Texas Instruments: Dividend growth remains steady as capex slows and margins set to improve

Texas Instruments has raised its dividend for 22 consecutive years. The company, the world’s largest maker of analog semiconductor chips, is positioned to see improved margins as its expansion projects come online.

While many associate Texas Instruments with calculators, the firm has a long history of innovation, including the first commercial silicon transistor and the transistor radio in 1954, the first handheld calculator in 1967, and the first microcontroller in 1970.

Analog chips and AI-driven demand

Although the current semiconductor conversation is dominated by artificial intelligence (AI) chips, Texas Instruments’ analog components remain important to data centers. The company said its sales to data centers grew 70% year over year, according to CEO Haviv Ilan during the company’s fourth-quarter earnings call.

AI servers require high-performance power management and signal-chain chips to handle the large volumes of electricity data centers consume—areas where Texas Instruments specializes.

Dividend track record and shareholder yield

Texas Instruments’ dividend history includes 22 consecutive years of increases, including a 4% raise in 2025. At the current share price, the dividend yield is about 2.9% (reported as 2.85% in the provided data). Over the past decade, the company has increased its dividend by 273%.

Capex, free cash flow, and margin outlook

Over the past few years, Texas Instruments has invested $30 billion in a new 300-millimeter semiconductor fabrication facility in Sherman Oaks, Texas. Production began in December. The site is expected to focus on mature process chips used in automotive, industrial, and consumer electronics.

The company’s plan is designed to reduce reliance on outside foundries, supporting stable, high-volume production over the long term. Keeping production in the U.S. is also intended to help avoid tariff-related risks.

Even during periods of heavy capital spending, Texas Instruments maintained predictable dividend increases. In 2025, it spent $4.7 billion on capex. The company has signaled that capex is slowing, from a high of $5 billion to a range of $2 billion to $5 billion per year, which the article says could support higher free cash flow. In 2025, cash flow was $2.9 billion, up 96% from the prior year.

Financial performance and manufacturing scale

Texas Instruments reported 2025 revenue of $17.7 billion, up 13%. Earnings per share (EPS) increased 4.8% to $5.45.

Unlike many “fabless” competitors that outsource production, Texas Instruments owns and operates most of its manufacturing. The company has said that by the end of the decade it plans to produce 95% of its wafers internally. This vertical integration is intended to improve supply-chain control and lower costs, supported by 300mm wafers that yield about 40% more chips per wafer than 200mm wafers.

Market snapshot and recent trading

• Current price: $194.87
• Market capitalization: $177B
• Day’s range: $191.00 to $196.06
• 52-week range: $139.95 to $231.32
• Volume: 3.4M (average volume: 7.7M)
• Gross margin: 57.02%
• Dividend yield: 2.85%

Implications for investors

The article argues that the company’s combination of cost reduction efforts and improving production capacity could support continued share price and dividend growth, particularly as capex is expected to slow and free cash flow rises.