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Texas Instruments signals CapEx reduction to $2-$3 billion by 2026 amid expanded fab capacity
Wednesday, February 25, 2026 at 12:38 PM
Texas Instruments outlined its manufacturing roadmap during its Capital Management Day, highlighting that it currently holds $20 billion in revenue capacity across its LFAB2 and SM1 cleanrooms. The shell for the SM2 facility is finished, while SM3 and SM4 are planned for the 2030s. Consequently, the company expects annual CapEx to decrease to between $2 billion and $3 billion by 2026, down from the previous guidance of up to $5 billion.
Context
Texas Instruments is transitioning to a "harvest" phase, slashing its 2026 capital expenditure guidance to $2 billion to $3 billion after a six-year investment peak of $5 billion annually. The company has completed critical infrastructure, including the LFAB2 and SM1 cleanrooms, which now support $20 billion in revenue capacity. With the SM2 shell finished and additional fabs like SM3 and SM4 delayed until the 2030s, management is pivoting from aggressive construction to operational efficiency.
This reduction is designed to drive free cash flow to more than $8 per share by 2026, a target requiring roughly 5% to 10% annual revenue growth. The lowered CapEx outlook clarifies the company’s path toward higher shareholder returns and provides flexibility for the upcoming Silicon Labs acquisition. By leveraging its new 300mm capacity, Texas Instruments expects to significantly boost margins and cash generation as it scales production into a recovering semiconductor market.
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