Goldman Sachs Communacopia + Tech Conf. 2025: TI CEO Haviv Ilan on Semi Mkt Recovery, Mfg Strategy, & Growth Outlook

Key Takeaways

TL;DR: TI signals robust semi recovery led by data center, steady but lagging improvement in industrial/auto, and full commitment to LT, US-centric mfg/inventory strategy. Major secular tailwinds in automation, electrification, digitization; cautious on NT volatility (esp. China/trade). Targets sustained FCF/sh and margin recovery as scale returns. Embedded processing stabilizing share post-multi-yr losses, w/ further margin, portfolio, and competitive expansion expected. TI expects 2025 data center sales >$1B and reiterates $8–$9 FCF/sh floor for 2026 even on low rev. scenarios.

1. Macro & End-Mkt Trends

• Semi Recovery:
  • Recovery began 1Q24: "We troughed...1Q24...seen a recovery since then, different mkts at different phases."
  • Data center booming: "Fastest recovering mkt...very strong growth at +50%...back to 2022 level."
  • Personal electronics/consumer & comms also recovering.
  • Industrial slow but steady, except aero/def at new highs. Most industrial segments "20–40%...below previous peak," due to macro & customer caution.
• China dynamics / Pull-in Effects:
  • China seq. growth "close to 20%" in Q2, "a little above natural." Mgmt flags potential inventory pull-ins from China customers ahead of tariffs/trade actions—Q2 outperformance, likely Q3 headwind. "That was an element of Q2...Q3 a little lower than our traditional 6–7% seq. growth."
• Trade & Geopolitical Tensions:
  • Ongoing disruption noise, both a drag on LT trendline recovery and driver of alternate sourcing/inventory build.
  • CEO: "Trade tensions, geopolitical tensions...a lot of disruption noise...influences the way the mkt wants to go back to trend line."

2. Operating/Fin. Performance & Targets

• Recent Financials:
  • Q2 2025: "Co grew at mid-teens, 15–16% YoY. Also, seq...grew 9% seq."—above avg.
  • Seq. growth in China (Q2): ~20%.
• GP path-back:
  • Focused on LT FCF/sh, not just GP. "[Product] GPs...complicated by capacity adds...DNA stepping up to $2–3B. Inventories fairly elevated."
  • GP expectation: "High-60s easily" once scale returns and CapEx/depr. flows normalize.
• FCF / LT Targets:
  • 2026 FCF/sh floor: "Even at lower rev. and CapEx, min FCF/sh target was about $8." CEO confirms "$8–9."
  • 2030/Rev. goals: "Funnel...2030...about $30–40B rev. and how co can behave in FCF/sh."

3. Mkt & Segment Strategies

• Data Center:
  • Fastest growing mkt; 2025 exit annualized run rate "$1–1.2B...growing +50%."
  • "Tremendous opp. for growth...maybe single digit portion of mkt, but growing to be...20% of our mkt not so far away..."
• Industrial/Automation:
  • "Investments in automation, electrification, digitization...secular growth, even if it takes more time."
  • Current industrial rev. still 20–40% below peak, but "seeing now 2–3 Qs of recovery."
• Auto:
  • Shallow correction: "Peak to trough...mid- to high-single digits," w/ quick resumption expected due to content growth/vehicle (EV, ADAS, body/comfort).
  • China: "55% of new cars sold are EVs in China"; S-curve matured, global transition underway ("R&D...shifting to EV platforms or PHEV").
• Embedded Processing:
  • Admits multi-yr share loss since 2017 but says losses have "stabilized."
  • Strategy: Expand portfolio (esp. low-power MCUs, wireless, real time control DSPs), more mfg in-house (Lehi), refocus on automation/robotics (e.g., power conversion in data centers, industrial automation).
  • Ambition: Embedded to be "at least equal contributor to LT FCF/sh growth."
  • App focus: "Automation, robotics...clear efficiency gain on cost per pin...opp. waiting to happen."