Good morning, or almost afternoon, everyone. Thanks for coming. I'm Stacy Rasgon. I'm Bernstein's Senior Research Analyst covering U.S. Semiconductors and Semiconductor Capital E quipment. It's my honor to welcome our guest here today, Haviv Ilan, the President and Chief Executive Officer of Texas Instruments. Before I start, I want to mention, if you have questions you'd like to have asked during the presentation, you should have a link to the Pigeonhole Live form. I think there's a QR code that you can scan. You can submit your questions there. We'll have time for Q&A at the end. Texas Instruments, TI, used to be that they were sort of boring Semiconductor company. They're kind of proud of it. I think it's been a little less boring lately, both for TI as well as for the space overall. TI, over the last four or five years, has embarked on a program of significant capacity expansion that at least temporarily sidelined cash flow and return, and this is for a company who sort of pioneered the whole idea of 100% free cash flow return. They always do think long term, and we're now at kind of the tail end of that investment strategy. The cash flow now seems ready to start coming through again. With a manufacturing footprint that they'll be left with, that potentially leaves them increasingly advantaged, maybe in a world that has grown increasingly decoupled. I think more tactically, the post-COVID overhang, which was pretty long, seems to now be behind us. At a minimum, we've got an industrial rebound now that's driving upside, and now, coupled with an AI environment that's gone mainstream and is sort of dragging everything along with it. There's a data center story, though, that may be becoming more of a primary growth driver for the company, which complements the traditional focus on industrial and auto. I wouldn't say things are all that boring anymore. To tell us about it's my great pleasure to welcome Haviv. Thank you so much for being with us here today. Thank you. Thank you, Stacy. Great to be here. Thanks for having us. You bet. Maybe to start off, just on that CapEx strategy, because that really has sort of been the defining element of the company over the last. I can't believe it's been half a decade already, but it really has. You're at the end of this five-year CapEx and investment cycle. Maybe just talk to us about what was the driver of it? What was the impetus? How has it gone versus your expectations? Where are we now, and what do we expect going forward in terms of CapEx and cash flow and return and margins and all that? How is the company now, I guess, on the other side of it, different from where it was before we went in, and how does that add up? Sure. First, thanks for the introduction. You touched more or less the executive summary. I appreciate that. I like to make your job- In general, you're right. Somewhere at the back end of 2020 and 2021, we got together and decided that we are going to set the company and prepare it for the next 10 and 15 years. This was not about the next cycle, but more of a longer-term thinking that secular growth in semiconductors will continue, especially, as you mentioned, in industrial and automotive. We also thought that we need to be ahead because one of the areas that we've learned during the previous cycle that when you fall behind and can't supply the parts or the sockets you've won, that's just not a good place to be. That kind of did bite you a little bit during COVID. Yeah. Our customers deserve that we can support them in every scenario. You want to model a set of scenarios. We said, "Hey, what could be secular growth in semis? Does it accelerate or not?" The answer was yes. The second is, do we only want to grow with the market, or do we want to have an opportunity to gain some market share and also support our customers through the cycle, not only at the middle of the trend line, but also at the peaks? Of course, that's very, very important. Along the investment plan, there was all these geopolitical tensions that continued to rise, and we said, "Hey, having manufacturing in North America, but in general, a geopolitical, dependable footprint that is broad is going to be very, very important." That's what kind of derived our plan. As you mentioned it was a six years plan between 2021 and 2026. Yeah, it is 2026. It feels again a long time ago. By the way- We are now in the last year of our investment cycle. it feels like it went like that, so. Some days are longer than others. Yeah. It does fly by, yes. We are in the sixth year, and we went through a more than $20 billion investment cycle, and we always said we want to be positioned for every scenario. A couple of years ago, as the cycle deepened or the down cycle deepened and lengthened, to your point before, it looked like, "Hey, are we on the right path?" We always had the conviction that we are. I think right now, coming into 2026, after a year of growth in 2025, but maybe growing demand driven by industrial and data center, as you mentioned, we are very pleased to be where we are because we have the capacity, we have inventory that can support short-term demand from customers or surge of demand, and we also have the clean room or the footprint, especially from a brick-and-mortar and clean room footprint, to grow into even faster growth scenarios. That's a very good position to be in, because if you are falling behind in a situation like that, you have to wait four to five years. Yeah If you haven't made the investment. We are excited to where we are. I think, as you said, free cash flow should grow as CapEx goes down and demand goes up. From here on, we should be more in a steady state of supporting our growth with investments as needed. Very happy to be in that phase of the investment cycle. Yes. It might be helpful if you could outline for us exactly what capacity have you actually put in place over the last six years, and where does it sit? Yeah. I know there's Richardson, and there's Lehi, and there's Sherman. Yeah. From a footprint location, made investments mainly in North America of 300 millimeter wafer fabs that are not common, by the way. For our analog and embedded market. We are building very modern fab, fully automated, and the scale of TI allows us to do it. We've built what we call the RFAB2, that's our RFAB2. It's now almost in full production. Almost fully utilized. We also decided to build a new site in Sherman, Texas, that's north of Dallas. Over there, we are planning a mega site almost four fabs. That altogether will be able to support, per fab, about $10 billion of revenue. Each? Each. Oh. Also, by the way, the cost to build one is also similar to that, so think about it at that rate. We've built two of them. Two shell rooms are built, the first one is partially equipped. Okay That Sherman one. It went into production, we had our inauguration date in Q4 of last year. Ramping out very nicely, we have a lot of clean room available over there that gives us the analog growth that we will need through this cycle that we are hopefully experiencing now. Lehi is really focused on two types of parts. Mainly, the embedded processing business is served by the Lehi fab. That was an acquisition, actually, of a fab we bought from Micron. That was the Crosspoint facility, right? Correct. What we decided to do, not only to retool the fab into an embedded processing type of product, but also expand the site with a second fab. It's called Lehi Two, which is a much larger facility. That can support even more revenue per the factory, maybe think about $15 billion of capacity over there. Oh, okay. Altogether, the plan is going well. Remember that the Lehi fab was not only to support growth, but also to support internalization of wafers. That was my next question, actually. I know. Actually built at the foundries, mainly in Taiwan, into the U.S. Very important to us to control our destiny. We will grow into our fabs. If embedded used to be maybe 10% or 15% built internally. It will reverse. By the end of the decade, we see embedded running more than 90% internal as a plan. Where is it right now? Is it still 15, 20% internal? No. So right now, we are almost at 50/50 already because we are transferring our 65-nanometer embedded processing nodes into the factory. By the way, there is also some analog, high-speed analog mixed signal solutions that are built over there. You can think about it as 2/3, 1/3 embedded versus analog, and that's already moving. Our next step is to move our 45-nanometer node. This is happening this year. By the end of the year, embedded will be predominantly built inside our own factory. How much 45 do you have below in your I can't imagine it'd be that high, but maybe it's higher than I think it is. 45-nanometer, we have a node that really for non-embedded flash technology. Think about external memories for embedded, think about radar systems. That's the main thing that runs on that. We are going a couple of steps forward. Right now, we are already sampling our test chips for 28-nanometer embedded flash systems. We have several flavors, one more mixed signal analog based, and one more embedded processing, embedded flash based. Our future MCUs. Especially the larger one that has more memory footprint. Will be built there. We can take it one more step forward into 22. That's more or less the plan. Okay Of this fab. We're not planning to build a FinFET technology in Lehi. That gives us, I would say, the excitement at least 10 or 15 years. That's a runway for sure. Of runway. Yeah To support our businesses. In that sense, very unique. The fact that we have invested in our own technology, that allows us right now to respond to the developing situations. across our markets, whether it's industrial, data center, or hopefully automotive comes back soon as well. Okay. We are feeling very comfortable about that. Okay. You'd also closed some other fabs, right? That was also part of the internalization. Yeah. We decided through this down cycle to shut our last 6-inch fabs. 6-inch fab. Oh. One of them was in Dallas, one of them was then same land in Sherman, different. That's done, right? That's done. Okay. We are now in the last, also from an overhead perspective, Q2 will be the last quarter of any expense related to these fabs. We are setting them down, and that's good to be because six-inch fabs, [audio distorted] ran for 50, 60 years, by the way. Beautiful ROIC, but it's hard to maintain them. When a tool goes down, it's really hard to fix it. Right We took the opportunity to transfer all that goodness of long-lived parts into our 300 millimeter wafer fabs. How does all this translate into gross margins then? Clearly, when you first embarked on the 300 millimeter, that was probably 15 years ago, with the RFAB1 and command and everything. You were running 4% of CapEx to revenue for 10 years or whatever, and I think gross margins peaked at 70%, or close to 70%. Yes. We knew as you embarked on this investment cycle, gross margins were to come. You never hit that, and they came down. I can't remember where they bottomed, like mid to upper 50s. They're kind of creeping up now. I know you don't guide to gross margin, but my math suggests the implied gross margin for next quarter is right around 60, so at least maybe starting with a six handle. A lot of the things that you're talking about, in theory, should be good for gross margins. We're through the depreciation slug. Revenue and utilization hopefully, are going up. You've moved stuff in, so the cost structure gets better. Where do I see those going? Can that actually get back to where we used to run back in the old days, or? Yeah. This is always the big question everybody always has for TI. I understand. We respect it. You know I know you don't run the company, but you get gross margin together. Yeah, we'll get there. Let's answer your question, because I think it's a fair one. First, about Q2, I think you said it. I think it's a good assumption. The more you wait, the better it gets. The reason is, Stacy, that, and that's just a math of depreciation and growth and internalization of wafers. I just invite you, if you want to see it in action, one way to do it, we now, I think by segment you can see the reporting of margin, of gross margin by segment. Look at the embedded segment. You will, you can see actually- You put operating margin by segment, right? Not gross. No, gross margins. You go look- You put gross? Yeah, that's the new rules. You go to the 10-Q, you'll see there. Really? I didn't even know that. Yeah, you see. I will look. You always learn something new. I can- You can look at it and see the progression of. What you're seeing there are wafers that are coming into Lehi. The reason Lehi is now at 50% utilization is that transition, and it continues every quarter because now our 45- nanometer wafers are moving in. You'll see gross margins right now getting closer again to 50% on embedded. Used to be much lower. Yeah. You'll continue to see that moving. That's one example of how you move a foundry wafer into TI. That's going to be accretive to your gross margins. Same is going to be in Sherman, but over there you have to grow revenue into that wafer capacity. I think both are happening right now. To your question, can it get back to the areas of before? Again, we don't think that way. The answer is yes, but that's not going to be satisfying for TI. We care about free cash flow per share growth. You can have very nice margin. Yeah the high 60s, and your free cash flow per share can do less than the double-digit growth as we've done in the previous decade. Our eye is how do we get back to that trend line of this about 10% CAGR of free cash flow per share, and that's how I talk to the board. That's our commitment, and as you said, we'll take a big step forward in 2026. Why? Because we are seeing some revenue growth, okay? We are seeing internalization of Lehi, to your point. We are starting to see the CapEx levels going down. The math just works together, as I said, the more you wait, the better it gets. That's kind of the plan. I'm always cautious. Yeah We were in the same point of time a year ago. We got up, yeah. I want to see the demand continuing, but so far the indications that the environment is a little different. This is a more broad environment of demand. I see it across regions. I see it across markets, to your point. Let's see how it develops. Of course, when we go out there in July, we will report. Further on the progress over there. Yeah. Let's maybe talk about some of those demand drivers, some of those end markets. Let me start with industrial. This historically was the biggest piece of your business, and this was probably the peakiest during COVID, given the shortages. It fell off the most, and I can't remember how much you were down. Almost 50% down from peak. Almost 50% On a quarterly basis, yeah. I guess, where are we now? Where are you seeing regarding the industrial recovery? Which areas are stronger, weaker, and where are we sitting today versus that prior? Yeah, that's a great question, because I look at it all the time. Now you've been waiting. You always draw this chart of growth versus trend, and you've been making the point we've been below trend for, I don't know, multiple years, right? The beautiful thing is that we are still below our peaks, okay. We are talking about four years later. Let's go a recap what happened first in Q1. I think it's just good to set the stage. Industrial did grow sequentially 20%, so very strong growth of almost a comeback, right? Year-over-year, close to 35%, somewhere between 30% and 35%, but closer to 35%. Still, Stacy, 15% below the peak. 15%. 15%. Yeah. Okay? Now it's catching up very quickly. As I indicated in the call, the reason we see above-average growth in Q2 sequentially is driven by industrial and data center, which is a different story. I'll get to data center. We'll get there, I'm sure. I appreciate the fact that you haven't started there. That's great. The fact that industrial is coming back is very visible for us. By the way, some of it in sectors that are data center related. If you think about energy infrastructure as a sector, a big sector for TI, I think data center helps over there. We might have to put that into data. Test and measurement is a sector that is getting help. These sectors are growing faster, but aerospace and defense is coming in a big way. We are starting to see, this is my biggest excitement, factory automation. Industrial automation and robotics coming back. That's an area where last year it was waiting to come back, but I think then, with all the anxiety about tariffs. I think our customers took a breather of making the CapEx decisions. I think they are moving now, okay. We are seeing this beautiful situation of industrial growing very fast on top of secular growth in data center. If I may add, automotive is still hovering at nice levels closer to the peak, but has not grown back to where it, I think, it should. Yeah. Overall, I think we are in a good setup. You sounded a little squishier on auto, I think, on the earnings call. No, because in automotive, if you look at the progression. In the last three years, peaked in 2023, automotive never dipped like industrial. Kind of stayed hovering around the same level. I think that's what happens with content growth. There was an inventory correction. Content growth continues to only keep it flattish, so not the industrial story. Right. I think that also continues to grow. There is secular growth in automotive continuing, and when that happens, my confidence level will be higher. You're right. The automotive was growing about mid-single digits. Something like that, yeah. Year-over-year in Q1, but very close to peak levels. Which is a better story? Got it. Hopefully, that gives you a picture about industrial. It does. To go back to industrial, any thoughts on how much of the strength we might be seeing might be customer restock? given lean inventories versus actual fundamental underlying demand, and I guess would you be able to tell? Yeah. First, you're right. We are trying to be very humble about we don't have that information. We just have anecdotes, right? Yeah. I will say that I believe because we are four years further away from the peak, because we are still 15% lower than the peak, I think it's very early in the hopefully the recovery phase. Typically, in the early phase, customers are not building inventory. Typically, that happens towards the end. Yeah Of the cycle, or closer to the peak. Now, the customers are sounding, and I did visits in Asia, I did visits in Europe actually this month, and it does sound that customers need more parts to really support ramps. We have seen also, I've seen anecdotally, this is where the only way I can tell with data that there is, "Yes, I appreciate your six-week lead time, but I need it now. Okay. Meaning customers are not carrying inventory. Okay. That's always for one or two parts. That's not across the board. This is not close to what we've seen in the COVID cycle, but there are more cases where TI needs to solve a problem. A little more escalation. Yeah. Okay. Yeah. My inbox was very quiet for three years. It's coming back right now. Let's see how it plays out, Stacy. I think we saw industrial also picking up in the first half of last year. Yeah A little bit of a breather. I want to see it one more quarter in. Yeah. So far, so good. Yeah. In general, your lead times are. Do you effectively still have 100% availability of 100% of your parts or pretty close to it? Yeah, saying 100% then I get a call from a customer, "Hey, but you only owe me that part." In general, yes, our lead times are stable. Most of our portfolio, by the way, the general purpose portfolio is six- week lead time. The more application specific that are more unique and have less diversity, we usually keep them at 12 or 18 weeks of lead time, depends on the part, but mostly 12 weeks. The average lead time is at around 12 weeks, okay, across our revenue footprint. That has been very stable. For a good reason. We have built inventory, we have capacity. Yeah. I expect it to stay for the foreseeable future that way. Again, demand, I don't forecast right now. Yeah. As long as demand continues to be strong, even at that level, we should be fine. Yeah. The only area where we've seen a little bit more work to do on our side is on the assembly and test side. Over there, the mix is changing sometimes because of demand signals that are coming. Okay To solve problems, as we just mentioned. This is where you never know the mix upfront on the assembly and test. This is like the so many different types of packages. Correct. Many SKUs. We have thousands of SKUs on the assembly and test, and it's different bonders, different lead frames that you have to take care of. We are putting a little bit of adjustment on how we allocate CapEx in 2026. It's really towards more on the assembly and test side. Over the back end. We also see the OSAT, the outside assembly and test houses that we are still using, more compressed. We are actually accelerating the internalization of our manufacturing into TI. We have the clean room, but we need equipment. I can't remember what the target was for like front end, I think we said something like 90% internal. Back end, was it similar? Similar. At 2030. Yeah What I can comment about it's probably going to happen quicker. Okay. We are seeing tightness externally, we just have to qualify more technologies internally, and that's what we are doing right as we speak right now. Got it. Are you guys holding more die bank now because of this? We do. We do all the more die bank. It gives you the flexibility of what does the customer want. It's also a more, financially, it's more effective way to hold inventory. Got it. Got it. Let's talk about data center. 28 minutes or 23 minutes in. We're not halfway through yet even. I'm proud. We've got time. That's amazing. Yeah. Well, that's good. Usually, it's the first question, so I appreciate it. We got to build to it. Let's talk about it. Okay You're reporting it as a segment now. Correct. As an end market. Your old segmentation, you had these enterprise systems, which I think was primarily more traditional servers and things like that. It looked like to me you took some out of what used to be in industrial, and some out of what used to be comm, put it all together, and that's data center. It's growing, I think last quarter it grew 90% year-over-year or something like that, right? 9% of your revenue last year, so relatively small still, but growing at a very rapid rate. What is in that segment? What are you serving? How much of it would you classify as actually AI-driven versus more traditional data center? By the way, maybe those two things are the same thing now, given the way the market's going. See if we can peel the onion back a little for us on what's exactly in that segment now? No, I think let me take a moment to just set up the data center market for our type of chips, because you guys spend so much time on. You sell a zillion things, I'm assuming. No, you're exactly. Yeah. You guys logic and memory, you know the story over there, and that's not our area. We make what I like to call foundational chips that are analog and embedded chips, and there are many of them, okay. I think even at the street level, people like to talk about a few sockets, but there are so many of them. Really thousands, and sometimes you count to tens of thousands per rack, okay. Very broad opportunity in the sense of product diversity. Customer diversity is more narrow. Yeah The product diversity is very high. Now, in our case, we decided, as you said, to define the end market as data center because first it was very small at the beginning. I would say go five years ago when we made our plans, I did not envision data center running at, now in Q1, 12% of our revenue. 12% in Q1, okay. In Q1 at 12%. Last year it was 9%, exactly as you said. Yeah. The definition I like. Double digits, okay. Yeah. Yeah. The definition for us, it's whatever it's inside the walls of the data center. Some people call the white zone, unlike the energy infrastructure that sits in the gray zone, where the dust is, right? We are inside the walls. Okay, if you got stuff in a turbine that's in a DC, you wouldn't count that. SSDs. Okay some of the UPS system. They sit outside. Okay. That's not in our number. Okay. That would be in industrial. Okay, also still growing. It's still growing, yeah. That's one of the sectors in industrial that I mentioned before was energy infrastructure. Go back to the walls, now you talk about three sectors. If you think about the rack, Stacy, there is compute trays, and this is why I don't say CPU traditional. Today on a compute node, you can have a CPU and two accelerators, right? To me, it's compute. I'm not trying to break it between AI and non-AI. To me, it's all compute. There's networking t hat is larger than you would think. I'll actually give some numbers in a minute. There is what we call rack power and cooling. The rack power is a traditional PSU. The AC comes in, DC comes out. There is also a change over there, as you might know. Overall, the market, if I quantify it last year, I call it in our area, $7.5 billion, less than 10% of our TAM. Okay. That's the market. That's not your revenue. That's a market. Okay. That's a market. We've done one and a half, so at about 20% share. Feels low, just given all the- One and a half? We like 20% share. No, seven and a half. That's the numbers. We've done our math. Huh. It's not very far away from what we've seen. I call it this year, and you can check some of the analysts out there, that came in at very similar numbers. I think it's twelve and a half this year. The growth rate is 65% or so. That's high. TI in Q1, just to complete the point, grew 90% year-over-year. Yeah. The run rate is right now above $2 billion, so it's close to somewhere between 550 and 600. That's just to set the stage. Why do we want to talk about it? Because of the growth rates. As more power is added to data centers, and power density also grows, and architectures are changing, there is a very important, and I think unique, growth opportunities for our type of chips, sitting around power, sitting around communication, clocking, sensing, cooling, protection, you name it. We want to play there. Our playing data center is across the rack. I would say when, as architectures change from 480 V AC to 800 V, or ±400 V DC, our play is going to be in the entire rack. I would segment it to three sectors, as I said. I think half of the TAM is more or less in the compute side, power. This is like analog and other stuff on- Feeding the power to the consumers on the board. Think about the compute trays, okay? Not only power sockets. Right. There's also a lot of signal chain clocking, et cetera. There is networking, about 35%, and the rest is data center power and cooling. So- So that's kind of a footprint. Repeat those percentages for me. footprint Repeat those percent for me, so the? 50% will be compute. Okay. Compute trays. Okay We count. Okay For networking. networking includes also optical networking- Yeah The optical modules, et cetera. Only 15% on the power side. Power delivery. Power delivery. Think about the AC to DC now. Okay. Okay, there is power also close to the GPU. Yeah. That's part of the compute now. Yeah. Okay, that's the way we think about it. Okay. Think about it as the end equipment is the tray. Okay, that's the way we think about what's the content. The beautiful thing is it's very rich. There are so many sockets per board. Yeah. Power, signal chain, clocking, protection, sensing. We play in all of them, Stacy. Our growth even last year was in all these sockets that no one likes to talk about. It's like the broad portfolio that we have. Of power. We serve it very, very well. Yeah, I love these types of sockets. They don't generate a lot of attention. They are not attacked every other day. We also want to play, and that was my comment in the last call, on the more application-specific one. Some people will call it, I like to call it multi-phase power. That's what feeds that. You have to take, I don't know, 2,000 amps into a GPU. Yeah. You don't do it in one wire. This is a heavy socket with multiple voltage regulators that are delivered in different phases of time. Some people call it the stage 2. We'll play over there. Over time, as architecture's growing into, let's call it 800 volts or ±400 V, we also want to play there because we do have a GaN technology that we've invested in. Right. That's a great technical solution to convert energy. Convert power, call it from 800 volts all the way to 12 volts or 6 volts. You can do it very nicely with GaN solutions. That's the opportunity for TI. We can grow into more application-specific sockets. Very competitive sockets. You have to win at multiple customers, but we are going to play there. Is it fair to say that on the application-specific stuff, that is where you have to compete for the socket, but the other stuff, you really don't have to compete as much? Like I said, it's more, I'm probably simplifying, but catalogy. I think competition is tougher for the application-specific also because they are defined by the customers. Yeah Usually, they'll define the footprint, and if you want to sell the socket, you're not doing it alone. This is not only yours. You have to compete with other players. The revenue concentration, we talked about it last year. Yeah. Revenue concentration per socket is high. Every win or loss is a lot. Okay? Obviously, there is more competition there. Now, our supply footprint, the fact that we have such a broad portfolio, serves very well the general purpose sockets, and they are maybe on average $0.20 or $0.30 per socket, but they add up. That's how you compose- Well, that was my next question. How do we think about content like per rack for you guys? Yeah, we can do all kinds of math, but I will say it's in the $ tens of thousands per rack. Okay? Actual content or opportunity? Opportunity. Opportunity. Our win rate last year or our share last year, was 20%. Do we want to grow market share? We do. Look, I called the TAM at about 65% growth. So far, one quarter, we grew 90%. Can we keep it up at that clip, or can we outgrow the market? We'll have to wait a year and see. Yeah. That's always our intention to outgrow the market. Auto and industrial are clearly your biggest segments. Correct. Like a third, a third, and now we are talking about 12%. Well, I'm wondering, does data center overtake the other ones at some point if? I don't know if it overtakes the other one, but I think it overtakes consumer or PE over time just because of the clip of growth rate. Where's PE now, 20%? PE is now 20%, low 20s, I would say. It doesn't grow fast, Stacy. Again, you've probably talked with people who are saying there's going to be new personal electronics, I don't know, wearables or whatever. I have not seen that market develop yet. That could also change. Right now, this market has been growing at a low single digits. When you grow a market at the 60s, it can become. Yeah Our third-largest market very quickly. Yes. Maybe to touch on PE, Yeah I get it's not a driver, and it's not that big of a number, but I'm a little worried about PE just into the back half on memory pricing and everything else. What are you seeing there? No, I think that's also part of the reason I want to see one more quarter before I call the second half. I don't think you should call the second half. Call the third quarter. I have to give you a third-quarter forecast, right? Eventually. I don't want to talk about it right now. To me, our second quarter, I mentioned 8% sequential growth, nice year-over-year growth. Let's let it play out. As I said, so far we're on plan. If I had something to report, I would let you know. To me, the PE is one of the question marks because I think memory is a constraint. I think they would want to build more end equipments, but they can't. It's still 21%, 22% of our business. Yeah. That could change the numbers. We want to see it play out. Are there memory impacts on anything else besides PE? I specifically have not seen it, but I know our customers are busy around that. I heard it's supply limitations. Also, the costs are higher, but luckily, I guess, we don't build memory anymore. Not anymore. Right. We are focused on our stuff, yeah. That's right. Yeah. Right. How are costs in general trending for you guys? We're clearly in another inflationary environment. Maybe if you're insourcing, you're a little more protected from foundry pricing, but foundry pricing going up, and memory and other things, and there's been, I don't even know if it's a rumor. You guys have been taking up price along with many of your other peers in this environment. Maybe the right question is how do we think about your pricing actions both in the wake of costs increasing as well as the potential to capture more value for yourselves? No, I think you set it up correctly. The reason we are experiencing inflation, especially when we think about energy in Asia, for example, we have all of our assembly and test. Cost of resin, so we think about what's coming inside the package, and the fillers or the mold compound, that's all higher. Costs of metals are higher. Yes, that's part of what we're seeing. Pricing environment is better than last year. If you think about the COVID cycle, where prices went up all the way into 2022. We have seen three years of our model coming through like 2023, 2024, 2025. This low single-digit price effect, if you will, like-for-like, did materialize in the last three years. As I commented on the call, in the first half of this year, we expect pricing to be flat, which is good news for us because usually when you start the year, prices usually because of price negotiations, does fall down a couple of percentage points. That is flattish. Yes, we have started discussions with our customers to talk about costs and the supply-demand situation. I think the second half of the year, prices could be a little higher. Yeah. We will be a follower here, Stacy. We are not trying to set the market price, but we are watching the market environment, and right now, you're right. Market prices are going higher. I just found it interesting because I look at the equipment guys, like lagging edge equipment demand has not been great. I know we're seeing maybe a recovery now in some of the end demand from some of these markets, the end demand in some of the trailing node stuff has not been great. Usually, you see price increases when supply in these markets is really tight. I'm not exactly convinced that in some of the markets that you play that supply is incredibly tight, and we have been seeing pricing coming in. Is that just a function of, like we saw during COVID, it is inflationary, and you do have the ability to at least pass those costs along without the customers like. I think it's a fair question, but again, this is why we have to be cautious because it's only a couple of quarters in. You're seeing what's happening in industrial. You're seeing the data center market becoming strong. Yeah. I just came back from Taiwan. I was there last week, really focused on more data center customers, and the supply chain, if you will, is heavily there. I think we are starting to see areas of supply and demand mismatch even in our area. Especially on the analog side, Stacy, we do see that. The discussion I had with customers last week was all about, "Hey, make sure you continue your lead times as they are. Make sure that you can upside if we need to." I always tell them, we have parts, we have capacity, we have inventory, bring it on. I think we are a little bit different than average there. You can see it also in lead times. Our lead times, you asked before, are stable. It's out there that lead times have been increasing, especially on the analog side, sometimes to a year. Okay. I think TI is uniquely positioned, and we are not surprised. I think we have been disciplined in adding capacity through the down cycles. We are unique there. Okay. It sets us up. We always said to every scenario, the scenario is still getting built as we speak. Yeah. You and I will watch it together. I think if it wants to continue to be strong in the second half, we will be ready. If it wants to continue into 2027, we'll be ready. That's where we are, and I love where we are. Because if you fall behind, and we saw it in the previous cycle, and you said, "Okay, I want to chase it now," you can't four years. Yeah. From the minute you move there to substantial output from your fab, it's four years. You're not talking about the current cycle anymore. Yeah. In that sense, TI doesn't have that lead time issue, okay? We are very well prepared. Got it. Talk to me about the Silicon Labs deal. Yeah. You guys sat out of M&A while the industry was consolidating for a long time, and I don't know what it was. There wasn't strategic fit, or the returns on the valuations weren't there, and why now? Yeah, first, you said set out in making a decision. We don't sit out on making stories. No, I understand you evaluated all. I get it. We have a quarterly process, okay? That's ongoing. You've seen that. We've done a big one in the early 2000s. We've done a big one in the early 2010. Per round. Yeah. Natural. We did another one last. On average, it's 10 - 15 years. We are on the cadence, right? Now, why this one? That's I think, let me set up a little bit of embedded, because it's an embedded-centric acquisition, and this is where there is a change. I would say 10 years ago, we would not consider it because we were not sure about our embedded business. Rich was very open about it. Yeah. You look 10, 15 years ago, custom business more than 50%, big logic, DSPs, very digital, mainly built externally. That's not the embedded business we are building today. Five, six, seven years ago, we said, "Okay, let's retool our embedded business towards our competitive advantages. Let's bring it in. Let's create a broad portfolio." Meaning less big processors and more MCUs, with some analog periphery, some application specific MCU for power conversion, motor drive, connectivity solutions, radar systems. These are the type, it's also part of a DSP investment that we have. These are the kind of investments we are making right now in embedded. The number of parts we build every year is higher. We are going to build them all internally, embedded is going to be more than 90% internal by the end of the decade. Now, when you come into Silab, this is where we had an opportunity to give ourselves a step function in our portfolio because we had some connectivity parts, but they are mainly serving very well the automotive market. This is where we are winning and expanding. Our industrial portfolio is slowly growing, and that's a one time, we saw a one-time chance to really increase our portfolio in a step function. If you think about our competitive advantages, Stacy, it's beautiful. There are four elements, but they bring in two, we add two. We talk about manufacturing and technology and building it internally in our technology. We talk about the broad product portfolio. We talk about the very strong channel position or advantage, both ti.com, but also our very large, largest in the industry of sales team, and the position of diversity and longevity. What do they bring in? They bring in a broad portfolio, a broad industrial portfolio, and a good position in terms of diversity and longevity. 90% of their business is industrial. You look at the revenue by socket, very broad. I think you can see it on our website. They bring in two elements. You add to that the fact that you can bring it inside our Lehi fab and build it internally and control your destiny in terms of technology and manufacturing. The field and the ti.com that can really sell beyond that connectivity chip. They have a very narrow portfolio in that sense, from a technology perspective. You get into the Excel sheet works. Okay? That doesn't happen every day. Many times, we look at stuff, it looks good strategically, but we can't make sense of the price. Look, if you ask me would I do this deal today, it will be harder. Look at what happened to the market prices of assets in the last three or four months. In that sense, I think the stars aligned and we made the acquisition. Very pleased about it, very pleased with the progress towards completing the deal in the next, I would say three to four quarters, by the first half of next year. I think it will be a great addition to our embedded business. That's a story over there. You want to do this deal 10 years ago, you don't have Lehi, you don't have conviction that it can be successful with our portfolio. Our confidence level is higher, and that's kind of the way we'll think about it moving forward. Got it. You wouldn't have had confidence in the business, and you wouldn't have. In general, the business, yeah. Wouldn't have anywhere to put it, even if. The synergies would not come in because these guys were using mainly TSMC. How long will that take you to internalize their product, and how difficult is that to do? Luckily, we've been doing it ourselves many times, including right now as we speak, and bringing stuff from the foundries into Lehi on our portfolio. They've done a great job, and this is very rare in a company on an embedded field. Very well organized platform, operationally. Very well invested. It's only somewhere between 10 and 15 different dies, which is. Across how many different products you said? 2,000 products. Oh, wow. Okay. Okay. They have done a very good job on doing this platform approach. That you can build 10 to 15 dies and then approach many, many products out there. That would take not too long, okay? It will be mostly completed by the end of the decade. We will start. By the end of the decade. Yes. Okay. It's going to take two to three years. Yeah. Okay. We are going to start immediately after close. That's the way we've modeled the synergies. Now internally, I want the team always to move faster, but as you saw, the $450 million of synergies that we described, they are mainly supported through the COGS, and it's almost fully in by the end of the decade. Got it. That also means that it's harder to buy somebody that sells 10,000 different products. There you go. to bring that in. Most companies, especially on the embedded side, the breadth of the portfolio is so high. It actually works against you then. It's hard to do. Yeah. It's hard to bring in the synergies when you buy a fabless company. Now, in the case of National, they had their own fab, so it's a different story. Yeah. This is why these things are not trivial. They are not easy to do. This is why you see us doing it rarely. I can tell you nothing has changed on the strategy. We'll continue to look at assets, and I think this one was a unique one. Got it. Talk to me about China. Clearly, you guys have made a bet on the U.S., and I get it, and I understand the whole concept of geographically and geopolitically attractive capacity. At the same time, I know it's an investment controversy. I don't know how real it is, but it's an investment controversy about your position in China, and I always joke, Texas Instruments has Texas right in the name. Most players in China there has to be some sort of China-for-China strategy, whether it's working with local partners or making it directly in the region or whatever. How do we think about TI's competitiveness over time in China relative to some of the local players, given the trends that we're seeing on the geopolitical spectrum right now? Yeah, let me break it. Thanks. I think it's an important topic. Let me break it out to two parts. The first one you mentioned is kind of you bet on the U.S. We bet on the U.S., maybe on manufacturing or new manufacturing. Manufacturing footprint. Not on the market only. Market-wise, we are a global company, okay? The fact that we are investing in the U.S., it doesn't mean that we don't know how to solve China from China. We have a factory in China. We have a fab. We have a big assembly and test house. We can support China in manufacturing. I think the challenge in China is actually how do you compete in the market. Especially when you are not a Chinese. Exactly. Yeah Supplier. I think that's more interesting. First, we want to play there. Why? China is what? 20% of world GDP, more or less. What is your revenue, I guess, by headquarters? Our revenue by headquarters last year was about 20%. Yeah. Okay. Okay? More importantly, China has some very important customers, let's take automotive, that are technology leaders. You even go into data centers, optical links. China is a big player there in terms of headquarters company. We also see areas in industrial where China, robotics, for example, China is a big player. You don't want to exclude yourself from China. You want to compete. It is harder. It is harder because of what you said. There is a growing industry of a very hungry supplier base that is always expanding. I have my own China index. I review with my team every quarter a set of 25 competitors, 25, that together add up to about half of TI. They are doing well. They are competing. TI can compete, and the reason we can compete is that we have some competitive advantages that are very, very important to our China customers. The portfolio. The portfolio is very attractive. If I want to solve a problem on the board, do I bring in 25 suppliers, some of them are startup companies that are just trying to breathe, versus an established player like TI that has good solution? Now, the portfolio is not enough. Cost competitiveness is key. Can TI play that game? Yes. We are vertically integrated. As much as the foundries in China are serving these local competitors, they still don't work for free. If you look at the utilization rates over there, they are not underutilized, let's say that. We can compete by supplying also cost structure. A very strong channel or sales team that is entrenched over there and built a relationship with customers for years. A customer base, Stacy, and I mentioned data center, but that's not the only case, that is continuously wanting to diversify their markets. Wanting to go into non-China markets. It's actually where they make most of their profit. That game is played well for TI, and the reason I say played well, just go put 2025. We report our China business. We grew close to 25%. The index I just mentioned grew slower. Okay. Okay? We are watching this every quarter. Q1 is now being reported. We are holding our share, okay? You can argue that last year we gained share in China in an impossible environment. This year, I think our odds are even better because of the supply-demand mismatch. Usually, everything starts in China. That's not an outlier this year. Over there, our capacity, our footprint, our cost competitiveness, and our broad portfolio and channel advantages are playing on. The risk I have about China, don't fall asleep. Don't be complacent. Don't say these guys are commodity players. Respect them. Also, don't be scared. Fight the fight. We take the fight to Shenzhen, to Shanghai. Our customers over there appreciate us, and by the way, every time there is a tie, we lose the sockets. We always have to be a little bit better than the local competition. Hopefully, that covers China. No, that does. Two minutes left. We'll do the lightning round. Whatever it means. I don't know. We got a few audience questions. Maybe we get one. Okay. Are robotics, humanoid or general drones or autonomous vehicles a driver of growth for you going forward? Answer is yes. When do you expect it to show up meaningfully in the top line? Answer is this, look, humanoid content is astonishingly high for TI, not only the TAM. We are talking about a content for TI higher than a car, higher than automotive. Think about $1,000 per humanoid. That's the content. Now, you tell me the number of humanoids that are going to be built. Depends who you listen to, but I think we are starting to see it, and I am excited about it. I don't think it's as soon as people say, but I can see why humanoids, like robotics, will be one day walking around our factories, especially assembly and tests, and providing value. I'm excited about that. Yes. Got it. We've got one minute left, so I'm going to finish this up the way I always do with everybody. We got a whole full room of folks here. Why should they buy TI stock? Yeah. Again, I think part of your introduction helped me, but Stacy, as we discussed, we have been preparing for an opportunity for a long time. It's been a long journey. I even kind of wake myself up, "Boy, it's been six years." We have done the hard work for being prepared. Now, tell me what the scenario will be. I think we are seeing more and more evidence that this is going to be a good time to be in semis. There is a secular growth in the data center market that is really not negligible anymore. TI is in a great position. There is industrial coming back in a nice way, and I think automotive is around the corner. You put all these three together, you can envision a very strong demanded environment. We are well-positioned to support it. We have the inventory, we have the capacity, we can grow into it, allowing hopefully, share gains for the company. Thank you, Stacy. I appreciate being here, and thanks for the time. I appreciate having you here. Thank you so much. Thank you.