Good morning, everyone. I'm Joe Moore. Very honored to have with us today the CEO of Texas Instruments, Rich Templeton. Hey, Rich. Good morning. We'll just go straight into Q&A. I wonder if you could kind of start, obviously, a pretty unusual industry environment. We're a couple years into a period of fairly severe shortages. Can you just talk about that from TI's perspective? You know, you guys, to some degree, I think, during the downturn, are always thinking about what the next upturn is like and during the upturn, you know, looking a little further ahead than most. You anticipated some of this, built a fair amount of inventory. We're ready for it, and you still kind of gotten to the point where TI stuff's pretty tight. Maybe just kind of talk about what got us to this point. Yeah. Demand is greater than supply. Okay, good. That leads to pretty much everything you see going on. Yeah. You know, as you commented, even with the question, the area I spend my time, I find it one, more important, two, more interesting is, you know, what do you need to be doing now to make sure you're well positioned, you know, pick a date, 2024, 2025 through 2030, because that's the, you know, that's how you've got to think in this business to do well. I'm thrilled with how the team has navigated and how we've navigated in terms of investments we've made. You mentioned the capacity. You know, we ran things in early 2020 when the world kind of panicked and ran the other way, and it served us well. I love where we are from a roadmap point of view of what we've got ahead. Great. Maybe talk a little bit about the environment. I know, I feel like you probably should spend 90% of your time thinking five years out about where the roadmap's going, and investor interest is always on lead times and tactics. Maybe we could talk a little bit about that tactical environment. You've described this as kind of, you know, lead times are mostly normal, but there are pockets of where there are issues. Can you talk to that a little bit and maybe some of the selectivity of customers that you guys have talked about? Yeah, there's really, you know, Joe, it's been six weeks since earnings. No new update to provide. Yeah. It's about the same. You know, I think we're maintaining, as I describe it, a pretty steady hand, making sure we're supporting, you know, a broad set of customers, a broad set of markets. It didn't get talked a lot, a bunch on the capital management call, but if you go back and look, we tend to like to look at fourth quarter of 2019 because it's kind of a clean pre-COVID period of time, and we've been able to grow revenue in every end market since fourth quarter of 2019 through fourth quarter of 2021 by making sure that we're, you know, doing the best we can across the customer set. It's a lot of work. It's hard work, but, you know, our team has done that well. Our team has done that and put a little bit of added emphasis on, you know, where we're going on industrial and where we're going on automotive. I think you see that in the numbers when you just look at, you know, where our revenues are and where the support is. I think we've navigated it well, and I think it's gonna set us up well for the long term. How much of this situation of tight supplies is just demand being good versus supply disruption? 'Cause obviously you've had a lot to deal with on the supply disruption piece of it when it comes to, you know, lead frames and back end and different dependencies that you guys have. You know, we've dealt with COVID shutdowns and trade issues and fires and cold spells and all these different things. I mean, how much of that supply disruption for you guys has been a factor? You know, I think it's the classic, when the river goes low or the rocks appear. When you have systems that run and can run reasonably well, but then they get stretched to where there's just less responsiveness in the system, any minor disruption from a supply chain point of view causes issues. I think it's not just, you know, what's happening in the semiconductor industry, but even upstream, downstream, but out to our customers and what they're dealing with on supply chains. You know, people are discovering that their inventories were too lean, and just in time wasn't really going to work in a world that had some delivery issues in it. I think that's part of it. Overall, it's because, you know, you just don't have as much capacity as the world desires right now. Can you talk about that inventory planning process? 'Cause, I mean, you guys were relatively early to say, "Okay, we're gonna hold a higher level of inventory." It feels like one of the real benefits of the Analog model that you don't need to worry about that there's no obsolescence, that you've got a broad set of customers. You know you might be wrong on demand in any given month, but the demand's gonna be there eventually. Why not hold more? I'm, you know, you did that last year. It was kind of controversial. It's worked out well for you. Your competitors are now talking about doing more of that going forward. Even from the customer standpoint, I mean, I think this just in time, at least for a while, is not gonna work for people. I think when the dust settles from all this, you'll see quite a bit of inventory. Just how do you think about all of that and how are you guys planning around, you know, this idea that maybe it's reasonable to hold more inventory going forward? Well, I think your comments are spot on because, you know, if you've been around long enough, you can go back 15 years ago, where wireless and big chips and few customers were the heart of what we did. That's a very dangerous environment to build a lot of inventory because the bananas can turn brown, and you can end up in a bad place. But where we've been able to work towards, and our portfolio allows us to do it, and you saw us take advantage of it in 2020, as you noted, you know, we really, because the breadth of our products, they sell to a lot of customers, they sell across markets, we can build that inventory with very little concern of obsolescence. We're making it, and have been making it, part of our strategy, and it's how we support customers. You see us doing, you know, building closer direct relationships with customers, the changes we've made with distribution over time. We talked even in capital management about the growth of the capabilities we're putting on ti.com so, customers can basically get serviced with zero lead time when they've got a surprise that they need to cover. We just think that that's going to be a tremendous benefit of convenience to our customers for the long term. Get past the near-term environment, don't let that distract you. That convenience that we can do by thinking that way is, I think it's gonna be something that we can do quite uniquely as a company. Yeah, maybe talk a little bit about those direct relationships with customers. I mean, you guys made some shifts with the way you're thinking about the distribution channel and are trying to go more direct to the customers that wanna be direct with you. Can you just talk a little bit about that initiative and how that's going? Yeah. We've, you know, and it probably in some ways bores people when they hear it, but, you know, Dave and Rafael, probably a quarter doesn't go by they don't talk about competitive advantages in manufacturing and technology, breadth of portfolio, reach of the channels, and diversity and longevity. On that reach of channels, you know, we've been working in a very methodical way for a decade now. Transitioning, you know, to where we wanna have a direct relationship with our customers 'cause we can support them better, we know what they need, so it's a diminishing role with distribution. It also includes building out capabilities like ti.com to get that convenience even higher. You know, we are thrilled in the past two-year environment, we were really lucky to get a lot of that transition done before it, 'cause it's just given us better visibility. Our customers are thrilled because they can work directly with us versus buffers that they've gotta go through on that front. I think this is just gonna be another example of that competitive advantage of reach of our channel just gets stronger over time. Yeah, I feel like the distribution strategy is giving you a closer connection with maybe smaller customers that used to buy through a distributor. I also feel like the large customers are probably more aware of you guys now, and even, you know, where a big automaker might have relied on its tier one supplier to manage inventory, seems like they are now reaching out directly to you and making sure, you know, do all my tier one suppliers have enough inventory so this doesn't happen again. Can you talk a little bit about that, and how do you take advantage of that to sort of build out those relationships longer term? I've had the chance to meet and talk with a lot of customers the past year or two, and even our customers' customers, so you know, get to the end auto companies, and it really is a key aspect of what we talk about, of you know, here's the manufacturing roadmaps that we've got in place. This is why we're doing the things we're doing, with areas like replenishment planning, where you know, we don't need long lead times, and we don't need large backlogs, and we will be here to support you regardless of where you build, where you buy, and how you do that. I just think that approach to our customers is gonna be a very successful one because, you know, just look in your life or your family's life, convenience really does matter. Yeah. That's gonna translate even to how you buy semiconductors over time, and I think we're off to a very fast start getting those capabilities in place. 'Cause you've gotta have the manufacturing roadmaps, you've gotta have the planning systems in place, and you've even gotta have the logistics investments, automated warehouses, the ability to pack and ship in small volumes, deliver, you know, one or two-day delivery, and those are all capabilities that we continue to invest and build out. When we have a supply chain crisis that's like this, that's so pervasive, you know, how much of the attention is going into, you know, how do I get through the next three months and get what I need to build the whatever, cars, industrial equipment, whatever the focus is? Then how much of it is, you know, what do we do differently down the road so that we don't get into this again? Particularly for companies where, you know, the semiconductor bill of materials is small relative to the product that they're building, like a car. You know, $400 of chip content is keeping them from building $50,000 cars. Yeah. How are they gonna act differently? Yeah. Simple answer is I think it's gonna vary. Yeah. I think you're gonna find, just like in anything in this world, there's companies that are more thoughtful and planned, and they use this to say, "We've gotta get even better," and others that'll survive the crisis and, you know, go back to old habits. I think that what customers are figuring out is, it's the feedback that we get, it's why customers are so excited about the roadmap that we have in place, is they like the idea that TI has got control of its manufacturing. It's gonna be inside. We're not negotiating with other third parties that are either gonna disrupt availability or change pricing on a unilateral basis. It gives them comfort that we can be a supplier that they can plan on in a very significant way. It's especially true, and I know you know this from even your time in the industry. You get into industrial customers where the life cycle of products that they're designing are five, 10, 15 years long, and they don't wanna have to make changes or redesign. They wanna be able to make a decision and then count on it for the long term. The solutions that we're proposing, I think, are very appealing to them right now. Yeah. Maybe we could talk a little bit about the manufacturing initiatives that you guys have. You know, you guys have had a lot of sort of change in focus over the years, and you've really paved the way, I think, to show people where the barriers to entry are high and where corporate governance can go. I mean, you really set the gold standard for that. I haven't really heard you guys talk about manufacturing this much since the initial 300mm initiative that you had. Obviously, manufacturing is now a pretty important focus for you. You're gonna spend $3.5 billion for the next few years. You know, what's driving that focus? Why? Is it entirely just the certainty that you're talking about, or are there other areas that kind of have you excited about manufacturing now? No, I think I'll bet there hasn't been a quarterly earnings call or a capital management discussion in 8-10 years where we don't talk about four competitive advantages. Manufacturing and technology, kind of the foundational one inside of it. We've always thought it really mattered. You know, the way we talk about those competitive advantages is they've got to give you a tangible benefit, it's got to be something that's difficult to replicate, and in the long term, the real test of whether it exists or not is can you grow your free cash flow per share faster than your best competitors. We really look at all of them that way, and when we spend money, we constantly ask, are we strengthening a competitive advantage or are we leveraging it? Manufacturing and technology has been a key one to us. You know, for years, I think when, you know, Dave or Rafael would present the material, you know, 300mm wafer can produce a 40% cheaper die, and everybody goes, "Okay, I got that. Yeah. We also say, "And you get better control of your supply chain." You kind of got, you know, who cares? We care now, yeah. Yeah. The past couple of years, people care. Yeah. I think it's just that the world comes in and says, "Wow, that does make sense," okay, because of the environment we're in. I don't think it's grown in our view of its importance. Yeah. I think the external view is, holy mackerel, this really does, you know, have an impact now. Yeah. That's fair. I mean, it has inflected from the amount of spending. I mean, even going back to last year and then the amount of spending that you're doing forward. And there's a little, you know, to a company that has been really focused on free cash flow per share, you know, there's gonna be a little bit less when you go through that investment process. I think you made the comment on the capital management call that that's because the free cash flow going forward is kind of more from the growth of top line as well. You know, how do you think about those trade-offs? To the extent that Rafael was saying, you know, look, this isn't a cyclical bet. This isn't something where if the industry has perturbations, we're gonna change the strategy. This is the strategy. Can you talk a little bit about that focus? Yeah. I think it says it, and you know, go look at you know, even the investor overview. We talk about three ambitions, you know, inside the company, and the first one is to act like owners that are gonna own the company for decades. When you listen to Rafael's answer on that, it's absolutely spot on. This is not about, are we trying to outguess 2022, 2023 or 2024? It's let's make sure we got a great answer for 2024 and 2025 and a great answer for 2030. Let's make sure that for the owners, we can really deliver that long-term growth of free cash flow per share. That's what's so exciting about the plan that's laid out right now. I think it really does that. It does, you know, we're excited about it as a team. I can tell you inside the company, everybody is just thrilled when they see that coming together and what it can do. I've, as I commented, had a chance to talk to a number of our customers. Yeah. When they see that roadmap, they're really pleased with what it looks like because they care about the long term, not just the next couple of years. Yeah. I mean, that makes a lot of sense. I guess, you know, from the investor standpoint, people are worried about the economy plateauing and some of these challenges that you have. Capital spending at the nodes that you're addressing is pretty high, and not just from TI, but, like, across the industry. I guess if you're building proprietary products where you have a pretty good view of your own picture, do you care about that? I mean, this is not a commodity where if other people have too much capacity, it has much effect on you. Yeah. It's, you know, to that question, the key is what do we need to do, not what will the investment look like. Yeah ...in the balance of the world. I think there's still a wide range of what's gonna really happen on that front, because I think a lot of the big numbers are still in the advanced lithography nodes and, you know, the amount that really can go into, you know, the sweet spot of what we do, think 45 nm through 130 nm. I think we're gonna be well-served with the investments we're making. Yeah. Okay. To what degree is the geopolitical aspect of this a driver, whether it's, you know, the CHIPS Act and domestic subsidies, tensions about reliance upon international foundries? You know, obviously, you guys take a pretty long view of these things. Is that a factor or is it sort of more you're just TI-focused? No, I think when, you know, when I hear it from customers and, you know, we make and put roadmaps together in locations that we think are gonna serve, you know, the owners and our customers well over the long term. So you want them as resilient as possible for geopolitical environments. You want geographical diversity, especially on assembly test, where we do have to run that in a number of countries. That roadmap that Dave and Rafael went through with capital management, I think it looks even wiser with the unfortunate tragedy going on in Russia and Ukraine right now, where people are like, "Wow, we like that TI not only has control of their capacity, but we know where the heck it's gonna be." We like it because it's gonna be in very cost-effective areas when you look at energy cost and what energy costs are gonna do and the leverage we get for scale in the North Texas area. I think these things have always mattered to us, but it all of a sudden becomes more visible when you have current events like we've got right now. CHIPS Act to me is very simple. We've got a roadmap. We're very pleased with it. We've put it into places we think are gonna make sense. We think it ought to get approved. We think it's wise for the U.S., and if it does, we'll take advantage and, you know, we'll get some benefits from it. If it doesn't, we still have a great roadmap. that we're gonna be thrilled to have for the long term. Yeah, this is really about setting TI up to be the best supplier that you can over the next decade. In foundry, you've talked about your use of foundry being down from, I think, about 20% now to about 10% in 2030. Can you talk about which products you're still gonna focus on foundry for? Yeah, we'll still have, you know, room to use foundries, and clearly, if you go down, you know, to lithographies below 45 nm, we have the ability to, you know, as we think it makes sense, we could reach down lower. If you've got some devices in 16 nm, we'll build those on the outside just because it's smarter in terms of the size and the scale that we operate on that front. We'll still have room for some use of foundry, but we'll target where we do it. Okay, great. Maybe shifting a little bit to the end market focus that you guys have. You know, you've been pretty clear for, I guess, at least a decade that automotive and industrial is the focus. Obviously you have a lot of customers in a lot of markets. They all need parts right now, and there are bottlenecks everywhere. How do you tactically kinda manage that, and you know, are you giving preferential treatment to one market versus another, or are you just trying your best to satisfy as much of the end demand as you can? Yeah. As I commented before, I think, and I give great credit to our team, 'cause they really have worked endlessly, and our customers have as well. It's a tough time to be in the supply chain, the past couple of years. We really, by design, we wanna have broad markets. By design, we wanna have broad customer bases, because it really plays to competitive advantage of diversity and longevity. We have worked to make sure that, you know, we've used a steady hand to support all customers, support all end markets, but we have made sure that we wanna, you know, have even more support for key industrial and key automotive markets for the long term. Again, if you take a look even at the percent revenue breakouts that we gave even, I guess, with the January earnings call, I think you see it pretty obviously that we've used a pretty steady hand on that. I think it'll serve us well. Yeah. Then the planning in those markets, I mean, you think about automotive, and you sort of talked about having a catalog focus to your business. In a market like automotive, there are a lot of system-level things that are happening and, you know, there are building blocks that are part of a bigger system. How do you think about sort of catalog versus vertical as you approach a market like that? If some of your big customers kinda want you to do something that's a little bit more tailored to their own systems requirements, is that something that you're interested in doing, or is it you still try to maintain that breadth? The answer is the religion that we believe greatly in is to be successful and grow free cash flow per share over the long term. That guides how you make that call. To the specific example, you know, we work closely. We've got systems teams. We've got deep insight by the five different, you know, segments that we break automotive out, for example. We've got ranging from kind of building block parts to more sophisticated devices, as you would think about them. The range of that we can operate is probably broader than almost any of our competitors on that front. All of those capabilities matter because our customers want solutions to that full range of components. I think both will be something that we can support for the long term. Yeah, I mean, I think when you look at areas like autonomous driving, you know, and I go to Hot Chips every year, and there's a bunch of startups doing, you know, big chips designed at those types of applications. You know, it doesn't feel like a TI type of market, and yet there's an awful lot of building blocks that go into those markets. It doesn't seem like you wanna go to Hot Chips and pitch the latest big, you know, 7 nm chip aimed at cars, but, you know, how do you think about a market like ADAS? You know, how do you think about supporting that? Is it kind of looking at the catalog requirements, or is there something a little more tailored to those- I think. Specimen requirements? You know, if you're bored, go pull those ADAS solutions, take a look at that big ol' SoC, and then start looking at what's around it. You're gonna have power devices to deliver the different rails that are required. You're gonna find different communications or high-speed data links 'cause you've got more data moving around the car. You're gonna have different converters and sensors that are required in these applications as well. Think of things like radar that have to come into that. It's not you are or you aren't, it's how do you help deliver those solutions to the customers? We end up, because of the portfolio of products and technologies and packaging that we have, ranging from Analog to Embedded, we're really able to participate across all those markets. It could be the attention on ADAS. It could be, you know, the very high-profile work going on with electrification. It could be even areas that don't get as much attention, but look at what's happening with lighting or look at what's happening with 48-volt systems across vehicles and what you've gotta do, drivers to be able to move seats, windows, and doors. There's a lot of lower profile end markets as well in automotive that, you know, we spend a lot of time and attention on. Great. I have one more question, then I'll open it up to see if the audience has questions, before you get the mics ready. I guess, how do you go about prioritization when you talk about automotive and industrial being important like this? You know, I've covered small analog companies in the past where the CEO would sit in on every single product review meeting and would, you know, and those are companies who would put out dozens of products a quarter, so that's kind of all-consuming. You know, you're talking about hundreds of products per quarter, and so I don't think you're able to do that. I am not. I know you have people below you that probably do, but, like, just how do you set the culture to sort of make sure that you're focused on the right things without having that level of, you know, I'm gonna sit in on every product review meeting? Yeah. I think it's again, I think it comes back to structural advantage we have in terms of how do you use size as an opportunity. You know, we've got, you know, teams that work by customer because you've gotta look at it that way. We've got teams that work by system, so think of the specific application. We're doing that in automotive and literally hundreds of different end equipments in industrial. Then think of the product vector. Now what you wanna do is make sure that all three of those teams have got very clear goals of, you know, growing your penetration with that customer or growing your market share in that particular end market or growing your product, your product revenue. You just have, you know, diligence and attention to make sure that the investments are going to the best opportunities. That's the ongoing process that, you know, that we use in the company. We really are fortunate. The team has grown up together. They know one another well. If you look at the track record of our automotive growth, look at the track record of our industrial growth, the recipe is working. That's what's comforting to me is past success doesn't guarantee future, but it's a hell of a good leading indicator. If you look at our growth, it's not any one chip or any one market or any one customer. We've been able to do it across the broad set of markets and industries on that. We keep doing that well, I think we'll be rewarded. Great. Let me pause there and see if we have any questions from the audience. Back. Can you talk about the amount of capital intensity reduction onwards? I think Intel see their price direction from subsidiaries, so do you see that as well? Would that make your free cash flow margin better onwards? My second question is your CapEx guidance net of gross? I'll work backwards. The CapEx guidance we gave is gross. It's what we intend to spend, and if there's CHIPS Act, you guys will all find out about them just about the same time we will, in terms of what that'll look like. So that's the way to think about that. In terms of capital intensity, you know, the way I describe it's got more to do with growth rates as you look out over the next 10 years and what we've had growth rate rise for the past 10. That's the primary driver of what you see with the numbers and the guidance that Rafael and Dave went through about a month ago. Is there another question in the back? I have a question regarding some of the new white spaces in EVs or renewables and things like that. In these kind of emerging spaces, do you feel that it's better to service with kind of the current supply constraints, the lighthouse accounts, and then build, you know, brand recognition and credibility that way? Or do you still believe that in these emerging fields, we're gonna do a scattershot approach of, you know, divvying up some capacity and product to everybody? Yeah. I'm not sure what lighthouse and scattershot means when you go through it. You know, in general, you've gotta make sure that you're working with the important customers in a market or in a segment. You look at, you know, take your example of electrification in vehicles, and there's a wide range of customers throughout the world. We believe being, you know, connected to them and working with them is something that's important to do. It's also helpful that we've got control of our wafer fabs. We've got an aggressive wafer fab roadmap. We've got control of our, manufacturing that, you know, we can make those commitments longer term and be able to be in support of our customers on that front. I think it, you know, it. I don't believe choosing or trying to, you know, pick narrowly new markets statistically is not a great way to do things. I guess as a follow-up on that, what I mean by that is, you know, if you have a number one and versus a bunch of other upstarts in new industries, versus like three or four key players in a consolidated industry, how does kind of this go-to-market really change in terms of, you know, your guys' products for, say, EV unicorns or the upstart solar, you know, microinverter companies, et cetera, et cetera? Thank you. Yeah. I'll repeat, you'll still benefit by having as broad an approach that you can take from a product point of view, just because, you know, just go look at the history and the ability to predict who are gonna be the winners five years from now and ten years from now. It's a bit of a theoretical question, but that's always gonna be a better approach. Great. That brings us up to the end of our time. Rich, thank you so much. Okay. Joe, thank you. It's great to see everybody.