Guinness Global Equity Income Fund on Texas Instruments
Thesis
Texas Instruments reported revenue above the top end of guidance and around 4% ahead of consensus, with year-over-year growth of 23%. Profitability improved as stronger volumes and factory utilisation lifted gross margin to 61.4%, while free cash flow rose to approximately $2.7bn. The fund sees structural growth from increasing semiconductor content in industrial and automotive applications, data-centre demand, electrification and automation. Texas Instruments' manufacturing scale, broad product portfolio and long product cycles are expected to support durable margins and cash generation.
“Texas Instruments’ scale, broad product portfolio, low-cost manufacturing base and long product cycles should allow it to benefit from these trends”
Key risks
- A more demanding valuation after the strong year-to-date share-price rally
- Concerns around capital intensity
- Weaker semiconductor sentiment