Texas Instruments TXN · USD

Commitments and contingenciesPurchase commitmentsOur purchase commitments include payments for software licenses and contractual arrangements with suppliers when there is a fixed, noncancelable payment schedule or when minimum payments are due with a reduced delivery schedule.As of December 31, 2025, we had committed to make the following minimum payments under our purchase commitments:20262027202820292030ThereafterTotalPurchase commitments$440 $442 $291 $151 $48 $70 $1,442 Indemnification guaranteesWe routinely sell products with an intellectual property indemnification included in the terms of sale. Historically, we have had only minimal, infrequent losses associated with these indemnities. Consequently, we cannot reasonably estimate any future liabilities that may result.Warranty costs/product liabilitiesOur stated warranties for semiconductor products obligate us to repair, replace or credit the purchase price of a covered product back to the buyer. Product claim consideration may exceed the price of our products. Historically, we have experienced a low rate of payments on product claims. Although we cannot predict the likelihood or amount of any future claims, we do not believe they will have a material adverse effect on our consolidated financial statements. We accrue for known product-related claims if a loss is probable and can be reasonably estimated. During the periods presented, there have been no material accruals or payments regarding product warranty or product liability.GeneralWe are subject to various legal and administrative proceedings. Although it is not possible to predict the outcome of these matters, we believe that the results of these proceedings will not have a material adverse effect on our consolidated financial statements.

Debt and lines of creditShort-term borrowingsWe maintain a line of credit to provide additional liquidity through bank loans and, if necessary, to support commercial paper borrowings. As of December 31, 2025, the aforementioned line of credit was a variable-rate, revolving credit facility from a consortium of investment-grade banks that allows us to borrow up to $1 billion until March 2026. The interest rate on borrowings under this credit facility, if drawn, is indexed to the applicable Term Secured Overnight Financing Rate (Term SOFR). As of December 31, 2025, our credit facility was undrawn, and we had no commercial paper outstanding.Long-term debtIn March 2025, we retired $750 million of maturing debt.In May 2025, we issued two series of senior unsecured notes for an aggregate principal amount of $1.20 billion, consisting of $550 million of 4.50% notes due in 2030 and $650 million of 5.10% notes due in 2035. We incurred $6 million of issuance and other related costs. The proceeds of the offering were $1.20 billion, net of the original issuance discounts, which will be used for general corporate purposes.In February 2024, we issued five series of senior unsecured notes for an aggregate principal amount of $3.00 billion, consisting of $650 million of 4.60% notes due in 2027, $650 million of 4.60% notes due in 2029, $600 million of 4.85% notes due in 2034, $750 million of 5.15% notes due in 2054 and $350 million of 5.05% notes due in 2063. We incurred $16 million of issuance and other related costs. The proceeds of the offering were $2.98 billion, net of the original issuance discounts, which will be used for general corporate purposes.We retired $300 million of maturing debt in May 2024 and an additional $300 million in November 2024.In March 2023, we issued two series of senior unsecured notes for an aggregate principal amount of $1.40 billion, consisting of $750 million of 4.90% notes due in 2033 and $650 million of 5.00% notes due in 2053. We incurred $11 million of issuance and other related costs. The proceeds of the offering were $1.40 billion, net of the original issuance discounts, which will be used for general corporate purposes.In May 2023, we issued three series of senior unsecured notes for an aggregate principal amount of $1.60 billion, consisting of $200 million of 4.60% notes due in 2028, $200 million of 4.90% notes due in 2033 and $1.20 billion of 5.05% notes due in 2063. We incurred $7 million of issuance and other related costs.

Valuation of debt and equity investments and certain liabilitiesInvestments measured at fair valueMoney market funds, debt investments and mutual funds are stated at fair value, which is generally based on market prices or broker quotes. We classify all debt investments as available-for-sale. See Fair-value considerations. Unrealized gains and losses are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets, and any credit losses are recorded as an allowance for credit losses with an offset recognized in OI&E in our Consolidated Statements of Income.Our mutual funds hold a variety of debt and equity investments intended to generate returns that offset changes in certain deferred compensation liabilities. We record changes in the fair value of these mutual funds and the related deferred compensation liabilities in SG&A.Other investmentsOur other investments include equity-method investments and nonmarketable investments, which are not measured at fair value. These investments consist of interests in venture capital funds and other nonmarketable securities. Gains and losses from equity-method investments are recognized in OI&E based on our ownership share of the investee’s financial results. Nonmarketable securities are measured at cost with adjustments for observable changes in price or impairments. Gains and losses on nonmarketable investments are recognized in OI&E.Details of our investments are as follows:December 31, 2025December 31, 2024Cash and Cash EquivalentsShort-Term InvestmentsLong-Term InvestmentsCash and Cash EquivalentsShort-Term InvestmentsLong-Term InvestmentsMeasured at fair value:Money market funds$844 $— $— $762 $— $— Corporate obligations517 522 — 694 796 — U.S. government and agency securities1,296 1,035 — 752 3,485 — Non-U.S. government and agency securities184 99 — 249 99 — Mutual funds— — 11 — — 11 Total2,841 1,656 11 2,457 4,380 11 Other investments— — 5 — — 12 Cash on hand384 — — 743 — — Total$3,225 $1,656 $16 $3,200 $4,380 $23 As of December 31, 2025 and 2024, unrealized gains and losses associated with our debt investments were not material. We did not recognize any credit losses related to debt investments in 2025, 2024 or 2023.

Income taxesIncome before income taxes is comprised of the following components:For Years Ended December 31,202520242023U.S.$4,503 $4,438 $6,445 Non-U.S.1,207 1,015 973 Total$5,710 $5,453 $7,418 Provision for income taxes is comprised of the following components:For Years Ended December 31,202520242023CurrentDeferredTotalCurrentDeferredTotalCurrentDeferredTotalU.S. federal$466 $102 $568 $605 $(139)$466 $943 $(277)$666 Non-U.S.259 (121)138 244 (71)173 240 (22)218 U.S. state3 — 3 15 — 15 24 — 24 Total$728 $(19)$709 $864 $(210)$654 $1,207 $(299)$908 Applying the updated requirements in ASU 2023-09 on a prospective basis, the principal reconciling items from the U.S. statutory income tax rate to the effective tax rate (provision for income taxes as a percentage of income before income taxes) are as follows:For Year Ended December 31,2025U.S. statutory income tax rate$1,199 21.0 %Foreign tax effects:Malaysia:Tax incentives(127)(2.2)Other foreign jurisdictions16 0.3 Effect of cross-border tax laws:Foreign derived intangible income(231)(4.0)Other(30)(0.6)Tax credits:R&D tax credit(79)(1.4)Nontaxable or nondeductible items:Stock compensation(66)(1.1)Other9 0.1 Other adjustments18 0.3 Effective tax rate$709 12.4 %For the years ended December 31, 2024, and 2023, prior to the adoption of ASU 2023-09, the principal reconciling items from the U.S. statutory income tax rate to the effective tax rate are as follows:For Years Ended December 31,20242023U.S. statutory income tax rate21.0 %21.0 %Foreign derived intangible income(6.1)(6.8)Stock compensation(2.1)(1.0)R&D tax credit(2.0)(1.3)Changes in uncertain tax positions0.1 — Other1.1 0.3 Effective tax rate12.0 %12.2 %The earnings represented by non-cash operating assets, such as fixed assets and inventory, will continue to be permanently reinvested outside the United States. Under current law, earnings of non-U.S. subsidiaries repatriated to the U.S. are not taxable. Consequently, no U.S. tax provision has been made for the future remittance of these earnings. However, withholding or distribution taxes in certain non-U.S. jurisdictions will be incurred upon repatriation of available cash to the United States. A provision has been made for deferred taxes on these undistributed earnings to the extent that repatriation of the available cash to the United States is expected to result in a tax liability.

LeasesWe conduct certain operations in leased facilities and also lease a portion of our data processing and other equipment. In addition, certain long-term supply agreements to purchase industrial gases are accounted for as operating leases. Lease agreements frequently include renewal provisions and require us to pay real estate taxes, insurance and maintenance costs.Our leases are included as a component of the following balance sheet lines: December 31, 20252024Other long-term assets$729 $786 Accrued expenses and other liabilities$119 $118 Other long-term liabilities612 663 Details of our operating leases are as follows:For Years Ended December 31, 202520242023Lease cost related to lease liabilities$102 $85 $73 Variable lease cost60 64 54 Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows for lease cost$80 $65 $65 Lease assets obtained in exchange for new lease liabilities$26 $241 $285 As of December 31, 2025, we had committed to make the following minimum payments under our noncancelable operating leases:20262027202820292030ThereafterTotalLease payments$122 $110 $97 $85 $82 $424 $920 Imputed lease interest(189)Total lease liabilities$731 The weighted average remaining lease term was 10.1 years and 10.8 years as of December 31, 2025 and 2024, respectively. The weighted average discount rate was 4.60% and 4.53% as of December 31, 2025 and 2024, respectively.

Cybersecurity risk management and strategyOur cybersecurity risk management is based on recognized cybersecurity industry frameworks and standards, including those of the National Institute of Standards and Technology, the Center for Internet Security Controls, and the International Organization for Standardization. We use these frameworks, together with information collected from internal assessments, to develop policies for use of our information assets (for example, TI business information and information resources such as mobile phones, computers and workstations), access to specific intellectual property or technologies, and protection of personal information. We protect these information assets through industry-standard techniques, such as multifactor authentication and malware defenses. We also work with internal stakeholders across the company to integrate foundational cybersecurity principles throughout our organization’s operations, including employment of multiple layers of cybersecurity defenses, restricted access based on business need, and integrity of our business information. Throughout the year, we also regularly train our employees on cybersecurity awareness, confidential information protection and simulated phishing attacks.We regularly engage third-party assessors to conduct penetration testing and measure our program to industry standard frameworks. We also have standing engagements with incident response experts and external counsel. We frequently collaborate with industry experts and cybersecurity practitioners at other companies to exchange information about potential cybersecurity threats, best practices and trends.Our cybersecurity risk management extends to risks associated with our use of third-party service providers. For instance, we conduct risk and compliance assessments of third-party service providers that request access to our information assets. Our cybersecurity risk management is an important part of our comprehensive business continuity program and enterprise risk management. Our global information security team periodically engages with a cross-functional group of subject matter experts and leaders to assess and refine our cybersecurity risk posture and preparedness. For example, we regularly evaluate and update contingency strategies for our business in the event that a portion of our information resources were to be unavailable due to a cybersecurity incident.

Subsequent eventAcquisition of Silicon LabsAs announced on February 4, 2026, we have entered into a definitive agreement to acquire Silicon Labs for $231.00 per share in an all-cash transaction, representing a total enterprise value of approximately $7.5 billion. Under the terms of the agreement, Silicon Labs stockholders will receive $231.00 in cash for each share of Silicon Labs common stock they hold at the time of closing, which is currently expected to close in the first half of 2027, subject to receipt of regulatory approvals and other customary closing conditions, including approval by Silicon Labs stockholders. We expect to fund the transaction with a combination of cash on hand and debt financing to be arranged prior to closing.

Stock compensationWe have stock options outstanding to participants under long-term incentive plans. The option price per share may not be less than the fair market value of our common stock on the date of the grant. The options have a 10-year term and generally vest ratably over four years. Options continue to vest after the recipient retires.We also have RSUs outstanding to participants under long-term incentive plans. Each RSU represents the right to receive one share of TI common stock, issued on the vesting date, which is generally four years after the date of grant. RSUs continue to vest after the recipient retires. Holders of RSUs receive an annual cash payment equivalent to the dividends paid on our common stock. The fair value per share of RSUs is determined based on the closing price of our common stock on the date of grant.We have options and RSUs outstanding to non-employee directors under director compensation plans. The plans generally provide for annual grants of stock options and RSUs, a one-time grant of RSUs to each new non-employee director and the issuance of TI common stock upon the distribution of stock units credited to director deferred compensation accounts.We also have an employee stock purchase plan (ESPP) under which options are offered to all eligible employees in amounts based on a percentage of the employee’s compensation, subject to a cap. Under the plan, the option price per share is 85% of the fair market value on the exercise date. As of December 31, 2025, 30 million shares remain available for future issuance under this plan.Total stock compensation expense recognized is as follows:For Years Ended December 31,202520242023COR$53 $52 $44 R&D145 132 119 SG&A221 203 199 Total$419 $387 $362 These amounts include expenses related to stock options, RSUs and options offered under our ESPP and are net of estimated forfeitures.We recognize compensation expense for stock options and RSUs on a straight-line basis over the minimum service period required for vesting of the award, adjusting for estimated forfeitures based on historical activity. Awards issued to employees who are retirement eligible or nearing retirement eligibility are expensed on an accelerated basis. Options issued under our ESPP are expensed over a three-month period.