenship Report for more information. Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report.

Sales of our Analog products generated about 77% of our revenue in 2022. Our Analog segment includes the following major product lines: Power and Signal Chain.