Thanks very much. I'm Chris Danely, your friendly neighborhood Semiconductor Analyst here at Citi. It's my distinct pleasure to kick off the tech conference semiconductor-wise with the reference standard company, in our opinion, for semis, Texas Instruments. Today we have the Chairman, President, CEO. There's probably a few other monikers and initials after his name. He does so many things around there, Rich Templeton. As those of you who have followed my research over the years know, TI has been one of our favorite semiconductor stocks for at least a decade, if not more, for a combination of really two factors. One, the market they're in, high-end analog, which we consider the best market in semis, and one of the best markets out there. Number two, this man standing to my left, Rich Templeton.
If you look at these statistics, which even a semiconductor sell-side like myself can determine, the margins have gone up for, I believe, you know, basically 20 years, since Rich took over, hitting new highs every upturn and hitting higher lows, in every downturn. More importantly, he gives that cash that he generates back to you guys, in the form of both dividends and buybacks. I think, you know, other than some other semiconductor companies that try and be a growth company, Rich has never pretended to, you know, chase any of the various shiny new pennies, in semiconductors. It's really my pleasure to welcome him. Take a seat, switch mics.
Chris, we could end right there. Just, call it a day.
Exactly. You know, Rich, I spent some time. You've been doing this for a while. You've been on the circuit for a little bit this year. I wanted to think of a question that you have not been asked before. This is the one thing I came up with is, you know, several years ago, you had the shortest retirement this side of Michael Jordan. At some point, I would imagine that you'll give up the reins to the next generation at TI. You know, what would you like your legacy to be at TI?
Well, Chris, it's very simple to me, and I think we'll probably even touch on different themes of it, today. That is, have a company that's stronger 10 years from now. That's not legacy. It's always the way that I've thought and really think our board and our whole leadership team thinks, which is make sure you're making the right choices to build a place stronger, and that includes leadership you put in place.
Mm-hmm. I wanted to ask you about another, you know, I don't know if it's urban legend or if it's true, that, you know, things I hear in and around Texas Instruments is that, you know, every sort of new employee at TI gets the, I guess, the TI handbook, which is something that you implemented. When I think of TI and, you know, what sets you guys apart from some of the other, what I would call higher end or, you know, premier semiconductor companies, is you guys have taken a business, high-end analog, that, you know, is one of the better businesses out there and have introduced process and a striving to do better culture to a business that, you know, frankly, a lot of folks within high-end analog tell me they don't need that.
If you could just talk about the culture at TI and, you know, what you guys have done so well to just keep pushing on the margins and the returns there.
Yeah, I think, you know, it's embedded a little bit. I'll go two places with that. First, it's in the investor overview, and you'll see it in other materials that we have. We talk about a passion in general, and it literally describes my passion as I, you know, was coming out of high school and wanted to be an electrical engineer of, you know, semiconductors making electronics more affordable and making a greater world and a better world. That remains. You know, if you look at most people joining TI that wanna be in the semiconductor business, it really is the passion. You then drop down to more executable, are the ambitions, and that's this whole desire to make sure you're gonna operate like an owner and an owner that's gonna be around for a decade.
This whole concept of making sure, back to the point you were making, of getting stronger and succeeding in a world that's always changing, okay? Just look at the world around us now, and you've got a good example. Finally, make sure that you're a company that you're proud to be part of and you'd want as a neighbor.
Mm.
You know, people get very complex in this world with how do you build culture? Well, just focus on a couple of simple things like that, and it's really easy to communicate. To your more detailed question of process, I think there's a couple of things that we've done, and we're just talking to a group even earlier on this, and they just serve us amazingly well. First is that we did put a set of processes or playbooks in place, and it's probably been a dozen years.
Mm.
It just, in a way, gives you a common language. When you've got 30,000 people around the world having a common language that you can speak in terms of your business or how you're running manufacturing or your factories, is very, very powerful. The second thing, and it may be the more important thing, is we've really operated long term with a general belief of build a relationship, interns coming out of college, then make a high percent of your new hires being people that had an intern experience, 'cause there's no better way than the younger people getting to know you and you getting to know them. Those processes have really served us well. They served us amazingly well 'cause we even kept the intern work underway during COVID. Obviously it was virtual.
It's not as good as being elbow to elbow at a bench with somebody. Many companies stopped their intern programs, for example, in 2020 and 2021. Those steps, I think, have really helped, you know, just drive a long-term view of how to build the company stronger.
Yep. On that note, I wanna touch on a few things that you guys have done sort of regardless of cycles. I remember sitting down with you you know 12, 13, 14 years ago, the last big downturn, and you guys were you know buying up used equipment, buying up any piece of capacity you possibly could to you know be able to not let your your customers down. As we look at you know what's happened in this cycle, we did have some shortages out there, and we'll talk about the possible fixes. I guess I get this question all the time, how did we end up in this you know big time shortage situation? How do you feel that TI was prepared for that?
I think we're well prepared for that, and we've had a tremendous number of customers turn to us during the process. I give as the best example of that is fourth quarter 2019, so take the last clean quarter pre-COVID, and second quarter 2022, we grew the revenue over 50%. In fact, I think it was close to 55%, which holds up against any other large semiconductor company, and it's gonna stand strong.
Mm-hmm.
Even more importantly within that, we grew revenue to every end market. Personal electronics, automotive, industrial, enterprise, and it wasn't by accident. It actually, I can't tell you how painful it was to have a very steady hand, not let the loudest, noisiest customer commandeer capacity.
Mm-hmm
And make sure you're supporting a broad set of customers. I think we've really been able to respond, well in a very stressful environment, and we've seen more and more customers turn to us as a result of both that response, but probably equally when they look at the work we have underway of the next 10 or 15-year path of investments, they just see, one, the ability to support their growth, and two, they see the ability, to provide what I'll describe as geopolitically dependable capacity.
Yep.
They like that it's owned by us. They like where it is, and it just ends up more and more important in every discussion that I'm having at high levels today. That's always our goal is do you get stronger through these, you know, stressful periods 'cause that's when the important relationships are built.
Do you think that the severe shortages we're seeing now, I get this question all the time, are a result of the pandemic and the pandemic-induced, whether it's shutdowns or supply chain snafus or whatever, and, you know, future upturns or shortages won't be this bad? Or do you think we could, you know, see something like this in the future and, you know, how does TI plan for that?
Yeah. I think there's a few things. First is that. There's more experts on this, but I think COVID in many ways probably accelerated trends in terms of what we see. Chris, we've talked about it for a decade now. We've been absolute believers that if you're gonna be well-positioned as a semiconductor company, you better be in industrial, you better be in automotive because the secular semiconductor content growth is just gonna make them the fastest-growing markets. 10+ years ago, you know, we had a third of our revenue in those two combined markets, and last year was, you know, over 60%, not by accident, by absolute plans. I think those trends are gonna absolutely continue regardless of what the rate of macro GDP is trying to do. I think it's gonna be very positive on that front.
Back to what will the supply environment be, that's what'll determine. Okay, what will the pressure look like over a 10-year period on that front. It's why, you know, in some ways I look at our what we've done is just extraordinarily simple. With our FAB1 , we had great growth coverage from 2010 through 2022, and we didn't have that much top-line growth because we were working revenue down from a wireless business during that period.
Mm-hmm.
We needed to have the next 15-year roadmap.
Yep.
That's what you saw presented at Capital Management back in in February. We've made that roadmap to where it has the flexibility, to where we can bring things in or it can ride out a little bit at the macro level. Just for example, we'll build the first two modules in Sherman to remove the two-year construction lead time with the second building. I just think those types of choices are the ones that they cost a little money, they have some time value of money, but they're tiny investments in terms of what the potential upside would be if the market needs it.
From a general capacity perspective, are you basically taking the blueprint from, you know, 2008, 2010 and just expanding it this time around? Or, you know, over the last decade, are you changing anything from a broad perspective as far as your approach to capacity expansion goes?
Yeah. To me, it's identical in that we've just looked at, okay, what is, you know, 10-15 years of growth, what could that range be? Let's make sure we have a robust roadmap that can handle those variables, and now go get things in place. What's different is we're not gonna be able to rely on used equipment. You're gonna have to do that new. But that's not a big change in that the magic's always been 300mm, not what did you pay for the 300mm. So that's not gonna change the rates of return on that. The other difference is it's not one wafer fab's worth of growth. You may need 5 or 6 wafer fabs worth of growth.
Yep.
To be able to handle the next 15 years, which is a great problem to have.
Do you think that the CHIPS Act is going to help? I don't think any of us are under the illusion that it will prevent any shortages in the future. Do you think that it's going to help, I don't know, ease the burden of shortages in the future?
Yeah. You know, I don't connect it to shortages, even though I understand the headline. I think it's historic. I think it's a great choice. I think it not only accelerates semiconductor manufacturing in the U.S., which will also attract, you know, the feeder supply chains that go into manufacturing.
Mm-hmm.
The other piece that doesn't get talked about very much is the R&D aspect in the CHIPS Act, which if it goes at least according to, I think, some thoughts, you'll see a reasonable percentage of that R&D go through university systems for pre-competitive R&D. I think that does great things for long-term health of the semiconductor industry and the semiconductor industry in the U.S. I think it was, you know, a lot of hard work, but I think it was very important work.
That's a good point. I haven't heard that one before. What does it mean for TI? Does it change anything with you? Are you changing any part of your business practices? Do you expect, I guess we're seeing the Chip 4 Alliance in Asia. There's a, you know, European Chips Act. Do you think that this is the first of many government, I don't wanna say interventions, but help for the future?
Yeah. I think as you said, we've already seen a number of them throughout Europe or even India and other places. Who knows how that'll continue. We're a bit of an anomaly as a company in that the roadmap we showed, the plans of completing our FAB2 , building out Sherman, the acquisition and growth of Lehi.
Mm-hmm.
We said very clearly that we're gonna do those regardless of the CHIPS Act.
Okay.
even in those discussions with the government, I said, "We're gonna do them." They're like, "Okay." I said, "But it's really important that we do the CHIPS Act as well.
You're not gonna turn the money down, right?
There's opportunity that we could do things quicker, do things sooner. We'll certainly, you know, take advantage of that. The great news is that the choices that we're making, they were going to pay off even without it.
Mm-hmm.
They can only get better, is what happens with CHIPS.
If you were in charge, I know you've been, you know, on the board of the SIA, et cetera, et cetera. If you were in charge, would you be, you know, changing anything about the CHIPS Act? What would you do for the future? What do you think the U.S. needs to do to, you know, remain competitive on a global level? We'll get into the China threat in a second.
Yeah, I think, and we've talked about it both at the SIA board and with the administration and with elected leaders. I think it's great what's been done. I think the piece that is still not being addressed, and it's for the U.S.'s, you know, it hurts the U.S., is we've got to get a welcome sign back up for high-skill immigration. We've got to be a country that says, "We welcome the best and brightest from around the world to be here." You know, that's still politically not a very popular topic. We're gonna have to get through that, because we're only 5% of the world's population, which says, by definition, we've only got 5% of the smartest people in the world here.
Mm-hmm.
I'd like to have a higher percentage over time. The history, you know, just look at the history of the semiconductor industry, let alone tech, and how important have, you know, high-skilled folks from around the world been in creating that. That piece is still work to be done.
TI was one of the pioneers of taking your inventory levels higher in anticipation of these future shortages. Now, granted you do high-end analog, it's not exactly DRAM, so the price fluctuations aren't nearly as bad. I think you guys raised your target inventory level earlier this year. How do you see that going forward? Do you think it continues to move up? As far as the channel goes, do you foresee coming out of this cycle as, you know, your customers will keep a higher sort of normalized level of inventory?
Yeah. A couple of pieces. We took up, you know, the range, particularly the high end of the range. You know, Dave can flay me. I think it was actually in early 2020, when we took that up, so it was actually pre-pandemic.
Wow.
That we took that up to 190 days.
COVID blended everything together for me.
Yeah, time does—it became one long year, I think most of us reflected. Bear in mind that, you know, compared to 15 years ago, our ability to do that is we're just in an enormously different position. 75% of our portfolio we can build because we sell it to multiple customers across multiple markets, so you have no risk of shelf life obsolescence. Fifteen years ago, when you were running a Nokia business with essentially custom parts, you didn't have that luxury.
Yeah.
It's not by accident that we're in the place we are, and you can take advantage of that. It certainly served us well as the market slowed in second quarter of 2020 and really gave us a big leg up. That inventory, you know, boy, if we could have only had more, carried us to early 2021.
Yeah.
Just ran out of gas in 2021. Yes, I think that, you know, you've heard Rafael say he's more than comfortable with even going above that, quote, "high end of the range." We don't sit there running the operating plan with that as a ceiling. If the environment says it makes sense to build more, we certainly will and can. You know, it is different. Customers have learned more from a supply chain point of view through this downturn than they ever have in terms of what they've got to change. Are customers going to have a different attitude in terms of inventory? I've certainly encouraged all CEOs that I've talked to, you know, look at your own internal processes before you just look for an outside factor of what you're doing.
I'm gonna guess that there is, you know, some longer term change in that. At the same time, memories do tend to be short in this world, and you go from yelling about not having parts to people yell about having too much inventory, and so humans are still gonna be with us.
Oh, they never do that, Rich. One thing about this year is, you know, TI was one of the first companies to see the slowdown. Now, you know, it seems like every week somebody else sees it. What do you think was unique about you guys and your ability to see this coming first?
Well, I don't know if there's uniqueness or just haven't been around long enough.
Call it like you see it.
Pay attention to it, and when everybody says, "No, the sky's the limit, there's no end," you probably ought to be concerned that they aren't looking.
Mm-hmm.
There could be that through construct of now over 60% of our revenue direct, things like ti.com online to where that's just real-time of.
Yeah.
Consuming natures. We just haven't had something like that in prior cycles. You know, can they assist us in being able to see it in addition to looking? Those are probably the only, you know, the only ways I'd think about it being different. It's also a slightly different cycle in that, it's not a synchronous downturn.
Mm-hmm.
Just look at second quarter, where at one extreme, if you were in PCs, it, you know, it was a pretty miserable quarter. If you were in automotive, there was no change. Typically, if you go back to, you know, the bigger changes in late 2008 and bigger changes in late 2000 and early 2001, those were highly synchronized in market corrections.
Oh, yeah.
This one's a little different on that.
Yeah. I know, you know, Rich has been through even more cycles than I have, hard to believe. As you sort of, you know, see this one playing out, like you said, it's a bit of an asynchronous downturn. Does TI do anything differently to prepare for the downturn, or are you out there? You know, clearly your CapEx plans haven't changed. What do you guys normally do to prepare for the downturn? You know, could this one be as bad as, you know, say a 2001, 2002, or a 2008? What signs are you looking for besides the old order rates to tell us that it's, you know, as bad, not as bad?
Yeah. As you've heard me say for many years, I don't spend that much time focused on cycles, 'cause to me, the more interesting discussion is what's gonna happen in 2025 and 2026 and 2030. Because those are the choices you're making, those are the decisions you're making today to really get positioned for them. That dominates, you know, 90+% of what we do.
Yep.
It's, you know, preparing in this downturn is actually about getting capacity online and getting these things built out, so that you're in a position in 2025 to make sure that you can run very hard, depending on what that market wants to be. You know, the other thing, Chris, you know, I know you're a historian in terms of trying to keep track of this stuff. To me, potentially, the cycle you may wanna go back and look at is 1995, 1996. Because 2000, 2001, the Y2K cycle emerged into a really pretty weak personal electronics market. The 2008, 2009 cycle emerged into a pretty weak, well, global economy.
Yeah.
Because of the structural impact from Global Financial Crisis. If you go back to 1995, 1996, you actually had, you know, what turned out to be a seven- or eight-year secular run with the growth of PCs and cell phones. Well, it isn't gonna be PCs and cell phones in this secular run. It's gonna be industrial and automotive because of semiconductor content.
Yeah.
If you actually look at how pricing, and it's a dangerous thing because of the way it's calculated as an average. Last time you had three or more years of increasing ASPs per WSTS was back in 1992 through 1996.
Yep.
That may be more instructive, as to how to think about things.
That'd be great if we get 1997-2000 coming out of this downturn, I'll tell you that.
1996 wasn't too bad, except if you're in the memory business.
Yeah. Yeah.
Which we were still at that time.
Yeah.
We did fix that finally, but.
Yeah, I still have PTSD from those DRAM years. Two questions that I got up and down the halls today that I wanted to ask you. In terms of your capacity expansion plans, CapEx, if the downturn gets really bad, would that potentially change?
No.
Good. The other one is, I get this from a lot of your holders, and I ask myself this question. You know, your margins are. They've been hitting all-time highs for quite some time, which we all know and love. Now you're entering an elongated cycle of increased CapEx, which should bring on higher depreciation. You know, what can give us confidence that your margins can get back to the previous highs? Or do you even think about that? You just say, "You know, margins are gonna be the margins, and this is what I need to do for the next decade."
Yeah. They'll be what they'll be.
Okay.
The thing you do look at, and it's not that we operate in ignorance, is, you know, if you look at free cash flow per share, and you start asking, you know, how are you gonna grow it over 10 years? Revenue growth is just gonna be a higher contributor. You're not gonna get it out of more margin. You may get a little incrementally on share count, but you've gotta win on the revenue side.
Yep.
You said it very well, we're not chasing shiny objects, we're not looking for crazy places to grow, just really high quality growth for the long term, and that's about having the capacity in place. You know, when you do the modeling, and you look out even with the CapEx roadmap that we've shown, and it can look, gee, kind of intimidating in 2022, 2023, 2024. We'll just run those numbers out to 2030, and you know, maximizing gross margin percents are never a great way to run the place for the long term.
Great. We have some time left, but I know this is supposed to be interactive. Apologies for taking everybody's question time, but if anybody has any questions, please raise your hand. Paul. I'll repeat it.
Um.
Just be nice.
Two-part related question. What % of your sales comes from foundry, and then five years from now, what % of your revenue will come from 300 mm?
The question was, what percent of revenue comes from foundry, and then five years out, what % will come from 300mm?
Yeah. I'll give you and Dave can yell from the back if I have them a little bit off. Think of today, 80% of our wafers are on the inside. Over time, I think we talked in the Capital Management slides, that number will run up to over 90%. The math is pretty simple. We've probably got 60+% of our assembly tests on the inside. That number will, you know, approach 90% or over 85%, five years out in time. 300mm is probably 40-ish% of our internal capacity.
Mm.
You play that out over time, I'll bet it's pushing 80% when you get out in 2030 because it's the only capacity we're adding. We'll take a little bit of the, you know, the final six-inch offline as well. Those are two very important knobs to me in terms of if you want an indicator of competitiveness and low cost and dependability, okay. How much do you own? How much is internal? What's your percent of 300mm? Those are the winning variables you wanna maximize.
If I could just ask a follow-up. What's a 300 mm fab?
How much is a 300mm fab?
I don't know. In round numbers, they probably wanna be $6 billion-$7 billion to build them out if it's a 340,000-350,000 sq ft facility, which are, you know, very large, highly automated, and as competitive as anything in the world. We can play ball with the best in those.
Hey, Rich, I wanted to touch on a couple of those topics that popped up as it relates to China.
Sure.
You know, it seems like every other week we hear of some Chinese city being shut down, some of which are rather large. Has that impacted you guys this year? Is that something you have to plan for? How does, you know, TI sort of respond and deal with that?
Yeah, well, certainly, take a look at second quarter. We talked about just dealing with the Shanghai lockdowns in terms of customers and such. You just saw an extremely low April, and the team was able to make it up by the end of June. You've recently read in the past couple of weeks the Chengdu lockdowns, and the team has done a great job of building a closed loop system, so that facility is up and operating to be able to operate independent of that. You know, we do our best to be able to plan and anticipate, but it doesn't mean we can anticipate everything.
You know, on China trying to do everything on their own. How do you see it? 'Cause, you know, certainly a large portion of your sales to go to China. Do you think that, you know, China diminishes in importance for TI over the next decade or two, and do you think that they can replicate your models?
Yeah. A couple of pieces in there, Chris. First is, you know, when we have in our annual report, you know, whatever the percent of sales to revenue in China.
Yeah.
50+% , I forget the exact number. I'm always just very careful with that because of the manufacturing. That's not where it's designed in. I get asked what's the real use of our semiconductors in China? It's probably about the GDP of China.
Yeah.
As a percent of the world.
Yeah.
I just, you know, that's probably what that looks like. In terms of importance, no, I think China's gonna, you know, you can have a debate, is it the number one economy in ten years or number two, or it's gonna be something close to those.
Mm-hmm.
It's gonna be big, and it's gonna be important. Our strategy is to be a great supplier to these customers.
Yeah.
Okay, for the long term. We have, you know, we continue to be very determined in doing that and design things to make us very appealing with great parts, great service, great availability, everything that you would wanna do. But we've also got the advantage when you think about Chinese domestic companies, the ability to build out a direct sales channel, the ability to build out a portfolio of 100,000 parts, the ability to get to the markets that we get to, that's just a very hard thing to go do or takes a very long time. As a result, you see most of the domestic companies tending to have more verticality.
Mm-hmm.
They'll focus on markets that are closer, local. Few customers, few parts make up a lot of the revenue. We'll go compete very aggressively, and I think if we do our job, we'll be successful.
You know, you've talked with a lot of the other mucky mucks in semis, how often does the possibility of China invading Taiwan pop up? You know, you do have some foundry exposure. Do you have a backup plan, or do you think that this is very unlikely?
It's why I talked about, you know, even in discussions with customers when they look at the roadmap, and again, it's identical slides that we shared with investors back in February.
Mm-hmm.
The number one comment I hear is our roadmap represents geopolitically dependable capacity.
Yeah.
Okay? Because it's not going to be centered in Taiwan or China on that front. You know, we think that is a very important thing to have.
Mm-hmm.
I don't know how to handicap the percentages, but the magnitude of the impact is pretty.
Big. Real big, yeah.
It's pretty easy to handicap, and we're just going to be a very dependable option that isn't going to be exposed to that.
Mm-hmm.
I think the value of that, even in the discussions I have, is gonna be enormous for the long term. We're again, we've got a lot of work to do to build it out. We've got to, you know, get that done, but I think we're gonna be very well served with that capacity roadmap.
I have a few more questions, but right here.
Rich, you mentioned that your capacity expansion is not tied in any way to government subsidies and CHIPS Act. The Biden administration released a guideline yesterday that suggested that it seemed to politicize returning cash to shareholders for companies that receive subsidies. If these subsidies are not gonna impact your capacity, would the potential strings attached to them impact your capital allocation going forward?
The question was on the CHIPS Act and the potential strings attached, and how does that impact TI? If I could paraphrase.
Yeah. We'll make sure we have the ability to run the company the way we think is wise. I think we're very clear that, you know, growing free cash flow per share over the long term is the best approximation of increasing value. The other part of that is to either invest the outcome wisely or return it, and/or return it. I see no change in our ability to do both of those.
Subsidies do change the math of what you do run those equations currently, correct?
Well, we'll have to see. I've not seen all the documentation yet on that, but.
It's not rules, they're guidelines.
Like I said, we'll have to see what that all looks like. We have no intent to change the long-term belief that we have of how do you grow value and then how do you return it, because we think that's again foundational.
Anybody else from the audience, or else I'll keep going. Going once, going twice. Rich, just to touch on that, I think and you've talked about one of your advantages is your own 300mm fab. Now one of your larger, largest competitors could potentially be building their own 300mm fab. Do you think that would make them more competitive? Would that, you know, change anything? Would that, you know, cause your worry level to go up? Does anything cause your worry level to go up these days? What do you think about that?
No. Worry level doesn't go up that much these days. You know, Chris, we and I think we've got the material even past couple of three years of just these competitive advantages in manufacturing and technology and breadth of the portfolio and reach of the channel and diversity and longevity. We really believe that the test of those, and we look at those on a very regular basis, is do they give you tangible benefits? Are they difficult to replicate? Ultimately, if they're real and not just nonsense on a PowerPoint, your free cash flow per share should grow faster than your best competitors. That's, you know, get through the crap, and that's the real test.
Yep.
That's where I keep whenever, you know, people say, "Yeah, but this company's buying another company, or this company may invest in something," just put it up against that list of competitive advantages and ask, "What's it going to do to any of those?" The fact is, you know, even on something like manufacturing and technology, if you look at how much has to be invested, how much skill has to be built, that's probably a 10-year journey, okay, for that other company or what, you know, for a company to go undertake if they're starting from ground zero.
Mm-hmm.
It's gonna be a long time coming, and therefore, it really doesn't decay the advantage that we will end up having. The number of our competitors that are going to be able to build their own internal manufacturing and technology is very, very limited. I think that's becoming increasingly obvious.
One other thing I wanna touch on. You know, you were not afraid, or I don't know if it was you or Tom, was not afraid to get out of the DRAM business in 1997 when it didn't fit the bill. We're not afraid to get out of the Nokia business in the 2000s. We're not afraid to get rid of the Sensors & Controls business as well. If I look at the embedded business, you know, the margins and the returns have not quite been up to the analog business or overall TI. Why have we not seen that go down the route of, you know, DRAM or the Nokia business? Is there some sort of synergies with the analog business?
Do you think that those returns, while they've gotten better, they're still, you know, not quite to where the Analog business is? Maybe talk about why Embedded sticks around versus taking the.
Oh, yeah.
PO route.
It's really simple. If I didn't think it had the ability to add value over the next 10 years, it'd be gone. I think you just summarized it.
Mm-hmm.
You take a look at that business, you look at the potential, and there was things that we didn't execute well, okay? We've got, you know, changes in place, and I think that team is starting to show the right leading indicators. You know, we're pretty simple. We don't come out on earnings calls and talk about leading indicators. Let's get real results and real growth.
Mm-hmm.
That's what Haviv Ilan and his team is doing right now, is proving that they can. I do believe you're going to, you know, look back five and 10 years from now and say it is absolutely all the contributor. I don't mean matched gross margins or operating margins, but if you just have the business growing at the same rate-
Yep.
It's gonna be helping the company in the same way, and I think it's got the potential to do it. No, it doesn't live on synergy. That's, you know, that's an oxymoron in terms of we don't allow that discussion.
Great. I think we're out of time. Thanks, everyone. Thanks so much.
Okay. Chris, thank you.