Activist Elliott wants Texas Instruments to bolster free cash flow. An amicable solution may emerge

Texas Instruments, a prominent semiconductor company, has a long history of innovation and success. It is known for its groundbreaking inventions, such as the integrated circuit, handheld calculator, and digital signal processor. The company specializes in analog and embedded semiconductor products, serving over 100,000 customers. Texas Instruments has invested in manufacturing capabilities, particularly in 300-mm wafer production, which has contributed to its gross margin expansion. Despite its strong position in the analog semiconductor market, the company has underperformed peers in recent years. An activist investor, Elliott, has raised concerns about the company’s focus on free cash flow per share and its aggressive capital expenditure plan. Elliott suggests adopting a dynamic capacity-management strategy and setting a higher free cash flow per share target. By doing so, they believe the company can restore investor confidence and achieve long-term value.