Texas Instrs — Key Risks

China Exposure Creates Concentrated Revenue Risk

About 20% of TI's revenue comes from customers headquartered in China, but roughly 50% of all products shipped go into China. This gap suggests a large portion of TI's chips end up in Chinese-made products even when sold through non-Chinese customers. If trade restrictions, tariffs, or export controls tighten further, this outsized exposure could hit revenue hard from multiple directions at once.

Fixed Manufacturing Costs Make Downturns More Painful

Because TI owns much of its own manufacturing capacity, a large share of its operating costs are fixed — meaning those costs continue even when customer orders fall. The company has been actively expanding capacity, so capital expenditures and depreciation have increased. When demand cycles down (as it regularly does in semiconductors), these fixed costs compress profit margins with little ability to offset them quickly.

A Massive Capital Expansion May Not Deliver Expected Returns

TI has committed to large investments in new manufacturing facilities and capacity. The company openly acknowledges it "might not realize the expected return on those investments." Construction depends on third-party contractors, equipment suppliers, and skilled workers — all of which face their own supply and geopolitical pressures. A delay or shortfall in utilization of new plants could weigh on financial results for years.

Competition From China's State-Backed Semiconductor Push

China is actively funding and reshaping its domestic semiconductor industry through policy changes and direct investment. This could enable Chinese competitors to undercut TI on price or capture market share in ways that are difficult to match, particularly since those competitors may benefit from government subsidies that TI does not.

Supply Chain Concentration in Critical Materials

Certain key materials used in semiconductor manufacturing come from a limited number of geographies. Export controls, geopolitical tensions, or supplier disruptions could limit access to these inputs or drive up costs. TI does not have long-term contracts with all of its suppliers, and the number of alternative suppliers is limited — leaving little cushion if a key source becomes unavailable.

Government Incentives Could Be Reduced or Clawed Back

TI has received government incentives — including tax incentives likely tied to domestic manufacturing investments under programs like the CHIPS Act — but the filing warns these could be subject to "reduction, modification, clawback or termination." If these incentives shrink or disappear, the financial case for some of TI's capital investments could weaken materially.