What Washington ContributesNarrow moat
Texas Instruments (TXN) — moat facet
$335 million of CHIPS money against $4.55 billion of capex is a rounding error dressed as industrial policy.
TI is building fabs in America and getting paid a little to do it, which is a smaller part of the story than the headlines suggest.
The company received $335 million of CHIPS Act incentive proceeds in 2025, disclosed as a line in its own free-cash-flow reconciliation.1 Against capital expenditure of $4.55 billion in the same year, that is about 7% — helpful, and nowhere near decisive. The fabs at Sherman, Richardson and Lehi were committed on their own economics.
The 2025 tax legislation mattered more. The One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI's effective tax rate was 12.4% in 2025 and management expects the rate and tax-related cash payments to be lower than they would have been under prior law from 2026 onward.2
The strategic value is larger than the subsidy. A company with leading-edge-adjacent analog capacity inside the United States is positioned for exactly the procurement preferences that industrial and defence customers now apply.
The risk is symmetrical and rarely mentioned: policy that favours domestic manufacturing in America is being matched by policy favouring domestic manufacturing everywhere else, including in the market that takes about 50% of TI's shipments.3
$335m of CHIPS proceeds against $4.55bn of capital spending, and a tax rate expected to be lower from 2026 under the 2025 legislation. Real, modest, and unchanged in either direction.
Against capital expenditure of $4,550M in the same year — about 7%, helpful and nowhere near decisive. The 2025 tax legislation mattered more: expensing of US research and eligible capital expenditure and an increased CHIPS investment tax credit contributed to an effective tax rate of 12.4%, with lower rates expected from 2026. The fabs were committed on their own economics.
Source: Texas Instruments Form 10-K, FY2025 ↗- ReportedThe company received $335 million of CHIPS Act incentive proceeds in 2025, disclosed as a line in its own free-cash-flow reconciliation.Texas Instruments Incorporated, Form 10-K FY2025 — Management's Discussion and Analysis, cash flow statement and the free-cash-flow reconciliation. Cash flow from operations $7,153M (2024 $6,318M), 40.5% of revenue; capital expenditures $4,550M (2024 $4,820M); proceeds from CHIPS Act incentives $335M; free cash flow $2,938M (2024 $1,498M), 16.6% of revenue. In 2025 TI invested $3.94bn in R&D and SG&A, invested $4.55bn in capital expenditures and returned $6.48bn to shareholders. Dividends paid were $4,999M against $4,795M in 2024 and $4,557M in 2023, reflecting an increased dividend rate; $1,477M was used to repurchase 8.5 million shares against $929M for 4.7 million shares in 2024. Net proceeds of $1,199M were received from the issuance of fixed-rate long-term debt and $750M of maturing debt retired. Over the ten-year period from 2016 to 2025 TI allocated $109 billion, of which about $24 billion went to capital expenditures, and states it is near completion of its six-year elevated capital expenditure cycle. The dividend was raised 4% to $1.42 per share per quarter, marking 22 consecutive years of increases, since extended to 23. The One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI expects the effective tax rate and tax-related cash payments to be lower than under prior law from 2026. — FY2025 · publ. 2026-02-06 · source ↗
- ReportedThe One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI's effective tax rate was 12.4% in 2025 and management expects the rate and tax-related cash payments to be lower than they would have been under prior law from 2026 onward.Texas Instruments Incorporated, Form 10-K FY2025 — Management's Discussion and Analysis, cash flow statement and the free-cash-flow reconciliation. Cash flow from operations $7,153M (2024 $6,318M), 40.5% of revenue; capital expenditures $4,550M (2024 $4,820M); proceeds from CHIPS Act incentives $335M; free cash flow $2,938M (2024 $1,498M), 16.6% of revenue. In 2025 TI invested $3.94bn in R&D and SG&A, invested $4.55bn in capital expenditures and returned $6.48bn to shareholders. Dividends paid were $4,999M against $4,795M in 2024 and $4,557M in 2023, reflecting an increased dividend rate; $1,477M was used to repurchase 8.5 million shares against $929M for 4.7 million shares in 2024. Net proceeds of $1,199M were received from the issuance of fixed-rate long-term debt and $750M of maturing debt retired. Over the ten-year period from 2016 to 2025 TI allocated $109 billion, of which about $24 billion went to capital expenditures, and states it is near completion of its six-year elevated capital expenditure cycle. The dividend was raised 4% to $1.42 per share per quarter, marking 22 consecutive years of increases, since extended to 23. The One Big Beautiful Bill Act, enacted 4 July 2025, provided for expensing of US research and eligible capital expenditure and increased the CHIPS Act investment tax credit; TI expects the effective tax rate and tax-related cash payments to be lower than under prior law from 2026. — FY2025 · publ. 2026-02-06 · source ↗
- ReportedThe risk is symmetrical and rarely mentioned: policy that favours domestic manufacturing in America is being matched by policy favouring domestic manufacturing everywhere else, including in the market that takes about 50% of TI's shipments.Texas Instruments Incorporated, Form 10-K for the year ended 31 December 2025 (SEC, CIK 97476) — Item 1, Business. TI's two reportable segments are Analog and Embedded Processing, with remaining activities in Other; operations began in 1930 and it has design, manufacturing or sales operations in more than 30 countries. The product portfolio includes more than 80,000 products. TI states four sustainable competitive advantages: a strong foundation of manufacturing and technology, a broad portfolio of analog and embedded processing products, the reach of its market channels, and the diversity and longevity of its products, markets and customer positions, which in combination it describes as difficult to replicate. An unpackaged chip built on a 300mm wafer costs about 40% less than one built on a 200mm wafer; TI continued qualifying and ramping production at its newest 300mm fabs in Richardson and Sherman, Texas, and Lehi, Utah, supporting external foundry transfers and internal transfers from its legacy 150mm facilities, and expects to maintain sufficient internal capacity to meet the majority of its production needs, offering customers geopolitically dependable capacity. TI sells to over 100,000 customers, with about half of revenue derived from customers outside its largest 50; more than 80% of revenue was direct in 2025, including TI.com. End markets as a percentage of 2025 revenue: industrial 33%, automotive 33%, personal electronics 21%, data centre 9%, communications equipment 3%, and calculators about 1%. About 60% of revenue comes from customers headquartered outside the United States; revenue from end customers headquartered in China represented about 20% of revenue in 2025, while revenue from products shipped into China represented about 50%. The analog and embedded processing markets remain highly fragmented, with significant global competition from dozens of large and small companies including emerging companies, particularly in Asia. The company's stated objective is the growth of free cash flow per share over the long term. — FY2025 · publ. 2026-02-06 · source ↗