UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, ~~2022~~2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 001-03761

TEXAS INSTRUMENTS INCORPORATED

(Exact Name of Registrant as Specified in Its Charter)

Delaware

75-0289970

(State of Incorporation)

(I.R.S. Employer Identification No.)

12500 TI Boulevard, Dallas, Texas

75243

(Address of principal executive offices)

(Zip Code)

Registrant’s telephone number, including area code 214-479-3773

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $1.00	TXN	The Nasdaq Global Select Market

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act

☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

~~913,707,365~~907,966,327

Number of shares of Registrant’s common stock outstanding as of

July ~~19, 2022~~18, 2023

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

PART I - FINANCIAL INFORMATION

ITEM 1. Financial statements


		For Three Months Ended				For Six Months Ended					For Three Months Ended				For Six Months Ended
Consolidated Statements of Income	Consolidated Statements of Income	June 30,				June 30,				Consolidated Statements of Income	June 30,				June 30,
(In millions, except per-share amounts)	(In millions, except per-share amounts)	2022		2021		2022		2021		(In millions, except per-share amounts)	2023		2022		2023		2022
Revenue	Revenue	$	5,212	$	4,580	$	10,117	$	8,869	Revenue	$	4,531	$	5,212	$	8,910	$	10,117
Cost of revenue (COR)	Cost of revenue (COR)	1,587		1,503		3,050		2,995		Cost of revenue (COR)	1,621		1,587		3,137		3,050
Gross profit	Gross profit	3,625		3,077		7,067		5,874		Gross profit	2,910		3,625		5,773		7,067
Research and development (R&D)	Research and development (R&D)	414		391		805		777		Research and development (R&D)	477		414		932		805
Selling, general and administrative (SG&A)	Selling, general and administrative (SG&A)	422		425		844		850		Selling, general and administrative (SG&A)	461		422		935		844
Acquisition charges		—		48		—		95

Restructuring charges/other	Restructuring charges/other	66		—		132		—		Restructuring charges/other	—		66		—		132
Operating profit	Operating profit	2,723		2,213		5,286		4,152		Operating profit	1,972		2,723		3,906		5,286
Other income (expense), net (OI&E)	Other income (expense), net (OI&E)	7		73		22		119		Other income (expense), net (OI&E)	119		7		199		22
Interest and debt expense	Interest and debt expense	49		44		101		90		Interest and debt expense	89		49		157		101
Income before income taxes	Income before income taxes	2,681		2,242		5,207		4,181		Income before income taxes	2,002		2,681		3,948		5,207
Provision for income taxes	Provision for income taxes	390		311		715		497		Provision for income taxes	280		390		518		715
Net income	Net income	$	2,291	$	1,931	$	4,492	$	3,684	Net income	$	1,722	$	2,291	$	3,430	$	4,492

Earnings per common share (EPS):	Earnings per common share (EPS):									Earnings per common share (EPS):
Basic	Basic	$	2.48	$	2.08	$	4.85	$	3.98	Basic	$	1.89	$	2.48	$	3.76	$	4.85
Diluted	Diluted	$	2.45	$	2.05	$	4.80	$	3.92	Diluted	$	1.87	$	2.45	$	3.72	$	4.80

Average shares outstanding:	Average shares outstanding:									Average shares outstanding:
Basic	Basic	920		923		922		923		Basic	908		920		907		922
Diluted	Diluted	930		937		932		936		Diluted	916		930		916		932

A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:	A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:									A portion of net income is allocated to unvested restricted stock units (RSUs) on which we pay dividend equivalents. Diluted EPS is calculated using the following:

Net income	Net income	$	2,291	$	1,931	$	4,492	$	3,684	Net income	$	1,722	$	2,291	$	3,430	$	4,492
Income allocated to RSUs	Income allocated to RSUs	(10)		(7)		(19)		(15)		Income allocated to RSUs	(8)		(10)		(18)		(19)
Income allocated to common stock for diluted EPS	Income allocated to common stock for diluted EPS	$	2,281	$	1,924	$	4,473	$	3,669	Income allocated to common stock for diluted EPS	$	1,714	$	2,281	$	3,412	$	4,473

See accompanying notes.	See accompanying notes.									See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


		For Three Months Ended				For Six Months Ended					For Three Months Ended				For Six Months Ended
Consolidated Statements of Comprehensive Income	Consolidated Statements of Comprehensive Income	June 30,				June 30,				Consolidated Statements of Comprehensive Income	June 30,				June 30,
(In millions)	(In millions)	2022		2021		2022		2021		(In millions)	2023		2022		2023		2022
Net income	Net income	$	2,291	$	1,931	$	4,492	$	3,684	Net income	$	1,722	$	2,291	$	3,430	$	4,492
Other comprehensive income (loss)	Other comprehensive income (loss)									Other comprehensive income (loss)
Net actuarial losses of defined benefit plans:	Net actuarial losses of defined benefit plans:									Net actuarial losses of defined benefit plans:
Adjustments, net of tax effect of $8 and ($5); $6 and ($7)		(40)		16		(34)		21
Recognized within net income, net of tax effect of ($4) and ($2); ($5) and ($5)		16		8		18		16
Adjustments, net of tax effect of ($2) and $8; ($1) and $6										Adjustments, net of tax effect of ($2) and $8; ($1) and $6	2		(40)		—		(34)
Recognized within net income, net of tax effect of ($1) and ($4); ($2) and ($5)										Recognized within net income, net of tax effect of ($1) and ($4); ($2) and ($5)	3		16		6		18

Derivative instruments:										Derivative instruments:
Change in fair value, net of tax effect of ($1) and $0; $0 and $0										Change in fair value, net of tax effect of ($1) and $0; $0 and $0	3		—		1		—

Available-for-sale investments:	Available-for-sale investments:									Available-for-sale investments:
Unrealized losses, net of tax effect of $1 and $0; $2 and $0		(3)		—		(7)		—
Unrealized gains (losses), net of tax effect of $0 and $1; $0 and $2										Unrealized gains (losses), net of tax effect of $0 and $1; $0 and $2	(2)		(3)		1		(7)
Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	(27)		24		(23)		37		Other comprehensive income (loss), net of taxes	6		(27)		8		(23)
Total comprehensive income	Total comprehensive income	$	2,264	$	1,955	$	4,469	$	3,721	Total comprehensive income	$	1,728	$	2,264	$	3,438	$	4,469

See accompanying notes.	See accompanying notes.									See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


		June 30,		December 31,			June 30,		December 31,
Consolidated Balance Sheets	Consolidated Balance Sheets	2022		2021		Consolidated Balance Sheets	2023		2022
(In millions, except par value)	(In millions, except par value)					(In millions, except par value)
Assets	Assets					Assets
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	3,802	$	4,631	Cash and cash equivalents	$	3,439	$	3,050
Short-term investments	Short-term investments	4,585		5,108		Short-term investments	6,113		6,017
Accounts receivable, net of allowances of ($12) and ($8)		2,190		1,701
Accounts receivable, net of allowances of ($16) and ($13)						Accounts receivable, net of allowances of ($16) and ($13)	1,956		1,895
Raw materials	Raw materials	305		245		Raw materials	388		353
Work in process	Work in process	1,258		1,067		Work in process	2,110		1,546
Finished goods	Finished goods	636		598		Finished goods	1,231		858
Inventories	Inventories	2,199		1,910		Inventories	3,729		2,757
Prepaid expenses and other current assets	Prepaid expenses and other current assets	267		335		Prepaid expenses and other current assets	277		302
Total current assets	Total current assets	13,043		13,685		Total current assets	15,514		14,021
Property, plant and equipment at cost	Property, plant and equipment at cost	8,825		7,858		Property, plant and equipment at cost	11,664		9,950
Accumulated depreciation	Accumulated depreciation	(2,894)		(2,717)		Accumulated depreciation	(3,139)		(3,074)
Property, plant and equipment	Property, plant and equipment	5,931		5,141		Property, plant and equipment	8,525		6,876
Goodwill	Goodwill	4,362		4,362		Goodwill	4,362		4,362
Deferred tax assets	Deferred tax assets	293		263		Deferred tax assets	537		473
Capitalized software licenses	Capitalized software licenses	82		85		Capitalized software licenses	143		152
Overfunded retirement plans	Overfunded retirement plans	296		392		Overfunded retirement plans	183		188
Other long-term assets	Other long-term assets	716		748		Other long-term assets	1,675		1,135
Total assets	Total assets	$	24,723	$	24,676	Total assets	$	30,939	$	27,207

Liabilities and stockholders’ equity	Liabilities and stockholders’ equity					Liabilities and stockholders’ equity
Current liabilities:	Current liabilities:					Current liabilities:
Current portion of long-term debt	Current portion of long-term debt	$	499	$	500	Current portion of long-term debt	$	299	$	500
Accounts payable	Accounts payable	712		571		Accounts payable	923		851
Accrued compensation	Accrued compensation	520		775		Accrued compensation	561		799
Income taxes payable	Income taxes payable	115		121		Income taxes payable	121		189
Accrued expenses and other liabilities	Accrued expenses and other liabilities	714		602		Accrued expenses and other liabilities	807		646
Total current liabilities	Total current liabilities	2,560		2,569		Total current liabilities	2,711		2,985
Long-term debt	Long-term debt	6,745		7,241		Long-term debt	10,920		8,235
Underfunded retirement plans	Underfunded retirement plans	71		79		Underfunded retirement plans	127		118
Deferred tax liabilities	Deferred tax liabilities	90		87		Deferred tax liabilities	69		66
Other long-term liabilities	Other long-term liabilities	1,165		1,367		Other long-term liabilities	1,172		1,226
Total liabilities	Total liabilities	10,631		11,343		Total liabilities	14,999		12,630
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $25 par value. Shares authorized – 10; none issued	Preferred stock, $25 par value. Shares authorized – 10; none issued	—		—		Preferred stock, $25 par value. Shares authorized – 10; none issued	—		—
Common stock, $1 par value. Shares authorized – 2,400; shares issued – 1,741	Common stock, $1 par value. Shares authorized – 2,400; shares issued – 1,741	1,741		1,741		Common stock, $1 par value. Shares authorized – 2,400; shares issued – 1,741	1,741		1,741
Paid-in capital	Paid-in capital	2,783		2,630		Paid-in capital	3,163		2,951
Retained earnings	Retained earnings	48,280		45,919		Retained earnings	51,522		50,353
Treasury common stock at cost	Treasury common stock at cost					Treasury common stock at cost
Shares: June 30, 2022 – 826; December 31, 2021 – 817		(38,532)		(36,800)
Shares: June 30, 2023 – 833; December 31, 2022 – 835						Shares: June 30, 2023 – 833; December 31, 2022 – 835	(40,240)		(40,214)
Accumulated other comprehensive income (loss), net of taxes (AOCI)	Accumulated other comprehensive income (loss), net of taxes (AOCI)	(180)		(157)		Accumulated other comprehensive income (loss), net of taxes (AOCI)	(246)		(254)
Total stockholders’ equity	Total stockholders’ equity	14,092		13,333		Total stockholders’ equity	15,940		14,577
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	24,723	$	24,676	Total liabilities and stockholders’ equity	$	30,939	$	27,207

See accompanying notes.	See accompanying notes.					See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


		For Six Months Ended					For Six Months Ended
Consolidated Statements of Cash Flows	Consolidated Statements of Cash Flows	June 30,				Consolidated Statements of Cash Flows	June 30,
(In millions)	(In millions)	2022		2021		(In millions)	2023		2022
Cash flows from operating activities	Cash flows from operating activities					Cash flows from operating activities
Net income	Net income	$	4,492	$	3,684	Net income	$	3,430	$	4,492
Adjustments to net income:	Adjustments to net income:					Adjustments to net income:
Depreciation	Depreciation	427		363		Depreciation	550		427
Amortization of acquisition-related intangibles		—		95

Amortization of capitalized software	Amortization of capitalized software	27		30		Amortization of capitalized software	31		27
Stock compensation	Stock compensation	159		130		Stock compensation	215		159
Gains on sales of assets	Gains on sales of assets	(3)		(4)		Gains on sales of assets	(1)		(3)
Deferred taxes	Deferred taxes	(15)		7		Deferred taxes	(60)		(15)
Increase (decrease) from changes in:	Increase (decrease) from changes in:					Increase (decrease) from changes in:
Accounts receivable	Accounts receivable	(489)		(177)		Accounts receivable	(61)		(489)
Inventories	Inventories	(289)		105		Inventories	(972)		(289)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	20		23		Prepaid expenses and other current assets	10		20
Accounts payable and accrued expenses	Accounts payable and accrued expenses	30		52		Accounts payable and accrued expenses	(50)		30
Accrued compensation	Accrued compensation	(254)		(238)		Accrued compensation	(242)		(254)
Income taxes payable	Income taxes payable	5		(44)		Income taxes payable	(58)		5
Changes in funded status of retirement plans	Changes in funded status of retirement plans	70		35		Changes in funded status of retirement plans	23		70
Other	Other	(268)		(90)		Other	(256)		(268)
Cash flows from operating activities	Cash flows from operating activities	3,912		3,971		Cash flows from operating activities	2,559		3,912

Cash flows from investing activities	Cash flows from investing activities					Cash flows from investing activities
Capital expenditures	Capital expenditures	(1,040)		(694)		Capital expenditures	(2,428)		(1,040)
Proceeds from asset sales	Proceeds from asset sales	3		4		Proceeds from asset sales	2		3
Purchases of short-term investments	Purchases of short-term investments	(6,449)		(4,734)		Purchases of short-term investments	(7,060)		(6,449)
Proceeds from short-term investments	Proceeds from short-term investments	6,974		4,455		Proceeds from short-term investments	7,091		6,974
Other	Other	69		(13)		Other	38		69
Cash flows from investing activities	Cash flows from investing activities	(443)		(982)		Cash flows from investing activities	(2,357)		(443)

Cash flows from financing activities	Cash flows from financing activities					Cash flows from financing activities

Proceeds from issuance of long-term debt						Proceeds from issuance of long-term debt	3,000		—
Repayment of debt	Repayment of debt	(500)		(550)		Repayment of debt	(500)		(500)
Dividends paid	Dividends paid	(2,123)		(1,882)		Dividends paid	(2,250)		(2,123)
Stock repurchases	Stock repurchases	(1,771)		(246)		Stock repurchases	(182)		(1,771)
Proceeds from common stock transactions	Proceeds from common stock transactions	113		250		Proceeds from common stock transactions	150		113
Other	Other	(17)		(19)		Other	(31)		(17)
Cash flows from financing activities	Cash flows from financing activities	(4,298)		(2,447)		Cash flows from financing activities	187		(4,298)

Net change in cash and cash equivalents	Net change in cash and cash equivalents	(829)		542		Net change in cash and cash equivalents	389		(829)
Cash and cash equivalents at beginning of period	Cash and cash equivalents at beginning of period	4,631		3,107		Cash and cash equivalents at beginning of period	3,050		4,631
Cash and cash equivalents at end of period	Cash and cash equivalents at end of period	$	3,802	$	3,649	Cash and cash equivalents at end of period	$	3,439	$	3,802

See accompanying notes.	See accompanying notes.					See accompanying notes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Notes to financial statements

1. Description of business, including segment and geographic area information

We design ~~make~~ and manufacture semiconductors that we sell ~~semiconductors~~ to electronics designers and manufacturers all over the world. We have 2two reportable segments, Analog and Embedded Processing, each of which represents groups of similar products that are combined on the basis of similar design and development requirements, product characteristics, manufacturing processes and distribution channels. Our segments also reflect how management allocates resources and measures results.

•Analog semiconductors change real-world signals, such as sound, temperature, pressure or images, by conditioning them, amplifying them and often converting them to a stream of digital data that can be processed by other semiconductors, such as embedded processors. Analog semiconductors are also used to manage power in all electronic equipment by converting, distributing, storing, discharging, isolating and measuring electrical energy, whether the equipment is plugged into a wall or using a battery. Our Analog segment consists of two major product lines: Power and Signal Chain.

•Embedded Processing products are the digital “brains” of many types of electronic equipment. They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application.

We report the results of our remaining business activities in Other. Other includes operating segments that do not meet the quantitative thresholds for individually reportable segments and cannot be aggregated with other operating segments. Other includes DLP® products, calculators and custom ASIC products.

Our centralized manufacturing and support organizations, such as facilities, procurement and logistics, provide support to our operating segments, including those in Other. Costs incurred by these organizations, including depreciation, are charged to the segments on a per-unit basis. Consequently, depreciation expense is not an independently identifiable component within the segments’ results and, therefore, is not provided.

Segment information


		For Three Months Ended				For Six Months Ended					For Three Months Ended				For Six Months Ended
		June 30,				June 30,					June 30,				June 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Revenue:	Revenue:									Revenue:
Analog	Analog	$	3,992	$	3,464	$	7,808	$	6,744	Analog	$	3,278	$	3,992	$	6,567	$	7,808
Embedded Processing	Embedded Processing	821		780		1,603		1,547		Embedded Processing	894		821		1,726		1,603
Other	Other	399		336		706		578		Other	359		399		617		706
Total revenue	Total revenue	$	5,212	$	4,580	$	10,117	$	8,869	Total revenue	$	4,531	$	5,212	$	8,910	$	10,117

Operating profit:	Operating profit:									Operating profit:
Analog	Analog	$	2,226	$	1,778	$	4,376	$	3,424	Analog	$	1,463	$	2,226	$	3,037	$	4,376
Embedded Processing	Embedded Processing	324		312		639		599		Embedded Processing	318		324		555		639
Other (a)	Other (a)	173		123		271		129		Other (a)	191		173		314		271
Total operating profit	Total operating profit	$	2,723	$	2,213	$	5,286	$	4,152	Total operating profit	$	1,972	$	2,723	$	3,906	$	5,286

(a)Includes ~~acquisition charges and~~ restructuring charges/other

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Geographic area information

The following geographic area information ~~includes revenue,~~is based on product shipment ~~destination. The geographic revenue information~~destination, which does not ~~necessarily~~ reflect end demand by ~~geography because our products tend to be shipped to the locations where our customers manufacture their products.~~geography.


		For Three Months Ended				For Six Months Ended					For Three Months Ended								For Six Months Ended
		June 30,				June 30,					June 30,								June 30,
		2022		2021		2022		2021			2023				2022				2023				2022
Revenue:	Revenue:									Revenue:
United States	United States	$	577	$	529	$	1,071	$	922	United States	$	715	16	%	$	577	11	%	$	1,270	14	%	$	1,071	11	%
Asia (a)		3,395		2,993		6,598		5,851
China (a)										China (a)	1,820		40		2,751		53		3,651		41		5,299		52
Rest of Asia										Rest of Asia	534		12		644		12		1,083		12		1,299		13
Europe, Middle East and Africa	Europe, Middle East and Africa	822		696		1,636		1,378		Europe, Middle East and Africa	956		21		822		16		1,942		22		1,636		16
Japan	Japan	276		235		539		474		Japan	349		8		276		5		638		7		539		5
Rest of world	Rest of world	142		127		273		244		Rest of world	157		3		142		3		326		4		273		3
Total revenue	Total revenue	$	5,212	$	4,580	$	10,117	$	8,869	Total revenue	$	4,531	100	%	$	5,212	100	%	$	8,910	100	%	$	10,117	100	%

(a)Revenue from products shipped into China ~~was $2.8 billion and $2.5 billion in the second quarters of 2022 and 2021, respectively, and $5.3 billion and $4.8 billion in the first six months of 2022 and 2021, respectively, which~~ includes shipments to customers that manufacture in China and then export end products to their customers around the world, as well as distributors that transship inventory through China to service other countries.

The following additional geographic information includes our estimate for revenue based on the location of our end customers’ headquarters, providing a better representation of the geographic profile for where critical decisions are made.


	For Three Months Ended								For Six Months Ended
	June 30,								June 30,
	2023				2022				2023				2022
Revenue:
United States	$	1,493	33	%	$	1,706	33	%	$	2,850	32	%	$	3,276	32	%
China	872		19		1,340		26		1,748		20		2,615		26
Rest of Asia	435		10		569		11		829		9		1,109		11
Europe, Middle East and Africa (a)	1,194		26		1,120		21		2,464		28		2,199		22
Japan	480		11		414		8		918		10		806		8
Rest of world	57		1		63		1		101		1		112		1
Total revenue	$	4,531	100	%	$	5,212	100	%	$	8,910	100	%	$	10,117	100	%

(a)Revenue from end customers headquartered in Germany was 13% and 9% in the second quarters of 2023 and 2022, respectively, and 13% and 10% in the first six months of 2023 and 2022, respectively.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

2. Basis of presentation and significant accounting policies and practices

Basis of presentation

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (GAAP) and on the same basis as the audited financial statements included in our annual report on Form 10-K for the year ended December 31, ~~2021.~~2022. The Consolidated Statements of Income, Comprehensive Income and Cash Flows for the periods ended June 30, ~~2022~~2023 and ~~2021,~~2022, and the Consolidated Balance Sheet as of June 30, ~~2022,~~2023, are not audited but reflect all adjustments that are of a normal recurring nature and are necessary for a fair statement of the results of the periods shown. Certain information and note disclosures normally included in annual consolidated financial statements have been omitted pursuant to the rules and regulations of the U.S. Securities and Exchange Commission. Because the consolidated interim financial statements do not include all of the information and notes required by GAAP for a complete set of financial statements, they should be read in conjunction with the audited consolidated financial statements and notes included in our annual report on Form 10-K for the year ended December 31, ~~2021. Certain amounts in prior periods' financial statements have been reclassified to conform to the current presentation.~~2022. The results for the three- and six-month periods are not necessarily indicative of a full year’s results.

Significant accounting policies and practices

Earnings per share (EPS)

We use the two-class method for calculating EPS because the restricted stock units (RSUs) we grant are participating securities containing non-forfeitable rights to receive dividend equivalents. Under the two-class method, a portion of net income is allocated to RSUs and excluded from the calculation of income allocated to common stock.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Computation and reconciliation of earnings per common share are as follows:


		For Three Months Ended June 30,											For Three Months Ended June 30,
		2022					2021						2023					2022
		Net Income		Shares	EPS		Net Income		Shares	EPS			Net Income		Shares	EPS		Net Income		Shares	EPS
Basic EPS:	Basic EPS:											Basic EPS:
Net income	Net income	$	2,291				$	1,931				Net income	$	1,722				$	2,291
Income allocated to RSUs	Income allocated to RSUs	(10)					(7)					Income allocated to RSUs	(9)					(10)
Income allocated to common stock	Income allocated to common stock	$	2,281	920	$	2.48	$	1,924	923	$	2.08	Income allocated to common stock	$	1,713	908	$	1.89	$	2,281	920	$	2.48
Dilutive effect of stock compensation plans	Dilutive effect of stock compensation plans			10					14			Dilutive effect of stock compensation plans			8					10

Diluted EPS:	Diluted EPS:											Diluted EPS:
Net income	Net income	$	2,291				$	1,931				Net income	$	1,722				$	2,291
Income allocated to RSUs	Income allocated to RSUs	(10)					(7)					Income allocated to RSUs	(8)					(10)
Income allocated to common stock	Income allocated to common stock	$	2,281	930	$	2.45	$	1,924	937	$	2.05	Income allocated to common stock	$	1,714	916	$	1.87	$	2,281	930	$	2.45

		For Six Months Ended June 30,											For Six Months Ended June 30,
		2022					2021						2023					2022
		Net Income		Shares	EPS		Net Income		Shares	EPS			Net Income		Shares	EPS		Net Income		Shares	EPS
Basic EPS:	Basic EPS:											Basic EPS:
Net income	Net income	$	4,492				$	3,684				Net income	$	3,430				$	4,492
Income allocated to RSUs	Income allocated to RSUs	(19)					(15)					Income allocated to RSUs	(17)					(19)
Income allocated to common stock	Income allocated to common stock	$	4,473	922	$	4.85	$	3,669	923	$	3.98	Income allocated to common stock	$	3,413	907	$	3.76	$	4,473	922	$	4.85
Dilutive effect of stock compensation plans	Dilutive effect of stock compensation plans			10					13			Dilutive effect of stock compensation plans			9					10

Diluted EPS:	Diluted EPS:											Diluted EPS:
Net income	Net income	$	4,492				$	3,684				Net income	$	3,430				$	4,492
Income allocated to RSUs	Income allocated to RSUs	(19)					(15)					Income allocated to RSUs	(18)					(19)
Income allocated to common stock	Income allocated to common stock	$	4,473	932	$	4.80	$	3,669	936	$	3.92	Income allocated to common stock	$	3,412	916	$	3.72	$	4,473	932	$	4.80

Potentially dilutive securities representing 69 million and 26 million shares of common stock that were outstanding during the second quarters of ~~2022~~2023 and ~~2021,~~2022, respectively, and 59 million and 35 million shares outstanding during the first six months of ~~2022~~2023 and ~~2021,~~2022, respectively, were excluded from the computation of diluted earnings per common share during these periods because their effect would have been anti-dilutive.

Derivatives and hedging

We use derivative financial instruments to manage exposure to foreign exchange risk. These instruments are primarily forward foreign currency exchange contracts, which are used as economic hedges to reduce the earnings impact that exchange rate fluctuations may have on our non-U.S. dollar net balance sheet exposures. Gains and losses from changes in the fair value of these forward foreign currency exchange contracts are credited or charged to OI&E. We do not apply hedge accounting to our foreign currency derivative instruments.

We are exposed to variability in compensation charges related to certain deferred compensation obligations to employees. We use total return swaps to economically hedge this exposure and offset the related compensation expense, recognizing changes in the value of the swaps and the related deferred compensation liabilities in SG&A.

In connection with the issuance of long-term debt, we may use financial derivatives such as treasury-rate lock agreements that are recognized in AOCI and amortized over the life of the related debt.

The results of these derivative transactions have not been material. We do not use derivatives for speculative or trading purposes.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Fair values of financial instruments

The fair values of our derivative financial instruments were not material as of June 30, ~~2022.~~2023. Our investments in cash equivalents, short-term investments and certain long-term investments, as well as our deferred compensation liabilities, are carried at fair value. The carrying values for other current financial assets and liabilities, such as accounts receivable and accounts payable, approximate fair value due to the short maturity of such instruments. As of June 30, ~~2022,~~2023, the carrying value of long-term debt, including the current portion, was ~~$7.24~~$11.22 billion, and the estimated fair value was ~~$6.72~~$10.46 billion. The estimated fair value is measured using broker-dealer quotes, which are Level 2 inputs. See Note 4 for a description of fair value and the definition of Level 2 inputs.

3. Income taxes

Provision for income taxes is based on the following:


		For Three Months Ended						For Six Months Ended							For Three Months Ended						For Six Months Ended
		June 30,						June 30,							June 30,						June 30,
		2022			2021			2022			2021				2023			2022			2023			2022
Taxes calculated using the estimated annual effective tax rate	Taxes calculated using the estimated annual effective tax rate	$	395		$	322		$	756		$	597		Taxes calculated using the estimated annual effective tax rate	$	289		$	395		$	565		$	756
Discrete tax items	Discrete tax items	(5)			(11)			(41)			(100)			Discrete tax items	(9)			(5)			(47)			(41)
Provision for income taxes	Provision for income taxes	$	390		$	311		$	715		$	497		Provision for income taxes	$	280		$	390		$	518		$	715

Effective tax rate	Effective tax rate	15		%	14		%	14		%	12		%	Effective tax rate	14		%	15		%	13		%	14		%

The effective tax rate differs from the 21% U.S. statutory corporate tax rate due to the effect of U.S. tax benefits.

4. Valuation of debt and equity investments and certain liabilities

Investments measured at fair value

Money market funds, ~~available-for-sale~~ 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 ~~from available-for-sale debt securities~~ are recorded as an increase or decrease, net of taxes, in AOCI on our Consolidated Balance Sheets, and any credit losses ~~on available-for-sale debt securities~~ 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 investments

Our other investments include equity-method investments and non-marketable ~~equity~~ investments, which are not measured at fair value. These investments consist of interests in venture capital funds and other non-marketable ~~equity~~ securities. Gains and losses from equity-method investments are recognized in OI&E based on our ownership share of the investee’s financial results.

Non-marketable ~~equity~~ securities are measured at cost with adjustments for observable changes in price or impairments. Gains and losses on non-marketable ~~equity~~ investments are recognized in OI&E.

910

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Details of our investments are as follows:


		June 30, 2022						December 31, 2021							June 30, 2023						December 31, 2022
		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments			Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments		Cash and Cash Equivalents		Short-Term Investments		Long-Term Investments
Measured at fair value:	Measured at fair value:													Measured at fair value:
Money market funds	Money market funds	$	2,333	$	—	$	—	$	1,824	$	—	$	—	Money market funds	$	2,367	$	—	$	—	$	1,238	$	—	$	—
Corporate obligations	Corporate obligations	309		1,266		—		1,060		1,070		—		Corporate obligations	384		1,761		—		276		1,535		—
U.S. government and agency securities	U.S. government and agency securities	438		2,971		—		642		3,388		—		U.S. government and agency securities	100		3,957		—		680		4,234		—
Non-U.S. government and agency securities	Non-U.S. government and agency securities	—		348		—		300		650		—		Non-U.S. government and agency securities	50		395		—		149		248		—
Mutual funds	Mutual funds	—		—		11		—		—		16		Mutual funds	—		—		11		—		—		11
Total	Total	3,080		4,585		11		3,826		5,108		16		Total	2,901		6,113		11		2,343		6,017		11

Other measurement basis:	Other measurement basis:													Other measurement basis:
Equity-method investments	Equity-method investments	—		—		23		—		—		42		Equity-method investments	—		—		14		—		—		18
Non-marketable investments	Non-marketable investments	—		—		5		—		—		4		Non-marketable investments	—		—		6		—		—		5
Cash on hand	Cash on hand	722		—		—		805		—		—		Cash on hand	538		—		—		707		—		—
Total	Total	$	3,802	$	4,585	$	39	$	4,631	$	5,108	$	62	Total	$	3,439	$	6,113	$	31	$	3,050	$	6,017	$	34

As of June 30, ~~2022,~~2023, and December 31, ~~2021,~~2022, unrealized gains and losses associated with our ~~available-for-sale~~debt investments were not material. We did not recognize any credit losses related to ~~available-for-sale~~debt investments for the first six months of ~~2022~~2023 and ~~2021.~~2022. All of our debt securities classified as available-for-sale as of June 30, 2023, have maturities within one year.

Proceeds from sales, redemptions and maturities of short-term available-for-sale investments were ~~$4.20~~$3.07 billion and ~~$2.46~~$4.20 billion for the second quarters of ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$6.97~~$7.09 billion and ~~$4.46~~$6.97 billion for the first six months of ~~2022~~2023 and ~~2021,~~2022, respectively. Gross realized gains and losses from these sales were not material.

~~The following table presents the aggregate maturities of our available-for-sale debt investments as of June 30, 2022:~~

~~Fair Value~~

~~One year or less~~

~~5,258~~

~~One to two years~~

Fair-value considerations

We measure and report certain financial assets and liabilities at fair value on a recurring basis. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

The three-level hierarchy described below indicates the extent and level of judgment used to estimate fair-value measurements.

•Level 1 – Uses unadjusted quoted prices that are available in active markets for identical assets or liabilities as of the reporting date.

~~TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES~~

•Level 2 – Uses inputs other than Level 1 that are either directly or indirectly observable as of the reporting date through correlation with market data, including quoted prices for similar assets and liabilities in active markets and quoted prices in markets that are not active. Level 2 also includes assets and liabilities that are valued using models or other pricing methodologies that do not require significant judgment since the input assumptions used in the models, such as interest rates and volatility factors, are corroborated by readily observable data. We utilize a third-party data service to provide Level 2 valuations. We verify these valuations for reasonableness relative to unadjusted quotes obtained from brokers or dealers based on observable prices for similar assets in active markets.

•Level 3 – Uses inputs that are unobservable, supported by little or no market activity and reflect the use of significant management judgment. These values are generally determined using pricing models that utilize management estimates of market participant assumptions. As of June 30, ~~2022, our Level 3 assets~~2023, and ~~liabilities were not material. As of~~ December 31, ~~2021,~~2022, we had no Level 3 assets or liabilities.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

The following are our assets and liabilities that were accounted for at fair value on a recurring basis. These tables do not include cash on hand, assets held by our postretirement plans, or assets and liabilities that are measured at historical cost or any basis other than fair value.


		June 30, 2022						December 31, 2021							June 30, 2023						December 31, 2022
		Level 1		Level 2		Total		Level 1		Level 2		Total			Level 1		Level 2		Total		Level 1		Level 2		Total
Assets:	Assets:													Assets:
Money market funds	Money market funds	$	2,333	$	—	$	2,333	$	1,824	$	—	$	1,824	Money market funds	$	2,367	$	—	$	2,367	$	1,238	$	—	$	1,238
Corporate obligations	Corporate obligations	—		1,575		1,575		—		2,130		2,130		Corporate obligations	—		2,145		2,145		—		1,811		1,811
U.S. government and agency securities	U.S. government and agency securities	3,309		100		3,409		3,629		401		4,030		U.S. government and agency securities	3,957		100		4,057		4,914		—		4,914
Non-U.S. government and agency securities	Non-U.S. government and agency securities	—		348		348		—		950		950		Non-U.S. government and agency securities	—		445		445		—		397		397
Mutual funds	Mutual funds	11		—		11		16		—		16		Mutual funds	11		—		11		11		—		11
Total assets	Total assets	$	5,653	$	2,023	$	7,676	$	5,469	$	3,481	$	8,950	Total assets	$	6,335	$	2,690	$	9,025	$	6,163	$	2,208	$	8,371

Liabilities:	Liabilities:													Liabilities:
Deferred compensation	Deferred compensation	$	313	$	—	$	313	$	395	$	—	$	395	Deferred compensation	$	353	$	—	$	353	$	326	$	—	$	326
Total liabilities	Total liabilities	$	313	$	—	$	313	$	395	$	—	$	395	Total liabilities	$	353	$	—	$	353	$	326	$	—	$	326

~~TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES~~

5. Postretirement benefit plans

Expenses related to defined benefit and retiree health care benefit plans are as follows:


		U.S. Defined Benefit				U.S. Retiree Health Care				Non-U.S. Defined Benefit					U.S. Defined Benefit				U.S. Retiree Health Care				Non-U.S. Defined Benefit
For Three Months Ended June 30,	For Three Months Ended June 30,	2022		2021		2022		2021		2022		2021		For Three Months Ended June 30,	2023		2022		2023		2022		2023		2022
Service cost	Service cost	$	4	$	6	$	—	$	1	$	6	$	9	Service cost	$	2	$	4	$	1	$	—	$	4	$	6
Interest cost	Interest cost	6		7		2		2		9		10		Interest cost	7		6		3		2		15		9
Expected return on plan assets	Expected return on plan assets	(8)		(9)		(2)		(3)		(17)		(21)		Expected return on plan assets	(5)		(8)		(4)		(2)		(17)		(17)
Recognized net actuarial loss		1		4		—		—		—		2
Recognized net actuarial losses (gains)														Recognized net actuarial losses (gains)	1		1		(2)		—		3		—

Net periodic benefit costs		3		8		—		—		(2)		—
Net periodic benefit costs (credits)														Net periodic benefit costs (credits)	5		3		(2)		—		5		(2)
Settlement losses	Settlement losses	11		4		—		—		8		—		Settlement losses	1		11		—		—		1		8
Total, including other postretirement losses		$	14	$	12	$	—	$	—	$	6	$	—
Total, including other postretirement losses (gains)														Total, including other postretirement losses (gains)	$	6	$	14	$	(2)	$	—	$	6	$	6

		U.S. Defined Benefit				U.S. Retiree Health Care				Non-U.S. Defined Benefit					U.S. Defined Benefit				U.S. Retiree Health Care				Non-U.S. Defined Benefit
For Six Months Ended June 30,	For Six Months Ended June 30,	2022		2021		2022		2021		2022		2021		For Six Months Ended June 30,	2023		2022		2023		2022		2023		2022
Service cost	Service cost	$	8	$	11	$	1	$	2	$	13	$	18	Service cost	$	4	$	8	$	1	$	1	$	8	$	13
Interest cost	Interest cost	12		15		5		5		19		19		Interest cost	14		12		7		5		29		19
Expected return on plan assets	Expected return on plan assets	(16)		(17)		(6)		(6)		(35)		(41)		Expected return on plan assets	(11)		(16)		(9)		(6)		(32)		(35)
Recognized net actuarial loss		1		8		—		—		—		4
Recognized net actuarial losses (gains)														Recognized net actuarial losses (gains)	3		1		(3)		—		6		—

Net periodic benefit costs		5		17		—		1		(3)		—
Net periodic benefit costs (credits)														Net periodic benefit costs (credits)	10		5		(4)		—		11		(3)
Settlement losses	Settlement losses	13		8		—		—		9		1		Settlement losses	1		13		—		—		1		9
Total, including other postretirement losses		$	18	$	25	$	—	$	1	$	6	$	1
Total, including other postretirement losses (gains)														Total, including other postretirement losses (gains)	$	11	$	18	$	(4)	$	—	$	12	$	6

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

6. Debt and lines of credit

Short-term borrowings

We maintain a line of credit to ~~support commercial paper borrowings, if any, and to~~ provide additional liquidity through bank ~~loans.~~loans and, if necessary, to support commercial paper borrowings. As of June 30, ~~2022, we had~~2023, 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 ~~2023.~~2024. 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 June 30, ~~2022,~~2023, our credit facility was undrawn, and we had no commercial paper outstanding.

Long-term debt

In ~~April 2022,~~May 2023, we issued three series of senior unsecured notes for an aggregate principal amount of $1.60 billion, consisting of:

•$200 million further issuance of existing 4.60% notes due in 2028;

•$200 million further issuance of existing 4.90% notes due in 2033; and

•$1.20 billion of 5.05% notes due in 2063.

We incurred $7 million of issuance cost and other related costs. The proceeds of the offering were $1.60 billion, net of the original issuance discounts and premiums, which will be used for general corporate purposes.

In May 2023, we retired $500 million of maturing debt.

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.

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

Long-term debt outstanding is as follows:


		June 30,		December 31,			June 30,		December 31,
		2022		2021			2023		2022
Notes due 2022 at 1.85%		$	—	$	500
Notes due 2023 at 2.25%	Notes due 2023 at 2.25%	500		500		Notes due 2023 at 2.25%	$	—	$	500
Notes due 2024 at 2.625%	Notes due 2024 at 2.625%	300		300		Notes due 2024 at 2.625%	300		300
Notes due 2024 at 4.70%						Notes due 2024 at 4.70%	300		300
Notes due 2025 at 1.375%	Notes due 2025 at 1.375%	750		750		Notes due 2025 at 1.375%	750		750
Notes due 2026 at 1.125%	Notes due 2026 at 1.125%	500		500		Notes due 2026 at 1.125%	500		500
Notes due 2027 at 2.90%	Notes due 2027 at 2.90%	500		500		Notes due 2027 at 2.90%	500		500
Notes due 2028 at 4.60%						Notes due 2028 at 4.60%	700		500
Notes due 2029 at 2.25%	Notes due 2029 at 2.25%	750		750		Notes due 2029 at 2.25%	750		750
Notes due 2030 at 1.75%	Notes due 2030 at 1.75%	750		750		Notes due 2030 at 1.75%	750		750
Notes due 2031 at 1.90%	Notes due 2031 at 1.90%	500		500		Notes due 2031 at 1.90%	500		500
Notes due 2032 at 3.65%						Notes due 2032 at 3.65%	400		400
Notes due 2033 at 4.90%						Notes due 2033 at 4.90%	950		—
Notes due 2039 at 3.875%	Notes due 2039 at 3.875%	750		750		Notes due 2039 at 3.875%	750		750
Notes due 2048 at 4.15%	Notes due 2048 at 4.15%	1,500		1,500		Notes due 2048 at 4.15%	1,500		1,500
Notes due 2051 at 2.70%	Notes due 2051 at 2.70%	500		500		Notes due 2051 at 2.70%	500		500
Notes due 2052 at 4.10%						Notes due 2052 at 4.10%	300		300
Notes due 2053 at 5.00%						Notes due 2053 at 5.00%	650		—
Notes due 2063 at 5.05%						Notes due 2063 at 5.05%	1,200		—
Total debt	Total debt	7,300		7,800		Total debt	11,300		8,800
Net unamortized discounts, premiums and issuance costs	Net unamortized discounts, premiums and issuance costs	(56)		(59)		Net unamortized discounts, premiums and issuance costs	(81)		(65)
Total debt, including net unamortized discounts, premiums and issuance costs	Total debt, including net unamortized discounts, premiums and issuance costs	7,244		7,741		Total debt, including net unamortized discounts, premiums and issuance costs	11,219		8,735
Current portion of long-term debt	Current portion of long-term debt	(499)		(500)		Current portion of long-term debt	(299)		(500)
Long-term debt	Long-term debt	$	6,745	$	7,241	Long-term debt	$	10,920	$	8,235

Interest and debt expense was ~~$49~~$89 million and ~~$44~~$49 million for the second quarters of ~~2022~~2023 and ~~2021,~~2022, respectively, and ~~$101~~$157 million and ~~$90~~$101 million for the first six months of ~~2022~~2023 and ~~2021,~~2022, respectively. This was net of the amortized discounts, premiums, issuance and ~~issuance~~other related costs. Capitalized interest was not material.

1314

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

7. Stockholders’ equity

Changes in equity are as follows:


		Common Stock		Paid-in Capital		Retained Earnings		Treasury Common Stock		AOCI			Common Stock		Paid-in Capital		Retained Earnings		Treasury Common Stock		AOCI
Balance, December 31, 2021		$	1,741	$	2,630	$	45,919	$	(36,800)	$	(157)
Balance, December 31, 2022												Balance, December 31, 2022	$	1,741	$	2,951	$	50,353	$	(40,214)	$	(254)

2022
2023												2023
Net income	Net income	—		—		2,201		—		—		Net income	—		—		1,708		—		—
Dividends declared and paid ($1.15 per share)		—		—		(1,063)		—		—
Dividends declared and paid ($1.24 per share)												Dividends declared and paid ($1.24 per share)	—		—		(1,125)		—		—
Common stock issued for stock-based awards	Common stock issued for stock-based awards	—		(36)		—		93		—		Common stock issued for stock-based awards	—		(37)		—		118		—
Stock repurchases	Stock repurchases	—		—		—		(584)		—		Stock repurchases	—		—		—		(96)		—
Stock compensation	Stock compensation	—		74		—		—		—		Stock compensation	—		104		—		—		—
Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	—		—		—		—		4		Other comprehensive income (loss), net of taxes	—		—		—		—		2
Dividend equivalents on RSUs	Dividend equivalents on RSUs	—		—		(5)		—		—		Dividend equivalents on RSUs	—		—		(6)		—		—
Other	Other	—		(1)		1		—		—		Other	—		(2)		—		—		—
Balance, March 31, 2022		1,741		2,667		47,053		(37,291)		(153)
Balance, March 31, 2023												Balance, March 31, 2023	1,741		3,016		50,930		(40,192)		(252)

Net income	Net income	—		—		2,291		—		—		Net income	—		—		1,722		—		—
Dividends declared and paid ($1.15 per share)		—		—		(1,060)		—		—
Dividends declared and paid ($1.24 per share)												Dividends declared and paid ($1.24 per share)	—		—		(1,125)		—		—
Common stock issued for stock-based awards	Common stock issued for stock-based awards	—		31		—		25		—		Common stock issued for stock-based awards	—		36		—		29		—
Stock repurchases	Stock repurchases	—		—		—		(1,266)		—		Stock repurchases	—		—		—		(77)		—
Stock compensation	Stock compensation	—		85		—		—		—		Stock compensation	—		111		—		—		—
Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	—		—		—		—		(27)		Other comprehensive income (loss), net of taxes	—		—		—		—		6
Dividend equivalents on RSUs	Dividend equivalents on RSUs	—		—		(4)		—		—		Dividend equivalents on RSUs	—		—		(5)		—		—

Balance, June 30, 2022		$	1,741	$	2,783	$	48,280	$	(38,532)	$	(180)
Balance, June 30, 2023												Balance, June 30, 2023	$	1,741	$	3,163	$	51,522	$	(40,240)	$	(246)

1415

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES


		Common Stock		Paid-in Capital		Retained Earnings		Treasury Common Stock		AOCI			Common Stock		Paid-in Capital		Retained Earnings		Treasury Common Stock		AOCI
Balance, December 31, 2020		$	1,741	$	2,333	$	42,051	$	(36,578)	$	(360)
Balance, December 31, 2021												Balance, December 31, 2021	$	1,741	$	2,630	$	45,919	$	(36,800)	$	(157)

2021
2022												2022
Net income	Net income	—		—		1,753		—		—		Net income	—		—		2,201		—		—
Dividends declared and paid ($1.02 per share)		—		—		(940)		—		—
Dividends declared and paid ($1.15 per share)												Dividends declared and paid ($1.15 per share)	—		—		(1,063)		—		—
Common stock issued for stock-based awards												Common stock issued for stock-based awards	—		(36)		—		93		—
Stock repurchases												Stock repurchases	—		—		—		(584)		—
Stock compensation												Stock compensation	—		74		—		—		—
Other comprehensive income (loss), net of taxes												Other comprehensive income (loss), net of taxes	—		—		—		—		4
Dividend equivalents on RSUs												Dividend equivalents on RSUs	—		—		(5)		—		—
Other												Other	—		(1)		1		—		—
Balance, March 31, 2022												Balance, March 31, 2022	1,741		2,667		47,053		(37,291)		(153)

Net income												Net income	—		—		2,291		—		—
Dividends declared and paid ($1.15 per share)												Dividends declared and paid ($1.15 per share)	—		—		(1,060)		—		—
Common stock issued for stock-based awards	Common stock issued for stock-based awards	—		(3)		—		199		—		Common stock issued for stock-based awards	—		31		—		25		—
Stock repurchases	Stock repurchases	—		—		—		(100)		—		Stock repurchases	—		—		—		(1,266)		—
Stock compensation	Stock compensation	—		61		—		—		—		Stock compensation	—		85		—		—		—
Other comprehensive income (loss), net of taxes	Other comprehensive income (loss), net of taxes	—		—		—		—		13		Other comprehensive income (loss), net of taxes	—		—		—		—		(27)
Dividend equivalents on RSUs	Dividend equivalents on RSUs	—		—		(4)		—		—		Dividend equivalents on RSUs	—		—		(4)		—		—

Balance, March 31, 2021		1,741		2,391		42,860		(36,479)		(347)

Net income		—		—		1,931		—		—
Dividends declared and paid ($1.02 per share)		—		—		(942)		—		—
Common stock issued for stock-based awards		—		25		—		29		—
Stock repurchases		—		—		—		(146)		—
Stock compensation		—		69		—		—		—
Other comprehensive income (loss), net of taxes		—		—		—		—		24
Dividend equivalents on RSUs		—		—		(4)		—		—
Other		—		—		1		—		—
Balance, June 30, 2021		$	1,741	$	2,485	$	43,846	$	(36,596)	$	(323)
Balance, June 30, 2022												Balance, June 30, 2022	$	1,741	$	2,783	$	48,280	$	(38,532)	$	(180)

8. Contingencies

Indemnification guarantees

We 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 liabilities

~~We accrue~~Our stated warranties for ~~known product-related claims if~~semiconductor products obligate us to repair, replace or credit the purchase price of a ~~loss is probable and can be reasonably estimated. During~~covered product back to the ~~periods presented, there have been no material accruals or payments regarding product warranty or product liability.~~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 ~~condition, results of operations~~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 ~~liquidity. Our stated warranties for semiconductor products obligate us to repair, replace~~payments regarding product warranty or ~~credit the purchase price of a covered~~ product ~~back to the buyer. Product claim consideration may exceed the price of our products.~~liability.

General

We 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 ~~condition, results of operations or liquidity.~~statements.

1516

TEXAS INSTRUMENTS INCORPORATED AND SUBSIDIARIES

9. Supplemental financial information

Restructuring charges/other

During the second quarter and first six months of 2022, restructuring charges/other included $66 million and $132 million, respectively, ~~related to integration charges~~of preproduction costs at our Lehi, Utah, manufacturing ~~facility. These costs are~~facility, which were included in Other for segment reporting purposes. These costs transitioned primarily to cost of revenue after production began in December 2022.

Other long-term assets


	June 30,		December 31,
	2023		2022
U.S. CHIPS and Science Act investment tax credit	$	921	$	395
Other	754		740
Total	$	1,675	$	1,135

Details on amounts reclassified out of accumulated other comprehensive income (loss), net of taxes, to net income

Our Consolidated Statements of Comprehensive Income include items that have been recognized within net income during the second quarters and first six months of ~~2022~~2023 and ~~2021.~~2022. The table below details where these transactions are recorded in our Consolidated Statements of Income.


		For Three Months Ended				For Six Months Ended				Impact to Related Statement of Income Lines		For Three Months Ended				For Six Months Ended				Impact to Related Statement of Income Lines
		June 30,				June 30,						June 30,				June 30,
		2022		2021		2022		2021				2023		2022		2023		2022
Net actuarial losses of defined benefit plans:	Net actuarial losses of defined benefit plans:										Net actuarial losses of defined benefit plans:
Recognized net actuarial loss and settlement losses (a)	Recognized net actuarial loss and settlement losses (a)	$	20	$	10	$	23	$	21	Decrease to OI&E	Recognized net actuarial loss and settlement losses (a)	$	4	$	20	$	8	$	23	Decrease to OI&E
Tax effect	Tax effect	(4)		(2)		(5)		(5)		Decrease to provision for income taxes	Tax effect	(1)		(4)		(2)		(5)		Decrease to provision for income taxes
Recognized within net income, net of taxes	Recognized within net income, net of taxes	$	16	$	8	$	18	$	16	Decrease to net income	Recognized within net income, net of taxes	$	3	$	16	$	6	$	18	Decrease to net income

(a)Detailed in Note 5

Stock compensation

During the ~~second quarter and~~ first six months of ~~2022, 1~~2023, 3 million ~~and 2 million~~ shares ~~respectively,~~ were issued from treasury related to stock compensation. Shares issued from treasury during the second quarter of 2023 were less than 1 million.

1617

ITEM 2. Management’s discussion and analysis of financial condition and results of operations

Overview

We design ~~make~~ and manufacture semiconductors that we sell ~~semiconductors~~ to electronics designers and manufacturers all over the world. Technology is the foundation of our company, but ultimately, our objective and the best metric for owners to measure our progress ~~and generate long-term value for owners~~ is through the growth of free cash flow per ~~share.~~share over the long term.

Our strategy to maximize long-term free cash flow per share growth has three elements:

1.A great business model that is focused on analog and embedded processing products and built around four sustainable competitive advantages. The four sustainable competitive advantages are powerful in combination and provide tangible benefits:

i.A strong foundation of manufacturing and technology that provides lower costs and greater control of our supply chain.

ii.A broad portfolio of analog and embedded processing products that offers more opportunity per customer and more value for our investments.

iii.The reach of our market channels that gives access to more customers and more of their design projects, leading to the opportunity to sell more of our products into each design and gives us better insight and knowledge of customer needs.

iv.Diversity and longevity of our products, markets and customer positions that provide less single point dependency and longer returns on our investments.

Together, these competitive advantages help position TI in a unique class of companies capable of generating and returning significant amounts of cash for our owners. We make our investments with an eye towards long-term strengthening and leveraging of these advantages.

2.Discipline in allocating capital to the best opportunities. This spans how we select R&D projects, develop new capabilities like TI.com, invest in new manufacturing capacity or how we think about acquisitions and returning cash to our owners.

3.Efficiency, which means constantly striving for more output for every dollar spent.

We believe that our business model with the combined effect of our four competitive advantages sets TI apart from our peers and will for a long time to come. We will invest to strengthen our competitive advantages, be disciplined in capital allocation and stay diligent in our pursuit of efficiencies. Finally, we will remain focused on the belief that long-term growth of free cash flow per share is the ultimate measure to generate value.

Management’s discussion and analysis of financial condition and results of operations (MD&A) should be read in conjunction with the financial statements and the related notes that appear elsewhere in this document. In the following discussion of our results of operations:

•Our segments represent groups of similar products that are combined on the basis of similar design and development requirements, product characteristics, manufacturing processes and distribution channels, and how management allocates resources and measures results. See Note 1 to the financial statements for more information regarding our segments.

•When we discuss our results:

◦Unless otherwise noted, changes in our revenue are attributable to changes in customer demand, which are evidenced by fluctuations in shipment volumes.

◦New products do not tend to have a significant impact on our revenue in any given period because we sell such a large number of products.

◦From time to time, our revenue and gross profit are affected by changes in demand for higher-priced or lower-priced products, which we refer to as changes in the “mix” of products shipped.

1718

◦Because we own much of our manufacturing capacity, a significant portion of our operating cost is fixed. When factory loadings decrease, our fixed costs are spread over reduced output and, absent other circumstances, our profit margins decrease. Conversely, as factory loadings increase, our fixed costs are spread over increased output and, absent other circumstances, our profit margins increase.

•For an explanation of free cash flow, see the Non-GAAP financial information section.

•All dollar amounts in the tables are stated in millions of U.S. dollars.

The coronavirus (COVID-19) pandemic and its effects are impacting and will likely continue to impact market conditions and business operations across industries worldwide, including at TI. Therefore, we remain cautious about how the economy might behave for the next few years and continue to monitor potential impact on our operations.

Performance summary

Our second quarter revenue was ~~$5.21~~$4.53 billion, net income was ~~$2.29~~$1.72 billion and earnings per share (EPS) were ~~$2.45.~~$1.87.

Revenue increased ~~14%~~3% sequentially and decreased 13% from the same quarter a year ~~ago due~~ago. Similar to ~~growth~~last quarter, we experienced weakness across ~~markets.~~our end markets with the exception of automotive.

Our cash flow from operations of ~~$8.7~~$7.4 billion for the trailing 12 months again underscored the strength of our business ~~model.~~model, the quality of our product portfolio and the benefit of 300-mm production. Free cash flow for the same period was ~~$5.9~~$3.2 billion and ~~30%~~17% of revenue. ~~This reflects the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-millimeter production.~~

Over the past 12 months we invested ~~$3.2~~$3.6 billion in R&D and SG&A, invested ~~$2.8~~$4.2 billion in capital expenditures and returned ~~$6.2~~$6.5 billion to shareholders.

Results of operations – second quarter ~~2022~~2023 compared with second quarter ~~2021~~2022

Revenue of ~~$5.21~~$4.53 billion ~~increased $632~~decreased $681 million, or ~~14%~~13%, due to lower revenue from Analog, partially offset by higher revenue from ~~Analog and, to a lesser extent,~~ Embedded Processing. ~~This increase benefited from higher prices and the mix of products shipped.~~

Gross profit of ~~$3.63~~$2.91 billion was ~~up $548~~down $715 million, or ~~18%~~20%, ~~primarily~~ due to lower revenue and higher ~~revenue.~~manufacturing costs associated with planned capacity expansion. As a percentage of revenue, gross profit ~~increased~~decreased to ~~69.6%~~64.2% from ~~67.2%~~69.6%.

Operating expenses (R&D and SG&A) were ~~$836~~$938 million compared with ~~$816~~$836 million. This increase was due to higher employee-related costs as we invest to strengthen our competitive advantages.

Restructuring charges/other in the year-ago period was $66 million due to ~~integration charges~~preproduction costs at our Lehi, Utah, manufacturing facility. These costs transitioned primarily to cost of revenue after production began in December 2022.

Operating profit was $1.97 billion, or 43.5% of revenue, compared with $2.72 billion, or 52.2% of ~~revenue, compared with $2.21 billion, or 48.3% of~~ revenue.

OI&E was $7$119 million of income compared with ~~$73~~$7 million of income, due to higher interest income.

Interest and debt expense of $89 million increased $40 million due to the issuance of additional long-term debt. See Note 6 to the financial statements.

Our provision for income taxes was ~~$390~~$280 million compared with ~~$311~~$390 million. This ~~increase~~decrease was primarily due to ~~higher~~lower income before income taxes.

Net income was ~~$2.29~~$1.72 billion compared with ~~$1.93~~$2.29 billion. EPS was ~~$2.45~~$1.87 compared with ~~$2.05.~~$2.45.

1819

Second quarter ~~2022~~2023 segment results

Our segment results compared with the year-ago quarter are as follows:

Analog (includes Power and Signal Chain product lines)


		Q2 2022			Q2 2021			Change			Q2 2023			Q2 2022			Change
Revenue	Revenue	$	3,992		$	3,464		15	%	Revenue	$	3,278		$	3,992		(18)	%
Operating profit	Operating profit	2,226			1,778			25	%	Operating profit	1,463			2,226			(34)	%
Operating profit % of revenue	Operating profit % of revenue	55.8		%	51.3		%			Operating profit % of revenue	44.6		%	55.8		%

Analog revenue ~~increased~~decreased in both product lines, led by ~~Signal Chain.~~Power. Operating profit ~~increased~~decreased primarily due to ~~higher~~lower revenue and ~~associated gross profit.~~higher manufacturing costs.

Embedded Processing (includes microcontrollers and processors)


		Q2 2022			Q2 2021			Change			Q2 2023			Q2 2022			Change
Revenue	Revenue	$	821		$	780		5	%	Revenue	$	894		$	821		9	%
Operating profit	Operating profit	324			312			4	%	Operating profit	318			324			(2)	%
Operating profit % of revenue	Operating profit % of revenue	39.5		%	40.0		%			Operating profit % of revenue	35.6		%	39.5		%

Embedded Processing revenue ~~increased.~~increased due to the mix of products shipped. Operating profit ~~increased~~decreased primarily due to higher ~~revenue and associated gross profit.~~manufacturing costs, partially offset by higher revenue.

Other (includes DLP® products, calculators and custom ASIC products)


		Q2 2022			Q2 2021			Change			Q2 2023			Q2 2022			Change
Revenue	Revenue	$	399		$	336		19	%	Revenue	$	359		$	399		(10)	%
Operating profit*	Operating profit*	173			123			41	%	Operating profit*	191			173			10	%
Operating profit % of revenue	Operating profit % of revenue	43.4		%	36.6		%			Operating profit % of revenue	53.2		%	43.4		%
* Includes acquisition charges and restructuring charges/other
* Includes restructuring charges/other										* Includes restructuring charges/other

Other revenue ~~increased $63~~decreased $40 million, and operating profit increased ~~$50~~$18 million.

Results of operations – first six months of ~~2022~~2023 compared with first six months of ~~2021~~2022

Revenue of ~~$10.12~~$8.91 billion ~~increased $1.25~~decreased $1.21 billion, or ~~14%~~12%, due to lower revenue from Analog, partially offset by higher revenue from ~~Analog and, to a lesser extent,~~ Embedded Processing. ~~This increase benefited from higher prices and the mix of products shipped.~~

Gross profit of ~~$7.07~~$5.77 billion was ~~up $1.19~~down $1.29 billion, or ~~20%~~18%, ~~primarily~~ due to lower revenue and higher ~~revenue.~~manufacturing costs associated with planned capacity expansion. As a percentage of revenue, gross profit ~~increased~~decreased to ~~69.9%~~64.8% from ~~66.2%~~69.9%.

Operating expenses were ~~$1.65~~$1.87 billion compared with ~~$1.63~~$1.65 billion. This increase was due to higher employee-related costs as we invest to strengthen our competitive advantages.

Restructuring charges/other in the year-ago period was $132 million due to ~~integration charges~~preproduction costs at our Lehi, Utah, manufacturing facility. These costs transitioned primarily to cost of revenue after production began in December 2022.

Operating profit was $3.91 billion, or 43.8% of revenue, compared with $5.29 billion, or 52.2% of ~~revenue, compared with $4.15 billion, or 46.8% of~~ revenue.

OI&E was ~~$22~~$199 million of income compared with ~~$119~~$22 million of income, due to higher interest income.

Interest and debt expense of $157 million increased $56 million due to the issuance of additional long-term debt.

Our provision for income taxes was ~~$715~~$518 million compared with ~~$497~~$715 million. This ~~increase~~decrease was primarily due to ~~higher~~lower income before income ~~taxes and lower discrete tax benefits.~~taxes.

Net income was ~~$4.49~~$3.43 billion compared with ~~$3.68~~$4.49 billion. EPS was ~~$4.80~~$3.72 compared with ~~$3.92.~~

$4.80.

Year-to-date segment results

Our segment results compared with the year-ago period are as follows:

Analog


		YTD 2022			YTD 2021			Change			YTD 2023			YTD 2022			Change
Revenue	Revenue	$	7,808		$	6,744		16	%	Revenue	$	6,567		$	7,808		(16)	%
Operating profit	Operating profit	4,376			3,424			28	%	Operating profit	3,037			4,376			(31)	%
Operating profit % of revenue	Operating profit % of revenue	56.0		%	50.8		%			Operating profit % of revenue	46.2		%	56.0		%

Analog revenue ~~increased~~decreased in both product lines, led by ~~Signal Chain.~~Power. Operating profit decreased primarily due to lower revenue and higher manufacturing costs.

Embedded Processing


	YTD 2023			YTD 2022			Change
Revenue	$	1,726		$	1,603		8	%
Operating profit	555			639			(13)	%
Operating profit % of revenue	32.2		%	39.9		%

Embedded Processing revenue increased due to the mix of products shipped. Operating profit decreased primarily due to higher ~~revenue and associated gross profit.~~

~~Embedded Processing~~
YTD 2022 YTD 2021 Change
Revenue $ 1,603 $ 1,547 4 %
Operating profit 639 599 7 %
Operating profit % of revenue 39.9 % 38.7 %

~~Embedded Processing revenue increased. Operating profit increased primarily due to~~manufacturing costs, partially offset by higher ~~revenue and associated gross profit.~~revenue.

Other


		YTD 2022			YTD 2021			Change			YTD 2023			YTD 2022			Change
Revenue	Revenue	$	706		$	578		22	%	Revenue	$	617		$	706		(13)	%
Operating profit*	Operating profit*	271			129			110	%	Operating profit*	314			271			16	%
Operating profit % of revenue	Operating profit % of revenue	38.4		%	22.3		%			Operating profit % of revenue	50.9		%	38.4		%
* Includes acquisition charges and restructuring charges/other
* Includes restructuring charges/other										* Includes restructuring charges/other

Other revenue ~~increased $128~~decreased $89 million, and operating profit increased ~~$142~~$43 million.

Financial condition

At the end of the second quarter of ~~2022,~~2023, total cash (cash and cash equivalents plus short-term investments) was ~~$8.39~~$9.55 billion, ~~a decrease~~an increase of ~~$1.35 billion~~$485 million from the end of ~~2021.~~2022.

Accounts receivable were ~~$2.19~~$1.96 billion, an increase of ~~$489~~$61 million compared with the end of ~~2021.~~2022. Days sales outstanding for the second quarter of ~~2022~~2023 were 3839 compared with 3237 at the end of ~~2021.~~2022.

Inventory was ~~$2.20~~$3.73 billion, an increase of ~~$289~~$972 million from the end of ~~2021.~~2022. Days of inventory for the second quarter of ~~2022~~2023 were ~~125~~207 compared with ~~116~~157 at the end of ~~2021.~~2022.

Liquidity and capital resources

Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are cash and cash equivalents, short-term investments and access to debt markets. We also have a ~~variable rate,~~variable-rate, revolving credit facility. As of June 30, ~~2022,~~2023, our credit facility was undrawn, and we had no commercial paper outstanding. Cash flows from operating activities for the first six months of ~~2022~~2023 were ~~$3.91~~$2.56 billion, a decrease of ~~$59 million~~$1.35 billion from the year-ago period due to lower net income and higher cash used for working capital, ~~partially offset by higher net income.~~

as we continued to strategically build inventory.

Investing activities for the first six months of ~~2022~~2023 used ~~$443 million~~$2.36 billion compared with ~~$982~~$443 million in the year-ago period. Capital expenditures were ~~$1.04~~$2.43 billion compared with ~~$694 million~~$1.04 billion in the year-ago period and were primarily for semiconductor manufacturing equipment and facilities in both periods. Short-term investments provided cash of $31 million compared with $525 million in the year-ago period.

As we continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning, ~~we expect~~ our capital expenditures are expected to be higher than historical levels. ~~Short-term~~In August 2022, the U.S. government enacted the U.S. CHIPS and Science Act, which provides funding for manufacturing grants and research investments ~~provided~~and establishes a 25% investment tax credit for certain investments in U.S. semiconductor manufacturing. We expect to receive the cash ~~of $525 million compared~~benefit associated with ~~using cash of $279 million~~the investment tax credit for qualifying capital expenditures in future periods. See Note 9 to the ~~year-ago period.~~financial statements.

Financing activities for the first six months of ~~2022 used~~2023 provided $187 million compared with $4.30 billion ~~compared with $2.45 billion~~of cash used in the year-ago period. In ~~2022,~~2023, we received net proceeds of $3.00 billion from the issuance of fixed-rate, long-term debt, and we retired maturing debt of $500 ~~million compared with $550 million in~~million. In the year-ago ~~period.~~period, we retired maturing debt of $500 million. Dividends paid were ~~$2.12~~$2.25 billion compared with ~~$1.88~~$2.12 billion in the year-ago period, reflecting an increased dividend ~~rate.~~rate, partially offset by fewer shares outstanding. We used ~~$1.77 billion~~$182 million to repurchase ~~10.7~~1.1 million shares of our common stock compared with ~~$246 million~~$1.77 billion used in the year-ago period to repurchase ~~1.4~~10.7 million shares. Employee exercises of stock options provided cash proceeds of ~~$113~~$150 million compared with ~~$250~~$113 million in the year-ago period.

We had ~~$3.80~~$3.44 billion of cash and cash equivalents and ~~$4.59~~$6.11 billion of short-term investments as of June 30, ~~2022.~~2023. We believe we have the necessary financial resources and operating plans to fund our working capital needs, capital expenditures, dividend and debt-related payments, and other business requirements for at least the next 12 months.

Non-GAAP financial information

This MD&A includes references to free cash flow and ratios based on that measure. These are financial measures that were not prepared in accordance with generally accepted accounting principles in the United States (GAAP). Free cash flow was calculated by subtracting capital expenditures from the most directly comparable GAAP measure, cash flows from operating activities (also referred to as cash flow from operations).

We believe that free cash flow and the associated ratios provide insight into our liquidity, our cash-generating capability and the amount of cash potentially available to return to shareholders, as well as insight into our financial performance. These non-GAAP measures are supplemental to the comparable GAAP measures.

Reconciliation to the most directly comparable GAAP measures is provided in the table below.


		For 12 Months Ended									For 12 Months Ended
		June 30,									June 30,
		2022			2021			Change			2023			2022			Change
Cash flow from operations (GAAP)	Cash flow from operations (GAAP)	$	8,697		$	7,539		15	%	Cash flow from operations (GAAP)	$	7,367		$	8,697		(15)	%
Capital expenditures	Capital expenditures	(2,808)			(1,052)					Capital expenditures	(4,185)			(2,808)
Free cash flow (non-GAAP)	Free cash flow (non-GAAP)	$	5,889		$	6,487		(9)	%	Free cash flow (non-GAAP)	$	3,182		$	5,889		(46)	%

Revenue	Revenue	$	19,592		$	16,762				Revenue	$	18,821		$	19,592

Cash flow from operations as a percentage of revenue (GAAP)	Cash flow from operations as a percentage of revenue (GAAP)	44.4		%	45.0		%			Cash flow from operations as a percentage of revenue (GAAP)	39.1		%	44.4		%
Free cash flow as a percentage of revenue (non-GAAP)	Free cash flow as a percentage of revenue (non-GAAP)	30.1		%	38.7		%			Free cash flow as a percentage of revenue (non-GAAP)	16.9		%	30.1		%

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ITEM 4. Controls and procedures

An evaluation as of the end of the period covered by this report was carried out under the supervision and with the participation of management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934). Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that those disclosure controls and procedures were effective. In addition, there has been no change in our internal control over financial reporting (as defined in Rule 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934) that occurred during the period covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II – OTHER INFORMATION

ITEM 1A. Risk factors

Information concerning our risk factors is contained in Item 1A of our Form 10-K for the year ended December 31, ~~2021,~~2022, and is incorporated by reference herein.

ITEM 2. Unregistered sales of equity securities and use of proceeds

The following table contains information regarding our purchases of our common stock during the quarter.

ISSUER PURCHASES OF EQUITY SECURITIES
Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
April 1, 2022 through April 30, 2022 321,257 $ 171.86 321,257 $ 9.46 billion
May 1, 2022 through May 31, 2022 2,769,034 169.57 2,764,737 8.99 billion
June 1, 2022 through June 30, 2022 4,723,935 157.07 4,723,935 8.25 billion
Total 7,814,226 (b) $ 162.11 (b) 7,809,929 $ 8.25 billion (c)


Period	Total Number of Shares Purchased		Average Price Paid per Share			Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs (a)	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs (a)
April 1, 2023 through April 30, 2023	228,925		$	174.29		228,925	$	21.34	billion
May 1, 2023 through May 31, 2023	122,663		166.54			122,479	21.32		billion
June 1, 2023 through June 30, 2023	95,682		173.71			95,682	21.31		billion
Total	447,270	(b)	$	172.04	(b)	447,086	$	21.31	billion (c)

(a)All open-market purchases during the quarter were made under the ~~authorization~~authorizations from our board of directors to purchase up to $12.0 billion and $15.0 billion of additional shares of TI common stock announced September 20, ~~2018.~~2018, and September 15, 2022, respectively.

(b)In addition to open-market purchases, ~~4,297~~184 shares of common stock were surrendered by employees to satisfy tax withholding obligations in connection with the vesting of restricted stock units.

(c)As of June 30, ~~2022,~~2023, this amount consisted of the remaining portion of the $12.0 billion authorized in September ~~2018.~~2018 and the $15.0 billion authorized in September 2022. No expiration date has been specified for ~~this authorization.~~these authorizations.

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ITEM 6. Exhibits


Designation of Exhibits in This Report						Description of Exhibit
3(a)						Restated Certificate of Incorporation of the Registrant, dated April 18, 1985, as amended (incorporated by reference to Exhibit 3(a) of the Registrant’s Annual Report on Form 10-K for the year ended December 31, 2014).
3(b)						By-Laws of the Registrant (incorporated by reference to Exhibit 3 of the Registrant’s Current Report on Form 8-K filed January 26, 2022).
4(a)						Officers’ Certificate, dated Ma y 1 8 , 2023 (incorporated by reference to Exhibit 4.1 of the Registrant’s Current Report on Form 8-K filed M ay 1 8 , 2023).
31(a)						Certification of Chief Executive Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a).†
31(b)						Certification of Chief Financial Officer of Periodic Report Pursuant to Rule 13a-14(a) or Rule 15d-14(a).†
32(a)						Certification by Chief Executive Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.†
32(b)						Certification by Chief Financial Officer of Periodic Report Pursuant to 18 U.S.C. Section 1350.†
101.ins						XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.†
101.def						XBRL Taxonomy Extension Definition Linkbase Document.†
101.sch						XBRL Taxonomy Extension Schema Document.†
101.cal						XBRL Taxonomy Extension Calculation Linkbase Document.†
101.lab						XBRL Taxonomy Extension Label Linkbase Document.†
101.pre						XBRL Taxonomy Extension Presentation Linkbase Document.†
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).†
† Filed or furnished herewith.

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Notice regarding forward-looking statements

This report includes forward-looking statements intended to qualify for the safe harbor from liability established by the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by phrases such as TI or its management “believes,” “expects,” “anticipates,” “foresees,” “forecasts,” “estimates” or other words or phrases of similar import. Similarly, statements herein that describe TI’s business strategy, outlook, objectives, plans, intentions or goals also are forward-looking statements. All such forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those in forward-looking statements.

We urge you to carefully consider the following important factors that could cause actual results to differ materially from the expectations of TI or our management:

•The duration and scope of the COVID-19 pandemic, government and other third-party responses to it and the consequences for the global economy, including to our business and the businesses of our suppliers, customers and distributors;

•Economic, social and political conditions, and natural events in the countries in which we, our customers or our suppliers operate, including global trade policies;

•Market demand for semiconductors, particularly in the industrial and automotive markets, and customer demand that differs from forecasts;

•Our ability to compete in products and prices in an intensely competitive industry;

•Evolving cybersecurity and other threats relating to our information technology systems or those of our customers, ~~vendors~~suppliers and other third parties;

•Our ability to successfully implement and realize opportunities from strategic, business and organizational changes, or our ability to realize our expectations regarding the amount and timing of associated restructuring charges and cost savings;

•Our ability to develop, manufacture and market innovative products in a rapidly changing technological environment, our timely implementation of new manufacturing technologies and installation of manufacturing equipment, and our ability to realize expected returns on significant investments in manufacturing capacity;

•Availability and cost of ~~raw~~key materials, utilities, manufacturing equipment, third-party manufacturing services and manufacturing technology;

•Our ability to recruit and retain skilled personnel, and effectively manage key employee succession;

•Product liability, warranty or other claims relating to our products, software, manufacturing, delivery, services, design or communications, or recalls by our customers for a product containing one of our parts;

•Compliance with or changes in the complex laws, rules and regulations to which we are or may become subject, or actions of enforcement authorities, that restrict our ability to operate our business or subject us to fines, penalties or other legal liability;

•Changes in tax law and accounting standards that impact the tax rate applicable to us, the jurisdictions in which profits are determined to be earned and taxed, adverse resolution of tax audits, increases in tariff rates, and the ability to realize deferred tax assets;

•Financial difficulties of our distributors or semiconductor distributors’ promotion of competing product lines to our detriment; or disputes with current or former distributors;

•Losses or curtailments of purchases from key customers or the timing and amount of customer inventory adjustments;

•Our ability to maintain or improve profit margins, including our ability to utilize our manufacturing facilities at sufficient levels to cover our fixed operating costs, in an intensely competitive and cyclical industry and changing regulatory environment;

•Our ability to maintain and enforce a strong intellectual property portfolio and maintain freedom of operation in all jurisdictions where we conduct business; or our exposure to infringement claims;

•Instability in the global credit and financial markets;

•~~Our ability to recruit and retain skilled personnel, and effectively manage key employee succession;~~ and

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•Impairments of our non-financial assets.

For a more detailed discussion of these factors, see the Risk factors discussion in Item 1A of our most recent Form 10-K. The forward-looking statements included in this report are made only as of the date of this report, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances. If we do update any forward-looking statement, you should not infer that we will make additional updates with respect to that statement or any other forward-looking statement.

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SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.


TEXAS INSTRUMENTS INCORPORATED

By:	/s/	Rafael R. Lizardi
	Rafael R. Lizardi, Senior Vice President and Chief Financial Officer

Date: July ~~27, 2022~~26, 2023