Inside Texas Instruments' $60 billion U.S. megaproject, where Apple will make iPhone chips

Texas Instruments is undertaking a $60 billion expansion to build seven new U.S. fabs, primarily in Texas and Utah, aiming to increase its foundational analog and embedded chip production capacity fivefold using 300mm wafer technology. This strategic investment, supported by $1.6 billion in CHIPS Act funding and a significant commitment from Apple to source critical semiconductors domestically, positions TI as a potential beneficiary of U.S. re-shoring efforts and tariff policies, leveraging a cost advantage over foreign rivals. However, the aggressive expansion comes after a 13% stock drop following weak guidance and tariff concerns, and the company faces the challenge of regaining analog market share, making the success of this large-scale bet contingent on sustained demand and execution.

Analysis

Texas Instruments (TXN) is executing a significant strategic pivot with a $60 billion investment in U.S.-based semiconductor manufacturing, aiming to increase its production capacity fivefold. This expansion, centered on seven new fabs utilizing more cost-efficient 300mm wafers, is positioned to capitalize on geopolitical tailwinds, including a 100% tariff on certain foreign chips and substantial government support via $1.6 billion in CHIPS Act funding and a 35% investment tax credit. A major catalyst for this initiative is a new commitment from Apple, which will source critical foundation semiconductors from these U.S. facilities. Despite these long-term bullish drivers, which position TXN as a potential "tariff winner" according to UBS, the company faces considerable near-term headwinds. Its stock plummeted 13% following a weak guidance report in July, and its share of the analog market has significantly eroded from a peak of 19.8% in 2020 to 14.7% in 2024. The success of this massive capital outlay is therefore highly contingent on the company's ability to reverse this market share decline and on end-market demand firming up once tariff-related uncertainties subside.

Key Decisions for Investors

• Investors should monitor Texas Instruments' quarterly analog market share figures, as a failure to recapture share from the 14.7% low would signal a critical weakness in the thesis supporting its fivefold capacity expansion.
• Given the recent weak guidance and stock volatility, a cautious stance may be prudent in the short term, pending clearer signs of demand stabilization from its industrial and automotive customers.
• Long-term investors could consider this a strategic play on the reshoring of critical U.S. supply chains, viewing the government incentives and Apple partnership as significant de-risking factors for the $60 billion investment.
• Evaluate positions in competitors like TSMC, as TXN's subsidized U.S.-based 300mm fabs are designed to undercut the pricing of foreign-made legacy node chips, potentially creating margin pressure for rivals.