RNECY - Texas Instruments Paying To Grow But There Are Challenges Ahead

• The cost of doing business in semiconductors is going up, and TI's long-term capex expansion plan will see its capex intensity double over the next decade as it adds capacity.
• Higher capex will hit gross margins in the short term, but increased production at 300mm should have meaningful positive margin effects down the line.
• Management's capex plans are consistent with supporting 7% long-term revenue growth; industry growth should support mid-single-digit volume growth, but competition is intensifying.
• TI's valuation is far more reasonable now, but there are other chip stocks that offer even more upside.

For further details see: