The manufacturer of analog chips and other technologies, Texas Instruments Incorporated (TXN), will be one of the beneficiaries of the recently adopted CHIPS law. The new law provides up to $52 billion in subsidies and tax breaks to American chip manufacturers. At the same time, only those who produce their chips, and do not outsource production, can take advantage of the program. Texas Instruments plans to increase capital expenditures to $3.5 billion over the next four years to modernize its plants.
The company also intends to maintain increased capital investments at about 10% of revenue from 2025 to 2030. The Law on Subsidies and Tax Benefits will help to mitigate the financial burden and ensure that the company continues to expand and modernize its enterprises. In the past quarter, Texas Instruments’ revenue increased by 14% to $5.21 billion, which was higher than Wall Street analysts’ expectations. Net income increased by 19% to $2.29 billion, and earnings per share increased by 20% to $2.45. Texas Instruments strength is diversification, which avoids cyclical downturns typical of some industries.
The firm offers a wide selection of analog and embedded chips for the automotive industry, the manufacturing sector, the production of personal electronics, communications, etc. Texas Instruments generated 77% of its revenue in the second quarter from analog chips. Embedded chips accounted for another 16%, and other products accounted for the rest. Most of the company’s growth came from the automotive and industrial markets, which generated 62% of revenue last year.
The expansion of these two markets after the particularly acute phases of the pandemic made it possible to compensate for slower smartphone sales. In addition, Texas Instruments noted the break, and orders from China have grown industry of this country to catch up with the backlog. Thus, strong diversification and recovery of end markets allow Texas Instruments to maintain high sales and improve financial performance.