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Texas Instruments, Inc. (NASDAQ:TXN) released its third-quarter earnings report after Tuesday’s closing bell. Below are the transcripts from the third quarter earnings call. • TXN is encountering selling pressure. Get the details here. This transcript is brought to you by Benzinga APIs. For real-time access to our entire catalog, please visit https://www.benzinga.com/apis/ for a consultation. Mike Beckman (Head of Investor Relations) Welcome to the Texas Instruments third quarter 2025 earnings conference call. I’m Mike Beckman, Head of Investor Relations and I’m joined by our Chief Executive Officer Haviv Ilan and our Chief Financial Officer Rafael Lazardi. For any of you who missed the release, you can find it on our website@ti.com ir this call is being broadcast live over the web and can be accessed through our website. In addition, today’s call is being recorded and will be available via replay on our website. This call will include forward looking statements that involve risks and uncertainties that could cause TI’s results to differ materially from management’s current expectations. We encourage you to review the notice regarding forward looking statements contained in the earnings release published today, as well as TI’s most recent SEC filings. For a more complete description, you likely saw Last week we announced that the Board of Directors has elected Haviv Ilon Chairman of the board beginning January 2026. Haviv succeeds rich Templeton who will retire as Chairman after a 45 year career with TI. I’m sure you will join me in congratulating them both. Today we’ll provide the following updates. First, HAVIV will start with a quick overview of the quarter. Next, he’ll provide insight into third quarter revenue results with some details on what we are seeing with respect to our end markets. Lastly, Rafael will cover the financial results. Kevin, give an update on capital Management as well as share the guidance for fourth quarter 2025. With that, let me turn it over to Haviv. Haviv Ilan (CEO) Thanks Mike. I’ll start with a quick overview of the third quarter. Revenue came in about as expected at $4.7 billion, an increase of 7% sequentially and an increase of 14% year over year. Analog and embedded both grew year on year and sequentially. Analog revenue grew 16% year over year and embedded processing grew 9%. Our other segment grew 11% from the year ago quarter. Let me provide a few comments about the current market environment. The overall semiconductor market recovery is continuing, though at a slower pace than prior upturns, likely related to the broader macroeconomic dynamics and overall uncertainty. That said, customer inventories remain at low levels and their inventory depletion appears to be behind us. We are well positioned with capacity and inventory and have flexibility to support a range of scenarios. Now I’ll share some additional insights into third quarter revenue by end market. First, the industrial market increased about 25% year on year and was up low single digits sequentially following a strong result in the second quarter. The automotive market increased upper single digits year on year and around 10% sequentially with growth across all regions. Personal electronics grew low single digits year on year and grew upper single digits sequentially. Enterprise Systems grew about 35% year on year, grew about 20% sequentially and lastly, communications equipment grew about 45% year on year and was up about 10% sequentially. With that, let me turn it over to Rafael to review profitability and capital management. Rafael Lizardi (CFO) Thanks Aviv and good afternoon everyone. As Aviv mentioned, third quarter revenue was $4.7 billion. Gross profit in the quarter was $2.7 billion or 57% of revenue sequentially. Gross profit margin decreased 50 basis points. Operating expenses in the quarter were $975 million, up 6% from a year ago and about as expected on a trailing twelve month basis. Operating expenses were $3.9 billion or 23% of revenue. Operating profit was $1.7 billion in the quarter or 35% of revenue and was up 7% from the year ago quarter. Net income in the quarter was $1.4 billion or $1.48 per share. Earnings per share included a $0.10 reduction not in our original guidance. This includes $0.08 of restructuring charges related to efforts to drive operational efficiencies to support our long term strategy, including the planned closures of our last two 150 millimeter fabs. Let me now comment on our Capital Management results starting with our cash generation. Cash flow from operations was $2.2 billion in the quarter and $6.9 billion on a trailing twelve month basis. Capital expenditures were $1.2 billion in the quarter and 4.8 billion dollars over the last twelve months. Free cash flow on a trailing twelve month basis was $2.4 billion. This includes $637 million of CHIPS Act incentives including a $75 million payment received in the third quarter related to the direct funding agreement. In the quarter we paid $1.2 billion in dividends and repurchased $119 million of our stock. In September we announced we would increase our dividend by 4%, marking our 22nd consecutive year of dividend increases. This reflects our continued commitment to return free cash flow to our owners over time. In total, we returned $6.6 billion to our owners in the past 12 months. Our balance sheet remains strong with $5.2 billion of cash and short term investments at the end of the third quarter. Total debt outstanding is $14 billion with a weighted average coupon of 4%. Inventory at the end of the quarter was $4.8 billion, up $17 million from the prior quarter and days were 215, down 16 days sequentially. We have executed well on building an inventory position which we believe will allow us to to consistently deliver high levels of customer service. Turning to our outlook for the fourth quarter, we expect TI’s revenue in the range of 4.22 to $4.58 billion and earnings per share to be in the range of $1.13 to $1.39. Our fourth quarter outlook includes changes related to the new U.S. tax legislation and now assumes an effective tax rate of about 13%. In addition, we expect our effective tax rate in 2026 to be about 13% to 14%. In closing, we will stay focused in the areas that add value in the long term. We continue to invest in our competitive advantages which are manufacturing and technology, a broad product portfolio, reach of our channels and diverse and long lived positions. We will continue to strengthen these advantages through disciplined capital allocation and by focusing on the best opportunities which we believe will enable us to continue to deliver free cash flow per share growth over the long term. With that, let me turn it back to Mike. Mike Beckman (Head of Investor Relations) Thanks Rafael. Operator, you can now open the line for questions. In order to provide as many of you as possible an opportunity to ask your questions, please limit yourself to a single question. After our response, we’ll provide you an opportunity for an additional follow up. Operator Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate a line is in the question queue. You may press Star two to remove yourself from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the start keys. One moment please. While we poll for questions, our first question comes from the line of Timothy Arcuri with UBS. Please proceed with your question. UBS Equity Analyst Thanks a lot. Haviv, I’m wondering if you can talk about the linearity of bookings through the quarter. I know in the June quarter things had softened throughout the quarter, but this quarter it seemed like things got a little better as you move through the quarter. So can you talk about that as you sort of head into CQ4? Haviv Ilan (CEO) Yes, I’ll give some high level comments. And Mike, please add anything with more details. Yeah, this quarter was kind of came in as expected and nothing not similar to what we saw and the second quarter it was a little bit hectic with the tensions related to trade and tariffs. We saw a lot of change through the quarter. This was more of as expected quarters through the quarter in July, August and September. Mike, anything to add on that one? Mike Beckman (Head of Investor Relations) We had talked about the turns portion of the business had kind of started out strong at the beginning of second and had moderated near the end. We didn’t see that same behavior again in third. It really that portion kind of followed what you’d expect to see in a kind of a cyclical recovery that we saw in third. You have a follow up? UBS Equity Analyst I do, yeah. Rafael, I wanted to ask about loadings that are assumed in the fourth quarter. I know you usually come in at the high end, but if we assume the midpoint of the guidance and I assume that depreciation grows like it’s has the past few quarters, gross margin if I exclude the depreciation. So on a cash basis it’s down like sub 67. So it hasn’t been that low in like 10 years. And you are already sitting on a lot of inventory. I don’t think you want to build more. So sort of, what’s the path to get cash margins on a better path here? I mean it’s below where it was seven to eight quarters ago when revenue was six to $700 million lower than where it is today. Thanks. Rafael Lizardi (CFO) Yeah, let me try to answer that. There were several questions there, so let me see if I can hit most of them first. Your question is maybe fundamentally on inventory. So let me start there. We’re very pleased with our current inventory position. That objective for inventory is to support customers, to keep lead time short and have just great customer delivery, customer satisfaction so that we are achieving and we’re pleased to with where the inventory is now given where revenue, the midpoint of our revenue in order to continue to maintain those levels of inventory and where we want to be in inventory, we’re adjusting the loadings down into fourth quarter. We did some of that in third quarter and we’re going to do some more into fourth quarter. So as we do that and as you pointed out, when you look at fourth quarter, you have lower revenue, you have higher depreciation, you have the hit on the lower loadings. So that’s how you get to the EPS range that we have listed. OPERATOR All right, we’ll move on to the next caller. Thank you. Our next question comes from the line of Chris Danley with Citibank. Please proceed with your question. Citibank Equity Analyst Thanks guys and thanks for pronouncing my last name correctly. Operator. Hey guys, could you just talk a little bit more about the restructuring maybe what was the catalyst for it? And then any benefits to expenses, either gross margins or opex going forward. Haviv Ilan (CEO) High level. It’s related to actually two things. First, I think we announced several years back that we are winding down our 6 inch fabs or 150 millimeter fabs. We have one in Sherman, the old site, the old fab in the site and one in Dallas. Both of them have actually started the last wafer this month. And we will see a gradual reduction in cost related to these two factories through I think the first half of 2026. We were just taking the heat on the restructuring costs in Q3 as we had predictability and the amount was clear to us in terms of the the size of it. Regarding the other part of it, this is an ongoing work that we’re doing. We always look at the efficiency gains. We had some areas where we felt that our R and D machine is not generating the returns that we would expect on the long term. And we decided to consolidate some sites that is also going to take place in the next couple of quarters for the company. Do you have a follow up, Chris and Rafael? Is there anything that just on the OPEX side that you want to mention, Rafael? Rafael Lizardi (CFO) No, I would just say tactically for fourth quarter, expect OPEX to be about flat to third quarter and that’s. Aviv alluded to the benefits from the restructuring. They don’t all come in immediately. So it just takes a little while for that to happen. And there will be benefits in both cor as well as opex. Citibank Equity Analyst Follow up, Chris? Yeah, hey, thanks Mike. I think you guys said Industrial was up low single digits sequentially and Auto was up, I think it was high singles or something like that sequentially. That sounds like a bit of a, change from what you said last quarter and intra quarter. Is that true? And then why do you think Industrial is slowing down? Auto is a little better than expected. Haviv Ilan (CEO) Let me take first, Chris. As you remember, we only guide at the company level. We don’t guide by market. We did say, I think on the industrial side that we had a very strong Q2, so kind of indicated that we assume Q3 will taper off. Right. And actually to me that low single digit growth sequentially was good. I’m pleased with the result. Remember, very strong growth in the second quarter. On the automotive side I would say, look, Automotive is kind of sequentially up and down and up and down, but all in a very similar level. Right. The recovery in automotive, at least for Ti was was very the trough was shallow and now you know, it’s kind of back to where it used to be. So I would not read too much into it. You know, it came in more or less as expected and I think market grew across the regions in automotive. It did, yeah. Grew sequentially across all the regions. So no surprises there, Chris,, from our perspective at least. Yeah. And historically has it within and I just add with industrial a second to third transition usually actually down. If you look across the averages over history, it’s actually down a little bit. So an up low single digit is actually not an unusual result if you’re in a recovery. Operator All right, I’ll move on to the next caller. Thanks, Chris. Thank you. Our next question comes from the line of Joe Moore with Morgan Stanley. Please proceed with your question. Morgan Stanley Equity Analyst Great, thank you. I guess I continue to get a lot of questions about pricing for you guys. Anything unusual happening there? I think you alluded to kind of an ongoing learning curve, kind of price declines. But anything happening where any markets are sort of different on the pricing side? Haviv Ilan (CEO) Short answer is no. And again for the year, I think our assumption coming into the year was kind of a low single digit decline like for like on the pricing side. And I think that’s how we are trending year to date. So I expect the year to end at the low single digit price reduction in 2025. Your follow up, Shel? Morgan Stanley Equity Analyst Yeah. And just any comment on lead times? Are you still in the range that you’ve talked about? Any areas where lead times are getting. Rafael Lizardi (CFO) Longer across the portfolio? Very consistent with what it was the quarter prior. So not much of a change in that. And our lead times right now are competitive. We worked very hard to make sure that our inventory position could allow us to do that and we’re happy with the lead time position that we have. So yeah, not a lot of change on a sequential basis. Haviv Ilan (CEO) And Joe, just a little bit more color on the lead times. I think we always talk about inventory part by part, the technology by technology, package type by package type. I think as Rafael mentioned, the third quarter was a very good quarter for us because we’ve reached our milestone of that’s where we need to be. We had a few areas where we were still catching up. So that’s now behind us and we are now prepared to any scenario. As Mike said, we are serving our customers through a growth of meetings with no issues. So very strong support from ti. We are hitting our metrics and exceeding them even. And customer service is continuing to be very high for the company, which explains some of the low visibility we are seeing in terms of turns business, as Mike mentioned before. OPERATOR Move on to Our next caller please. Thank you. Our next question comes from the line of Stacy Rasgon with Bernstein Research. Please proceed with your question. Bernstein Equity Analyst Hi guys, thanks for taking my questions. For my first one I just wanted to dial in on the gross margin expectations explicitly for Q4. So you talked about loadings and everything else. You talked about the tax rate coming up. It seems to me you’re guiding it down, I don’t know, maybe 250bps, something in the ballpark of 55%. I just want to know is that the right number to think about and then given that baseline, like how much cost should I be expecting comes out of the model due to the 6 inch fab closures in the first half? Rafael Lizardi (CFO) So Stacy, high level, you’re in the ballpark. We let the EPS guide speak for itself but you have lower revenue. You follow that through. You have increases in depreciation for the year is 1.8 to 2 billion. But it should be an increase second to third. Third to fourth should be similar to second to third. So you do that and you have higher levels of depreciation. Then as Haviv said, we’re very pleased with our inventory levels. They’re doing what they’re supposed to. So now we are moderating those wafer stars, those loadings and as those come down we get the impact on gross margins. Let me just also step back and stress that we run the company with the mindset of a long term owner and the objective to grow free cash. Flow per share over the long term. And that is gaining momentum on a trailing twelve month basis. Our free cash flow is up 65% from last year and it has the potential to accelerate and grow even faster next year as we have outlined in our framework. Back in Capital management, do you have a follow up Stacey? Bernstein Equity Analyst I do. Thanks. So your Q4 guide is down about 7% sequential off of the slightly higher than expected Q3 base. My math suggests that down 7% or so is pretty much seasonal on a pre Covid. I know post Covid seasonality has been. Over the place, all over the place. But pre Covid it typically was down call like high single digits. So you seem to be on a seasonal trend now and maybe that’s consistent with customers no longer draining inventory. What is, how do I say I think what normal seasonality like pre Covid levels for Q1. My understand, my feeling is it’s typically down sequentially. Like what is. I’m not asking you to guide it but just like what, what is normal for Q1 at least on a pre Covid basis if we’re running more of a seasonal pattern from here. Haviv Ilan (CEO) Stacey, before we talk about Q1, let me just add a little bit More color on Q4 as you said. I look at it as a roughly seasonal guide, as you said. And the reason is there is a recovery, but it’s a very in a moderate pace. Right. So you know, that’s what guides our call it seasonal view into Q4. I also mentioned and that’s what we’re seeing. This is part of the way we do business these days. More customers are direct, more customers are on consignment, customer inventories are low and I think they’ve gone through this depletion process. Okay, that’s behind us. So we are going to be just seeing it real time as it comes and hence our guidance now regarding Q1. Mike, you could comment if you want. Mike Beckman (Head of Investor Relations) Yeah, it’s not unusual to see 4th to 1st just historically. This is not a guide for what we’re going to see. But what historically has done is typically down just slightly sequentially. It’s not unusual to see. All right, Stacy, thank you for the questions. OPERATOR Thank you. Our next question comes from the line of Ross Seymore with Deutsche Bank. Please proceed with your question. Deutsche Bank Analyst Hi guys. Thanks for asking a couple questions. Haviv, congratulations on the chairman role as well. I wanted to go back to the gross margin side. Rafael, you talked about all the reasons it was going to drop in the rough range from the prior question. Just wondered how does that flow through into next year from the perspective of depreciation, is there any change to the range you gave before? And if you’re flat to slightly down in the first quarter, does that flow through and the utilization dynamic, does that have to flow through inventory, et cetera, leading to a headwind as we go into the first half of next year as well. Rafael Lizardi (CFO) So a couple things. First, on depreciation, no change to our guidance 1.8 to 2 for this year. So you come back into fourth quarter as I answered to Stacey a second ago, and for next year we’ve set 2.3 to 2.7 billion. But to be on the lower end of that range. So that should give you enough to model that. Beyond that, we’ll forecast 1/4 at a time. It’s going to depend on revenue and demand. So this by lowering the loadings now puts us in a good position to have the level of inventory that we think is required. And I think that’s going to put us in a good position going into 2026. Haviv Ilan (CEO) And Ross, the only color I’ll add And then Rafael touched upon it. We do think and that’s the way we run the place on free cash flow per share. We have made an excellent progress on ramping and qualifying our Shareman new site. We are winding down 6 inch fabs. Our investments in Utah, in Lehigh 2 are continuing as planned. So our eyes on free cash flow per share growth and start with free cash flow. Right. So when you get to the right level of inventory, when you execute on your, on your expansion plans, I think we are now well prepared for any scenario. And as you remember, we have framed 2026 not on GPM but on free cash flow. And that’s where our site is on. Deutsche Bank Analyst I just wanted to also talk about margins but on the OPEX side, clarification first, then the question, the clarification for Rafael. You talked about OPEX being flat in the fourth quarter. I assume that’s excluding the charge in the third quarter. And then as you look forward in the past, you’ve had years that OPEX is flat year over year. You just took some restructuring. You’re consolidating R and D sites. You said how should we think just generally about opex, whether it’s relative to revenue or absolute levels. Do you plan to grow at low single digits? Is it something higher than that like this year? Any sort of color about how you’re approaching OPEX as you look into next year? Rafael Lizardi (CFO) Yeah, so a couple of things. First, on the first part of your question, when I think about opex, I do not include restructuring in that. That is a separate line. So that 85 million of course is not going to repeat. So that put that out. And the OpEx, the regular OpEx, I expect it to be about flat third to fourth quarter. Beyond that, on RD and SGNA strategy, more broadly speaking, we have a disciplined process of allocating RND and SGNA to the best opportunities and the best investments. That’s both primarily on the R and D space, but even in the in SG&A strategies such as ti.com to strengthen our competitive advantages. Haviv Ilan (CEO) Yeah. And on the R and D side, Ross, look, today I’d like to talk about and we are seeing the data center market becoming a larger opportunity over the last several years. And I think that continues into the future. So when I think about industrial automotive data center, the amount of opportunity to expand our portfolio is high. We have a lot of good investments to make there and we plan to continue to grow our portfolio in this three areas we care about all markets, all five markets. But these three will have really long term growth opportunity ahead of them and TI can do more to sell these markets. So I expect to see that in 2016 and beyond. OPERATOR Thank you Ross. Move on to our next caller please. Thank you. Our next question comes from the line of Jim Snyder with Goldman Sachs. Please proceed with your question. Goldman Sachs Equity Analyst Good afternoon. Thanks for taking my question. I was wondering if you could maybe give us a little bit of color in China and what you’re seeing there. I think last quarter you called out some pull in activity. I’m curious whether you saw a reversion there in terms of orders or whether orders ended up better than you expected and what you’re seeing on a real time basis heading into Q4. Haviv Ilan (CEO) In Q3 China came back to normal and I expect that to continue into Q4. Mike, anything specific on the China business in Q3? Mike Beckman (Head of Investor Relations) Maybe add as we probably talked about last quarter there was potential for pull forward and second and if you look at industrial in China that was the only market that didn’t grow sequentially. But if you look on a year on year still up about 40%. But I think you’re looking at where it essentially didn’t repeat. We didn’t see that same level pull forward. At least evidence of it can’t confirm that with certainty. But it doesn’t appear that same pull forward trend repeated itself in third just based on that. But we’ll have to see how it plays through. That’s the only thing I would add. Goldman Sachs Equity Analyst I know when you get to the beginning of next year you’ll give us an update on the capital management day, but I’m just sort of curious as we think sit here today in light of the slower recovery you seem to be talking about right now or you’re seeing right now, can you maybe give us a sense about whether you kind of that your capex for next year will be toward the lower end of the range you sort of outlined at the beginning of this year? Haviv Ilan (CEO) Yeah, we gave you the framework Jim, and again we gave you a 20 to 26 framework there but of course it can be higher or lower. I think the probability of being lower is probably more probable than higher than 26 billion. Right. So at the end of the day we’ll see what it wants to do. This recovery has been moderate so we haven’t seen even the market goes back to trend line mention going above trend line and customers building inventory. We just haven’t seen it. It could still happen in this cycle. It could not. The good news from a TI perspective that we are ready for any scenario. If it wants to grow quickly, we will be able to serve it. But if it wants to continue in that moderate recovery, of course we will be at the lower end of the capex and free cash flow will grow as indicated in our framework we provided in capital management. And as February comes in, we’ll have some more information. We’ll have Q4 behind us and we’ll provide more color on that. OPERATOR Our next question comes from the line of Chris Senyek with Wolfe Research. Please proceed with your question. Wolfe Equity Analyst Yes, thank you. I guess first question is with regard to general conditions and the recovery and I think the words you said were that the recovery was continuing at a slower pace. Can you talk about what’s changed in your mind since the last earnings call? I think earlier in the year perhaps you were more optimistic that this would follow lines of a more typical recovery which would be stronger by now. But what sort of changed in the part of your customers and such as compared to the last earnings call? Haviv Ilan (CEO) Yes, Sarah and I think that’s related most to the first half of two. Q I think Mike mentioned that and we acknowledged that in the July call that it had a very rapid start. We were thinking that we are sitting on a sharp slope. I think time taught us that it is not, I would not say it’s just a moderate. Okay, we are seeing the market. Getting. Back towards trend line but still below trend line and you know, that’s one of the, you know, more moderate recovery that we’ve seen in the history. I think you have to go back many years to see similar behavior could still change my and again I don’t have, I cannot prove it, but I do see when I talk with customers, especially on the industrial side and if you think about investing, building new factories, putting more capex, there is a bit of a wait and see mode with our customers. They are just hesitant to have clarity on what exactly are the final rules. Should I put my factory in this country or another one? You know, even in our domain, think about it, the rules are still not finalized in terms of the rates of tariffs, for example, will they be or not. So I do see this hesitancy at the customer base and I see it mainly on the industrial side. On the automotive side, the secular growth is continuing. So just content growth allows that market to go back to the level it picked before and the outlier is data center. Data center. Again, not a large part of our revenue, but growing more than 50% for TI year to date. That’s where we see strong investment. That’s the only place where we see a strong growth, where customers are investing and moving fast. And TI wants to do more there. And we are investing as well, but again a smaller part of our revenue. You have a follow up, Chris? Wolfe Equity Analyst I do, thank you. And as a follow up, if you could take us through your thought process with regard to the reduction in wafer starts utilization. I mean, is it a function of what you just said that you know, typically the recovery was stronger at this point and it’s not there. So you need to moderate a bit. You take us through the thought process of that and for how long you would, you know, keep the loadings at a lower level and what would you need to see to start raising those loadings again? Rafael Lizardi (CFO) Yeah, so it is, you can think of it fairly mechanically, frankly. Think of revenue was 4.7 and change in third quarter. Now the midpoint is 4.4. If you run the factories the same way you were before with lower revenue, you just grow inventory and keep on growing inventory. We only grew 17 million in third quarter, so it was essentially flat. But at a lower revenue, same loadings, you would grow inventory. So you need to moderate that in order to keep inventory either flat or maybe slightly down as we go into fourth quarter. The second part of your question is going to depend on revenue. Right. So if the higher the revenue could be over the next 6, 912 months going into 2026, then the faster we could increase the loadings back up or we may leave them at that level if the revenue is more moderate. So it’s just going to depend on how revenue comes in. Yeah. Thanks, Chris. OPERATOR Moving on to the next caller, please. Thank you. Our next question comes from the line of Blayne Curtis with Jefferies. Please proceed with your question. Jefferies Equity Analyst Hey, thanks guys. I added two questions. I just want to follow back up. On that loading comment. I mean you said that you would keep it kind of flat in December. I mean, I guess you’re not going to guide to March, but I’m just kind of curious. You’ve been growing inventory for many, many quarters. Is this now the way to think about it? You’ll keep it flat until you see a more robust recovery in the top line. Rafael Lizardi (CFO) Yeah, and I think you’re referring flat inventory levels and I said flat to down. So we are comfortable with the $4.8 billion that we have that has very of inventory that has very low obsolescence level. We hardly ever scrap any of our inventory because it lasts a long time both in Phoenix goods and in chips in chip form, in diebank and in finished goods. So we feel very comfortable with that level. But it’s about sustainability, right. If you just keep on growing, it’s just not a good allocation of your cash, of your capital, of owners. So it’s better to moderate the loadings. That way you’re flat to down in the current environment and we feel that we can do that and continue to have very high levels of customer service and metrics supporting our customers. Jefferies Equity Analyst Thanks. And then I guess just a follow. Up in terms of the lower loading in the December quarter, is that all reflected in the gross margin guidance or does that kind of spill into March? Obviously, like I said, you’re not going to guide to March, but just kind of thinking about the moving pieces. Is there any kind of part of the December cut that spills into March addition to whatever March is? Rafael Lizardi (CFO) Yeah, so we’re not guiding to March as you pointed out. But the lower loadings that I’m talking about, some of that happened in third quarter. There was a step down in third quarter, second to third and there’s another step down into fourth that is of course embedded in the APS guidance that we just gave. OPERATOR All right, thanks Blayne. Move on to our next caller please. Thank you. Our next question comes from the line of Tore Svanberg with Stifel. Please proceed with your question. Stifel Analyst Yes, thank you and congratulations. My first question is on the enterprise data and communications business. I get the enterprise data that’s obviously part of the data center, but I’m a little bit surprised to see the communications equipment being that strong. Is that also tied to data center and perhaps you know, some of these cluster build outs or is there anything else going on there? Haviv Ilan (CEO) Oh yes, I think it’s a great question and that’s the reason I think we indicated before and we provide More color in Q1 we are planning to break out data center as a market for the company. Right now our data center sits mainly in enterprise in the compute and equipment but also on the comm side we have there the wire, the switches and the wired comms in a rack and rack to rack. We also have the optical module business there in comm. So they are really part of the data center market if you will. The other part of the data center market for TI sits today in industrial. Think about all this high voltage power delivery, the PSUs and all that. And you know there is also a lot of architectural change there going to high voltage DC and all that. So I think it’s time that TI calls out Data center at the Top will provide more color in Q1, but just for the year and we are in the midst of collecting all the bits and pieces, but TI is running more or less at a $1.2 billion run rate in 2025. That’s what we’re seeing right now. And again we’ll provide more specifics in Q1, but it’s also a fastest growing market. It’s going year to date above 50% for the first three quarters and I see customers continuing to invest. As I alluded before, that’s the one market that we see CapEx going into and I’m not seeing any slowdown there at least in the foreseeable future related to our visibility at least. Okay, do you have a follow up? Stifel Analyst Just a quick follow up. I know you typically don’t guide by market for Q4, but any sort of outliers one way or the other by your end markets into the December quarter, please. Haviv Ilan (CEO) I’d just say there’s no specific outliers to call out. As you look across our businesses, some of our end markets have higher sensitivity to seasonality than others, personal electronics being probably the most sensitive to it. But overall there’s nothing specific that I call out about fourth quarter’s transition. So let me wrap up with what we’ve said previously. At our core we are engineers. Our technology is the foundation of our company but ultimately our objective is to bet and the best metric to measure progress and generate value to our owners is the long term growth of free cash flow per share. Thank you and have a good evening. This transcript is to be used for informational purposes only. Though Benzinga believes the content to be substantially and directionally correct, Benzinga cannot and does not guarantee 100% accuracy of the content herein. Audio quality, accents, and technical issues could impact the exactness and we advise you to refer to source audio files before making any decisions based upon the above. Read Next: • Tesla’s $1 Trillion Illusion: Elon Musk’s Pay Package And The Robotaxi Myth Photo: Shutterstock
