TI's Plan for a More Reliable Chip Supply Chain

Texas Instruments (TI) is executing one of the most aggressive supply chain overhauls in semiconductor history, positioning itself as the bulwark of a geopolitically dependable chip ecosystem amid persistent global uncertainties. Through a combination of record-breaking domestic investment, aggressive in-house manufacturing targets, and strategic inventory management, the company is redefining what supply chain reliability means for the foundational semiconductor industry.

A $60 Billion Bet on American Soil

At the heart of TI's strategy lies an unprecedented 60billioninvestmentacrosssevensemiconductorfabsintheUnitedStates,spanningthreemanufacturingmega−sitesinTexasandUtah.ThisrepresentsthelargestinvestmentinfoundationalsemiconductormanufacturinginU.S.history.ThecrownjewelofthisexpansionistheSherman,Texasmega−site,whereTIhascommittedupto60billioninvestmentacrosssevensemiconductorfabsintheUnitedStates,spanningthreemanufacturingmega−sitesinTexasandUtah.ThisrepresentsthelargestinvestmentinfoundationalsemiconductormanufacturinginU.S.history.ThecrownjewelofthisexpansionistheSherman,Texasmega−site,whereTIhascommittedupto40 billion for four 300mm wafer fabs—SM1, SM2, SM3, and SM4.

SM1, the first of these facilities, began volume production in December 2025 and is now actively ramping output as of January 2026. The facility focuses on "foundational" chips—analog and embedded processors—that serve as the nervous system for AI data centers, electric vehicles, and industrial automation. Operating primarily in the 28nm to 130nm range, these mature nodes are designed for durability, high-voltage precision, and thermal stability—qualities essential for power management in AI infrastructure and battery management systems in EVs.

95% In-House Manufacturing by 2030

TI has set an ambitious target to source more than 95% of its semiconductors from internal manufacturing by 2030. This marks a stark departure from the fabless model that dominates much of the semiconductor industry. By 2026, the company already expects to have more than 90% of its wafers sourced internally, with over 70% on more cost-effective 300mm wafers.

"Our confidence is a reflection of the combination of the growth in semiconductor content, our portfolio offering, and the continued strong customer demand for our geopolitically dependable capacity," TI management stated during the company's 2026 Capital Management Call. CEO Haviv Ilan emphasized that the company is "building geopolitically dependable capacity at scale".

The shift to 300mm wafers is a game-changer for cost efficiency. Transitioning from industry-standard 200mm wafers provides 2.3 times more surface area per wafer, yielding an estimated 40% reduction in chip-level fabrication costs. This cost advantage allows TI to maintain competitive pricing while delivering the massive volumes required by AI and automotive sectors.

Dual-Flow Manufacturing and Local Sourcing

Beyond sheer capacity, TI is building resilience through operational flexibility. The company operates manufacturing sites across multiple global locations with dual-flow capabilities, allowing production to be switched between sites to ensure continuity amid disruptions. Stefan Bruder, President of TI's EMEA region, explained: "You need to be flexible, as the future is uncertain. That is why we are investing in our own manufacturing".

TI also prioritizes local material sourcing in the regions where it manufactures, reducing dependency on other areas and improving overall supply resilience. The company is further internalizing assembly and test capacity, with an increasing portion of its 2026 capital expenditure directed toward mitigating external supply bottlenecks.

Financial Discipline and Strategic Inventory

After completing a six-year, 20billion−plusinvestmentcyclefocusedonexpanding300mmwaferfabcapacity,TIisnowtransitioningfromheavycapitalspendingtoa"harvest"phase.Thecompany′s2026capitalexpenditureistargetedat20billion−plusinvestmentcyclefocusedonexpanding300mmwaferfabcapacity,TIisnowtransitioningfromheavycapitalspendingtoa"harvest"phase.Thecompany′s2026capitalexpenditureistargetedat2 billion to 3billion,downfromapproximately3billion,downfromapproximately5 billion in previous years.

TI has also refined its inventory framework with a target of 150 to 250 days of inventory, designed to support high customer service levels and stable lead times across all market conditions while minimizing obsolescence. This approach proved its worth during the rapid demand surge in the first quarter of 2026, when the company utilized existing inventory to meet customer needs without delay.

CHIPS Act Support and National Security

The U.S. government has signaled strong support for TI's strategy. In May 2026, the Commerce Department signed a preliminary agreement to provide TI with up to 1.6billionindirectfundingundertheCHIPSandScienceAct.ThisfundingsupportsTI′splannedinvestmentofmorethan1.6billionindirectfundingundertheCHIPSandScienceAct.ThisfundingsupportsTI′splannedinvestmentofmorethan18 billion through the end of the decade to build three new facilities in Texas and Utah.

Commerce Secretary Gina Raimondo emphasized the national security implications: "During the pandemic, shortages of current-generation and mature-node chips fueled inflation and made our country less safe". The three new facilities are expected to generate more than 2,000 manufacturing jobs and "meaningfully support the increasing needs for economic and national security applications".

Market Impact and Customer Validation

The strategy is already yielding tangible results. In the first quarter of 2026, TI reported a gross margin of 58%, an improvement of 120 basis points year-over-year, with revenues rising 19% to $4.83 billion. Data center growth surged 90% year-over-year, reflecting secular demand for power density and TI's ability to fulfill both application-specific and general-purpose analog sockets.

Major U.S. companies—including Apple, Ford, Medtronic, NVIDIA, and SpaceX—have strengthened their partnerships with TI. Apple CEO Tim Cook noted that "Texas Instruments' American-made chips help bring Apple products to life". Ford highlighted the collaboration as key to "securing a robust, domestic supply chain for the future of mobility".

The Sherman fab is also enabling a new era of "all-American" AI servers, featuring Intel 18A processors, Micron HBM3E memory, and TI power management chips—a vertical domestic supply chain expected to hit the market by late 2026. This development is particularly significant for government and defense applications where security and supply chain provenance are paramount.

A Blueprint for the Industry

As TI navigates the completion of its massive capacity expansion, the company's model of vertical integration, domestic manufacturing, and strategic inventory management offers a blueprint for supply chain resilience in an era of geopolitical fragmentation. By controlling its own manufacturing, TI has not only secured its own future but has also fortified the supply chains that the global economy depends on.

"TI is building dependable, low-cost 300mm capacity at scale to deliver the analog and embedded processing chips that are vital for nearly every type of electronic system," said CEO Haviv Ilan. With free cash flow per share expected to reach 8to8to12 in 2026, the company is demonstrating that reliability and profitability can go hand in hand.

As the semiconductor industry continues to grapple with supply chain vulnerabilities, Texas Instruments is proving that the path to resilience runs through American soil—one 300mm wafer at a time.