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What changed in Texas Instruments's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Texas Instruments's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+115 added−115 removedSource: 10-K (2024-02-02) vs 10-K (2023-02-03)

Top changes in Texas Instruments's 2023 10-K

115 paragraphs added · 115 removed · 101 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeWe expect to continue to maintain sufficient internal manufacturing capacity to meet the majority of our production needs and to obtain manufacturing equipment to support new technology developments and revenue growth. In 2022, we sourced about 80% of our total wafers and about 60% of our assembly/test production internally. With our planned capacity expansions, we expect these percentages to increase.
Biggest changeIn 2023, we sourced about 80% of our total wafers and about 65% of our assembly/test production internally. With our planned capacity expansions, we expect these percentages to increase. To supplement our internal manufacturing capacity, we selectively use the capacity of outside suppliers, commonly known as foundries and subcontractors.
Our new application programming interfaces (APIs) give customers the ability to directly access real-time inventory information about TI products from their own systems, enabling them to purchase available chips immediately to better support their supply needs, reducing cost and delays.
Our new application programming interfaces (APIs) give customers the ability to directly access real-time information about TI products from their own systems, enabling them to purchase available chips immediately to better support their supply needs, reducing cost and delays.
Examples of these items include acquisition, integration and restructuring charges, as well as certain corporate-level items, such as litigation expenses, environmental costs and gains and losses from other activities, including asset dispositions. 4 Markets for our products The table below lists the major markets for our products in 2022 and the estimated percentage of our 2022 revenue that the market represented.
Examples of these items include acquisition, integration and restructuring charges, as well as certain corporate-level items, such as litigation expenses, environmental costs and gains and losses from other activities, including asset dispositions. 4 Markets for our products The table below lists the major markets for our products in 2023 and the estimated percentage of our 2023 revenue that the market represented.
The largest allocation over this period was to drive organic growth, which includes investments in R&D, sales and marketing, capital expenditures and working capital for inventory. In this period, we allocated just over $10 billion to capital expenditures.
The largest allocation over this period was to drive organic growth, which includes investments in R&D, sales and marketing, capital expenditures and working capital for inventory. In this period, we allocated just over $15 billion to capital expenditures.
This strategic decision to make manufacturing and technology a core competitive advantage provides us with tangible benefits of lower manufacturing costs and greater control of our supply chain, offering our customers geopolitically dependable capacity. We have focused on creating a competitive manufacturing structural cost advantage by investing in our advanced 300-mm capacity.
This strategic decision to make manufacturing and technology a core competitive advantage provides us with tangible benefits of lower manufacturing costs and greater control of our supply chain, offering our customers geopolitically dependable capacity. We have focused on creating a competitive manufacturing structural cost advantage by investing in our advanced 300mm capacity.
Market Sector Industrial Factory automation & control (40% of TI revenue) Grid infrastructure Medical Building automation Test & measurement Aerospace & defense Appliances Motor drives Power delivery Pro audio, video & signage Industrial transport Retail automation & payment Lighting Automotive Infotainment & cluster (25% of TI revenue) Hybrid, electric & powertrain systems Advanced driver assistance systems (ADAS) Body electronics & lighting Passive safety Personal electronics PC & notebooks (20% of TI revenue) Mobile phones Portable electronics TV Connected peripherals & printers Home theater & entertainment Tablets Wearables (non-medical) Gaming Data storage Communications equipment Wireless infrastructure (7% of TI revenue) Wired networking Broadband fixed line access Datacom module Enterprise systems Data center & enterprise computing (6% of TI revenue) Enterprise projectors Enterprise machine Other (calculators and other) (2% of TI revenue) Market characteristics Competitive landscape Despite consolidation, the analog and embedded processing markets remain highly fragmented.
Market Sector Industrial Factory automation & control (40% of TI revenue) Grid infrastructure Medical Aerospace & defense Test & measurement Building automation Motor drives Power delivery Appliances Pro audio, video & signage Industrial transport Retail automation & payment Lighting Automotive Infotainment & cluster (34% of TI revenue) Hybrid, electric & powertrain systems Advanced driver assistance systems (ADAS) Body electronics & lighting Passive safety Personal electronics Mobile phones (15% of TI revenue) PC & notebooks Portable electronics TV Connected peripherals & printers Tablets Home theater & entertainment Gaming Wearables (non-medical) Data storage Communications equipment Wireless infrastructure (5% of TI revenue) Wired networking Broadband fixed line access Datacom module Enterprise systems Data center & enterprise computing (4% of TI revenue) Enterprise projectors Enterprise machine Other (calculators and other) (2% of TI revenue) Market characteristics Competitive landscape Despite consolidation, the analog and embedded processing markets remain highly fragmented.
Other generated $1.41 billion of revenue in 2022 and includes revenue from DLP ® products (primarily used to project high-definition images), calculators and certain custom semiconductors known as application-specific integrated circuits (ASICs). In Other, we also include items that are not used in evaluating the results of or in allocating resources to our segments.
Other generated $1.11 billion of revenue in 2023 and includes revenue from DLP ® products (primarily used to project high-definition images), calculators and certain custom semiconductors known as application-specific integrated circuits (ASICs). In Other, we also include items that are not used in evaluating the results of or in allocating resources to our segments.
This investment tends to increase the length of our customer relationships because many customers prefer to reuse software from one product generation to the next. 3 Sales of Embedded Processing products generated about 16% of our revenue in 2022. Our Embedded Processing segment includes microcontrollers, digital signal processors (DSPs) and applications processors.
This investment tends to increase the length of our customer relationships because many customers prefer to reuse software from one product generation to the next. 3 Sales of Embedded Processing products generated about 19% of our revenue in 2023. Our Embedded Processing segment includes microcontrollers, digital signal processors (DSPs) and applications processors.
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. Over a 10-year period from 2013 to 2022, we allocated $87 billion, which reinforces the importance of discipline in capital allocation.
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. Over a 10-year period from 2014 to 2023, we allocated $94 billion, which reinforces the importance of discipline in capital allocation.
Our two reportable segments are Analog and Embedded Processing, and we report the results of our remaining business activities in Other. In 2022, we generated $20.03 billion of revenue. For decades, we have operated with a passion to create a better world by making electronics more affordable through semiconductors.
Our two reportable segments are Analog and Embedded Processing, and we report the results of our remaining business activities in Other. In 2023, we generated $17.52 billion of revenue. For decades, we have operated with a passion to create a better world by making electronics more affordable through semiconductors.
Sales of our Analog products generated about 77% of our revenue in 2022. Our Analog segment includes the following major product lines: Power and Signal Chain. Power Power includes products that help customers manage power in electronic systems.
Sales of our Analog products generated about 74% of our revenue in 2023. Our Analog segment includes the following major product lines: Power and Signal Chain. Power Power includes products that help customers manage power in electronic systems.
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. Our segments also reflect how management allocates resources and measures results. Analog Our Analog segment generated $15.36 billion of revenue in 2022.
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. Our segments also reflect how management allocates resources and measures results. Analog Our Analog segment generated $13.04 billion of revenue in 2023.
We make available free of charge through our Investor Relations website our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission.
Information on our website is not part of this report. We make available free of charge through our Investor Relations website our reports on Forms 10-K, 10-Q and 8-K, and amendments to those reports, as soon as reasonably practicable after they are filed with the Securities and Exchange Commission.
They are designed to handle specific tasks and can be optimized for various combinations of performance, power and cost, depending on the application. Our devices vary from simple, low-cost microcontrollers used in applications such as electric toothbrushes to highly specialized, complex devices such as motor control. Our Embedded Processing products are used in many markets, particularly industrial and automotive.
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. Our devices vary from simple, low-cost microcontrollers used in applications such as electric toothbrushes to highly specialized, complex devices such as motor control.
As a result, in 2022 about 70% of our revenue was direct, which includes TI.com, as customers valued the convenience of purchasing online.
As a result, in 2023 about 75% of our revenue was direct, which includes TI.com, as customers valued the convenience of purchasing online.
As a result, we expect to increase our inventory levels over time. Raw materials We source materials, parts and supplies from a diverse set of suppliers globally. The materials, parts and supplies essential to our business are generally available, and we believe that such materials, parts and supplies will be available in the foreseeable future.
Raw materials We source materials, parts and supplies from a diverse set of suppliers globally. The materials, parts and supplies essential to our business are generally available, and we believe that such materials, parts and supplies will be available in the foreseeable future.
An unpackaged chip built on a 300-mm wafer costs about 40% less than an unpackaged chip built on a 200-mm wafer. We continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning.
An unpackaged chip built on a 300mm wafer costs about 40% less than an unpackaged chip built on a 200mm wafer. We continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity plan to meet demand over time.
An important characteristic of our Embedded Processing products is that our customers often invest their own research and development (R&D) to write software that operates on our products.
Our Embedded Processing products are used in many markets, particularly industrial and automotive. An important characteristic of our Embedded Processing products is that our customers often invest their own R&D to write software that operates on our products.
We encourage you to review our Corporate Citizenship Report for more information. Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report. Available information Our internet address is www.ti.com. Information on our website is not part of this report.
Inclusion is one of our core values, and we have programs in place to promote diversity and inclusion. We encourage you to review our Corporate Citizenship Report for more information. Nothing in the Corporate Citizenship Report shall be deemed incorporated by reference into this report. Available information Our internet address is www.ti.com.
We were pioneers in the transition from vacuum tubes to transistors and then to integrated circuits. As each generation became more reliable, more affordable and lower in power, semiconductors were used by a growing number of customers and markets. This passion is alive today as we help our customers develop electronics and new applications, particularly in industrial and automotive markets.
We were pioneers in the transition from vacuum tubes to transistors and then to integrated circuits. As each generation has become more reliable, more affordable and lower in power, semiconductors are used by a growing number of customers and markets.
And third, we will be a company that we are personally proud to be a part of and that we would want as our neighbor. Our ambitions are foundational to ensuring that we operate in a sustainable, socially thoughtful and environmentally responsible manner. When we are successful in achieving these ambitions, our employees, customers, communities and shareholders all win.
Second, we will adapt and succeed in a world that is ever changing. And third, we will be a company that we are personally proud to be a part of and that we would want as our neighbor. Our ambitions are foundational to ensuring that we operate in a sustainable, socially thoughtful and environmentally responsible manner.
As engineers, we are fortunate to work on exciting technology which helps our customers innovate to create a better world. Technology is the foundation of our company, but ultimately, our objective and the best metric for owners to measure our progress is through the growth of free cash flow per share over the long term.
Technology is the foundation of our company, but ultimately, our objective and the best metric for owners to measure our progress is through the growth of free cash flow per share over the long term.
Bahai 60 Senior Vice President Kyle M. Flessner 52 Senior Vice President Mark S. Gary 48 Senior Vice President Haviv Ilan * 54 Director, Executive Vice President and Chief Operating Officer Hagop H. Kozanian 40 Senior Vice President Shanon J. Leonard 47 Senior Vice President Rafael R. Lizardi 50 Senior Vice President and Chief Financial Officer Mark T.
Bahai 61 Senior Vice President Mark S. Gary 49 Senior Vice President Haviv Ilan 55 Director, President and Chief Executive Officer Hagop H. Kozanian 41 Senior Vice President Shanon J. Leonard 48 Senior Vice President Rafael R. Lizardi 51 Senior Vice President and Chief Financial Officer Mark T.
To supplement our internal manufacturing capacity, we selectively use the capacity of outside suppliers, commonly known as foundries and subcontractors. Inventory Our objectives for inventory are to maintain high levels of customer service, maintain stable and competitive lead times, minimize inventory obsolescence and improve manufacturing asset utilization.
Inventory Our objectives for inventory are to maintain high levels of customer service, maintain dependable and competitive lead times, minimize inventory obsolescence and improve manufacturing asset utilization.
Roberts 47 Senior Vice President Amichai Ron 45 Senior Vice President Richard K. Templeton * 64 Director, Chairman of the Board, President and Chief Executive Officer Cynthia Hoff Trochu 59 Senior Vice President, Secretary and General Counsel Christine A. Witzsche 38 Senior Vice President * On January 19, 2023, Mr.
Roberts 48 Senior Vice President Amichai Ron 46 Senior Vice President Richard K. Templeton 65 Director and Chairman of the Board Cynthia Hoff Trochu 60 Senior Vice President, Secretary and General Counsel Christine A.
In 2022, our turnover rate was 12.1%. It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and more inclusive. Inclusion is one of our core values, and we have programs in place to promote diversity and inclusion.
We have a promote-from-within culture and offer training and rotation programs that provide the opportunity to quickly gain experience in different areas. In 2023, our turnover rate was 8.1%. It is important that our employees represent a mix of experiences and backgrounds in order to make our company stronger, more innovative and more inclusive.
Progress and investments include: • starting production in 300-mm wafer fabrication facility RFAB2 (Richardson, Texas); • starting production in 300-mm wafer fabrication facility LFAB (Lehi, Utah); and • starting construction on our next two 300-mm wafer fabrication facilities in Sherman, Texas, SM1 and SM2.
Progress and investments include: • Ramping production in 300mm wafer fabrication facility RFAB2 in Richardson, Texas. • Ramping production in 300mm wafer fabrication facility LFAB1 in Lehi, Utah. • Continuing construction on SM1 and SM2 in Sherman, Texas, where we are building four 300mm wafer fabrication facilities. • Starting construction on LFAB2, another 300mm wafer fabrication facility in Lehi, Utah.
Our broad portfolio is designed to manage power requirements across different voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated controllers and converters, power switches, linear regulators, voltage references and lighting products. Signal Chain Signal Chain includes products that sense, condition and measure real-world signals to allow information to be transferred or converted for further processing and control.
Our broad portfolio is designed to manage power requirements across different voltage levels, including battery-management solutions, DC/DC switching regulators, AC/DC and isolated DC/DC switching regulators, power switches, linear and low-dropout regulators, voltage references and lighting products.
All have been employees of the company for more than five years. Messrs. Templeton, Ilan and Lizardi and Ms. Trochu have served as executive officers of the company for more than five years. Messrs. Bahai, Flessner and Kozanian became executive officers of the company in 2018. Mr. Ron became an executive officer in 2019. Mr.
Trochu have served as executive officers of the company for more than five years. Mr. Ron became an executive officer in 2019. Mr. Gary became an executive officer in 2020. Mr. Roberts and Ms. Witzsche became executive officers in 2021. Mr. Leonard became an executive officer in 2022. Mr. Yunus became an executive officer in 2024.
Going forward, we expect increased capital expenditures to be the largest driver of free cash flow growth over the next 10 to 15 years. Beyond that, we also allocated capital to dividends and share repurchases.
Our increased capital expenditures are to support future revenue growth, which will be a greater component of free cash flow per share growth going forward. Beyond that, we also allocated capital to dividends and share repurchases.
For many years, we have run our business with three overarching ambitions in mind. First, we will act like owners who will own the company for decades. Second, we will adapt and succeed in a world that is ever changing.
Our passion continues to be alive today as we help our customers develop electronics and new applications, particularly in industrial and automotive markets. For many years, we have run our business with three overarching ambitions in mind. First, we will act like owners who will own the company for decades.
This North Texas site has the potential for four fabrication facilities to meet demand over time, as semiconductor growth in electronics, particularly in industrial and automotive markets, is expected to continue well into the future. SM1 production is expected to begin in 2025.
Semiconductor growth in electronics, particularly in industrial and automotive markets, is expected to continue well into the future.
Our objective for human capital management is to recruit, develop and retain the best talent possible. As a technology and manufacturing company, our success is grounded in having strong engineering talent and a reliable factory workforce. We have a promote-from-within culture and offer training and rotation programs that provide the opportunity to quickly gain experience in different areas.
Human capital management At December 31, 2023, we had about 34,000 employees worldwide. Of those, about 90% were in R&D, sales or manufacturing. Our objective for human capital management is to recruit, develop and retain the best talent possible. As a technology and manufacturing company, our success is grounded in having strong engineering talent and a reliable factory workforce.
Our Signal Chain products include amplifiers, data converters, interface products, motor drives, clocks, logic and sensing products. Embedded Processing Our Embedded Processing segment generated $3.26 billion of revenue in 2022. Embedded Processing products are the digital “brains” of many types of electronic equipment.
Signal Chain Signal Chain includes products that sense, condition and measure real-world signals to allow information to be transferred or converted for further processing and control. Our Signal Chain products include amplifiers, data converters, interface products, motor drives, clocks, logic and sensing products. Embedded Processing Our Embedded Processing segment generated $3.37 billion of revenue in 2023.
Ilan was elected by the board of directors to succeed Mr. Templeton as president and chief executive officer, effective April 1, 2023. Mr. Templeton will continue as chairman of the board. The term of office of these officers is from the date of their election until their successor shall have been elected and qualified.
Witzsche 39 Senior Vice President Mohammad Yunus 46 Senior Vice President The term of office of these officers is from the date of their election until their successor shall have been elected and qualified. All have been employees of the company for more than five years. Messrs. Bahai, Ilan, Kozanian, Lizardi and Templeton and Ms.
We care for our environment and work to prevent pollution and the potential risks related to climate change. We invest to reduce emissions long-term by installing abatement devices, using alternative gases and expanding renewable energy, in addition to implementing practices such as recycling and reusing materials and properly handling hazardous and restricted substances.
We care for our environment and work to prevent pollution and the potential risks related to climate change.
Removed
Gary became an executive officer in 2020. Mr. Roberts and Ms. Witzsche became executive officers in 2021. Mr. Leonard became an executive officer in 2022. Human capital management At December 31, 2022, we had about 33,000 employees worldwide. Of those, about 90% were in R&D, sales or manufacturing.
Added
When we are successful in achieving these ambitions, our employees, customers, communities and shareholders all win. As engineers, we are fortunate to work on exciting technology which helps our customers innovate to create a better world.
Added
We invest to reduce emissions over the long term in several ways, including installing new factory equipment with state-of-the-art emissions reduction technology, as well as retrofitting existing factory equipment with advanced abatement technology, in addition to using alternative gases and increasing the use of renewable electricity.
Added
We also continue to implement practices such as recycling and reusing materials and properly handling hazardous and restricted substances. We expect to continue to maintain sufficient internal manufacturing capacity to meet the majority of our production needs and to obtain manufacturing equipment to support new technology developments and revenue growth.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOur continued success depends in part on the retention and recruitment of skilled personnel, as well as the effective management of succession for key employees. Skilled and experienced personnel in our industry, including engineering, management, sales, technical and staff personnel, are in high demand, and competition for their talents is intense.
Biggest changeOur continued success depends in part on our ability to retain and recruit a sufficient number of qualified employees in a competitive environment. Our continued success depends in part on the retention and recruitment of skilled personnel as well as the contributions and effective succession of senior management and other key employees.
Our ability to recruit internationally or deploy employees to various locations may be limited by immigration laws and policies, including changes to, or the administration or interpretation of, those laws and policies. Our results of operations and our reputation could be affected by warranty claims, product liability claims, product recalls or legal proceedings.
Our ability to recruit internationally or deploy employees to various locations may be limited by immigration laws and policies, including changes to, or the administration or interpretation of, those laws and policies. 11 Our results of operations and our reputation could be affected by warranty claims, product liability claims, product recalls or legal proceedings.
Our results of operations also might suffer because of a general decline in customer demand resulting from, for example: uncertainty regarding the stability of global credit and financial markets; natural events, epidemics or domestic or international political, social, economic or other conditions; breaches of customer information technology systems that disrupt customer operations; or a customer’s inability to access credit markets and other sources of needed liquidity.
Our results of operations also might suffer because of a general decline or volatility in customer demand resulting from, for example: uncertainty regarding the stability of global credit and financial markets; natural events, pandemics, epidemics or domestic or international political, social, economic or other conditions; breaches of customer information technology systems that disrupt customer operations; or a customer’s inability to access credit markets and other sources of needed liquidity.
We, directly and indirectly, face infringement claims from third parties, including non-practicing entities that have acquired patents to pursue enforcement actions against other companies. We also face infringement claims where we or our customers make, use or sell products and where the intellectual property laws may be less established or less predictable.
We, directly and indirectly, face infringement claims from third parties, including nonpracticing entities that have acquired patents to pursue enforcement actions against other companies. We also face infringement claims where we or our customers make, use or sell products and where the intellectual property laws may be less established or less predictable.
However, our efforts cannot prevent all misappropriation or improper use of our protected technology and information, including, for example, third parties’ use of our patented or copyrighted technology, or our trade secrets in their products without the right to do so, or third parties’ sale of counterfeit products bearing our trademark.
However, our efforts cannot prevent all misappropriation or improper use of our protected technology and information, including, for example, third parties’ use of our patented or copyrighted technology, our trade secrets, or unauthorized copying and cloning, in their products without the right to do so, or third parties’ sale of counterfeit products bearing our trademark.
These events could, among other things, compromise our information technology networks; result in corrupt or lost data or the unauthorized release of our, our customers’ or our suppliers’ confidential or proprietary information; cause a disruption to our manufacturing and other operations; result in the release of personal data; or cause us to incur costs associated with increased protection, remediation, regulatory inquiries or penalties, or claims for damages, any of which could adversely affect our operating results and our reputation.
These events could, among other things, compromise our information technology networks; result in corrupt or lost data or the unauthorized release of our, our customers’ or our suppliers’ confidential or proprietary information; cause a disruption to our manufacturing and other operations (including our online services, platforms and transactions); result in the release of personal data; or cause us to incur costs associated with increased protection, remediation, regulatory inquiries or penalties, or claims for damages, any of which could adversely affect our operating results and our reputation.
Additionally, our costs may increase if one or more of our customers demand that we change the sourcing of materials we cannot identify as conflict-free. Our inability to timely implement new manufacturing technologies or install manufacturing equipment could adversely affect our results of operations.
Additionally, our costs may increase if one or more of our customers demand that we change the sourcing of materials we cannot identify as conflict-free. Our inability to timely implement new manufacturing technologies, install manufacturing equipment or secure necessary personnel for manufacturing operations could adversely affect our results of operations.
Our results of operations could be adversely affected by distributors’ promotion of competing product lines or our distributors’ financial performance. In 2022, about 30% of our revenue was generated from sales of our products through distributors. Our distributors carry competing product lines, and our sales could be affected if semiconductor distributors promote competing products over our products.
Our results of operations could be adversely affected by distributors’ promotion of competing product lines or our distributors’ financial performance. In 2023, about 25% of our revenue was generated from sales of our products through distributors. Our distributors carry competing product lines, and our sales could be affected if semiconductor distributors promote competing products over our products.
We are subject to complex laws, rules and regulations on an international, national and local level that affect our domestic and international operations relating to, for example, the environment and climate change; safety; health; trade; bribery and corruption; financial reporting; tax; data privacy and protection; labor and employment; competition; facilities and code compliance; market access; epidemics; intellectual property ownership and infringement; and the movement of currency.
We are subject to complex laws, rules and regulations on an international, national and local level that affect our domestic and international operations relating to, for example, the environment and climate change; safety; health; trade, including import and export; bribery and corruption; financial reporting; tax; data privacy and protection; labor and employment; competition; facilities and code compliance; market access; pandemics, epidemics or other public health crises; intellectual property ownership and infringement; and the movement of currency.
We are exposed to political, social and economic conditions (including inflation), security risks, acts of war, terrorism or other hostile acts, health conditions and epidemics, labor conditions, climate change risks and possible disruptions in transportation, communications and information technology networks of the various countries in which we operate.
We are exposed to political, social and economic conditions (including inflation), security risks, acts of war, terrorism or other hostile acts, pandemics, epidemics or other public health crises, labor conditions, climate change risks and possible disruptions in power, water supply, transportation, communications and information technology networks of the various countries in which we operate.
In addition, our global operations expose us to periods when the U.S. dollar significantly fluctuates in relation to the non-U.S. currencies in which we transact business. The remeasurement of non-U.S. dollar transactions can have an adverse effect on our results of operations and financial condition.
Any of these factors could adversely affect our results of operations, financial condition and reputation. In addition, our global operations expose us to periods when the U.S. dollar significantly fluctuates in relation to the non-U.S. currencies in which we transact business. The remeasurement of non-U.S. dollar transactions can have an adverse effect on our results of operations and financial condition.
Some of these complex laws, rules and regulations – for example, those related to environmental, safety and health requirements – may particularly affect us in the jurisdictions in which we manufacture products, especially if such laws and regulations: require the use of abatement equipment beyond what we currently employ; require the addition or elimination of a material or process to or from our current manufacturing processes; or impose costs, fees or reporting requirements on the direct or indirect use of energy, natural resources, or materials or gases used or emitted into the environment in connection with the manufacture of our products.
As the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand, we might have to undertake costly efforts to control, assess and report on ESG metrics. 12 Some of these complex laws, rules and regulations – for example, those related to environmental, safety and health requirements – may particularly affect us in the jurisdictions in which we manufacture products, especially if such laws and regulations: require the use of abatement equipment beyond what we currently employ; require the addition or elimination of a material or process to or from our current manufacturing processes; or impose costs, fees or reporting requirements on the direct or indirect use of energy, natural resources, or materials or gases used or emitted into the environment in connection with the manufacture of our products.
The risk of unfair copying or cloning may impede our ability to sell our products. The laws of countries where we operate may not protect our intellectual property rights to the same extent as U.S. laws. 13 Risks related to our financing activities and other risks Our debt could affect our operations and financial condition.
Activities such as those listed above may affect our reputation and impede our ability to sell our products. The laws of countries where we operate may not protect our intellectual property rights to the same extent as U.S. laws. 13 Risks related to our financing activities and other risks Our debt could affect our operations and financial condition.
Reliance on these suppliers involves risks, including possible shortages of capacity in periods of high demand, suppliers’ inability to develop and deliver advanced logic manufacturing process technology in a timely, cost-effective, and appropriate manner, the possibility of suppliers’ imposition of increased costs on us and the unauthorized disclosure or use of our intellectual property. 11 Our continued success depends in part on our ability to retain and recruit a sufficient number of qualified employees in a competitive environment.
Reliance on these suppliers involves risks, including possible shortages of capacity in periods of high demand, suppliers’ inability to develop and deliver advanced logic manufacturing process technology or build facilities in a timely, cost-effective, and appropriate manner, the possibility of suppliers’ imposition of increased costs on us and the unauthorized disclosure or use of our intellectual property.
Certain competitors possess sufficient financial, technical and management resources to develop and market products that may compete favorably against our products, and consolidation among our competitors may allow them to compete more effectively.
Certain competitors possess sufficient financial, technical and management resources and utilize available incentives offered by various countries and government entities to develop and market products that may compete favorably against our products, and consolidation among our competitors may allow them to compete more effectively.
Access to worldwide markets depends in part on the continued strength of our intellectual property portfolio in all jurisdictions where we conduct business.
Our performance depends in part on our ability to enforce our intellectual property rights and to maintain freedom of operation. Access to worldwide markets depends in part on the continued strength of our intellectual property portfolio in all jurisdictions where we conduct business.
In addition, it is possible for a customer to recall a product containing a TI part, for example, with respect to products used in automotive applications or handheld electronics, which may cause us to incur costs and expenses relating to the recall. Any of these events could adversely affect our results of operations, financial condition and reputation.
In addition, it is possible for a customer to recall a product containing a TI part, for example, with respect to products used in automotive applications or handheld electronics, which may cause us to incur costs and expenses relating to the recall.
A natural disaster that results in a prolonged disruption, particularly where we have principal manufacturing and design operations, as listed in the Properties section in Item 2, may adversely affect our results and financial condition. 10 The effects of the COVID-19 pandemic could adversely affect our business, results of operations and financial condition.
A natural disaster that results in a prolonged disruption, particularly where we have principal manufacturing and design operations, as listed in the Properties section in Item 2, may adversely affect our results and financial condition. 10 Rapid technological change in markets we serve requires us to develop new technologies and products.
There can be no assurance that we will be able to successfully retain and recruit the key engineering, management and technical personnel that we require to execute our business strategy.
Skilled and experienced personnel in our industry, including engineering, management, sales, technical and staff personnel, are in high demand, and competition for their talents is intense. There can be no assurance that we will be able to successfully retain, train and recruit the key engineering, management and technical personnel that we require to execute our business strategy.
Furthermore, should these laws, rules and regulations be amended or expanded, or new ones enacted, we could incur materially greater compliance costs or restrictions on our ability to manufacture our products and operate our business. 12 Increased focus from government authorities, investors, customers and other key stakeholders on environmental, social and governance (ESG) matters has led to new and more stringent reporting standards and disclosure requirements.
Furthermore, should these laws, rules and regulations be amended or expanded, or new ones enacted, we could incur materially greater compliance costs or restrictions on our ability to manufacture our products and operate our business.
We have made and will continue to make significant investments in manufacturing capacity, and we might not realize our expected return on those investments. We subcontract a portion of our wafer fabrication and assembly and testing of our products, and we depend on third parties to provide advanced logic manufacturing process technology development.
We have made and will continue to make significant investments in manufacturing capacity, and we might not realize our expected return on those investments.
We have manufacturing, data and design facilities and other operations in locations subject to natural occurrences such as severe weather, geological events or epidemics that could disrupt operations. Climate change might exacerbate these occurrences or cause natural disasters to occur with greater frequency.
We have manufacturing, data and design facilities and other operations in locations subject to natural occurrences such as severe weather, geological events or epidemics that could adversely affect manufacturing capacity, availability and cost of key raw materials, utilities and equipment or otherwise disrupt operations.
Compliance with these laws, rules and regulations may be onerous and expensive and could restrict our ability to manufacture or ship our products and operate our business. If we do not comply or if we become subject to enforcement activity or government investigations, we could be subject to fines, penalties or other legal liability or disruptions to our operations.
Compliance with these laws, rules and regulations may be onerous and expensive and could restrict our ability to manufacture or ship our products and operate our business. From time to time, we receive inquiries from government entities regarding our compliance with laws and regulations.
About 65% of our revenue comes from customers with headquarter locations outside the United States; revenue from end customers headquartered in China represents about 25% of our revenue. Alternatively, based on product shipment destination, about 90% of our revenue comes from products shipped to locations outside the United States.
About 65% of our revenue comes from customers with headquarter locations outside the United States; revenue from end customers headquartered in China represents about 20% of our revenue. We also continue to expand our offerings of online transactions and services worldwide.
Each quarter we forecast our tax expense based on our forecast of our performance for the year. If that performance forecast changes, our forecasted tax expense will change. Our performance depends in part on our ability to enforce our intellectual property rights and to maintain freedom of operation.
Each quarter we forecast our tax expense based on our forecast of our performance for the year. If that performance forecast changes, our forecasted tax expense will change. We have received and may in the future continue to receive government incentives, including but not limited to tax incentives, designed to encourage certain investments in our operations.
Removed
The coronavirus (COVID-19) pandemic and related measures to curtail its spread have impacted, and may continue to impact, our operations across markets in which TI operates and those of our suppliers, customers and distributors.
Added
Climate change might exacerbate these occurrences or cause natural disasters to occur with greater frequency and with more intense effects.
Removed
The extent to which the COVID-19 pandemic will continue to affect our business, results of operations and financial condition is difficult to predict and depends on numerous evolving factors including the duration and scope of the pandemic; government, social, business and other actions that have been and will be taken in response to the pandemic; appearance of new variants of COVID-19; the availability, adoption and efficacy of vaccines and treatments; and the effect of the pandemic on short- and long-term general economic conditions.
Added
We subcontract a portion of our wafer fabrication and assembly and testing of our products, and we depend on third parties (including contractors and other service providers) to support key portions of our operations (including manufacturing operations and advanced logic manufacturing process technology development) and to construct our facilities.
Removed
We have experienced, and continue to experience, short- or long-term constrained supply or volatility in customer demand, which could materially and adversely affect our business and financial results. Rapid technological change in markets we serve requires us to develop new technologies and products.
Added
In addition, failure by these suppliers to fulfill expectations, commitments and responsibilities in accordance with agreed terms or applicable laws, rules and regulations (including health, safety, forced labor, human trafficking and supply chain standards) could adversely affect our results of operations, financial condition and reputation.
Removed
As the nature, scope and complexity of ESG reporting, diligence and disclosure requirements expand, we might have to undertake costly efforts to control, assess and report on ESG metrics.
Added
Improper, incorrect, illicit or unauthorized storage, handling, modification or use of our products (including use in applications for which our products were not designed), or use of counterfeit products, by third parties could result in reputational harm. Any of these events could adversely affect our results of operations, financial condition and reputation.
Added
If we do not comply with a law or regulation (or the same is alleged), or a government inquiry is unresolved, we could be subject to litigation, investigations or enforcement activity that can be unpredictable and time-consuming, as well as disruptions to our operations, or significant fines, penalties or other legal liability.
Added
Increased focus from government authorities, investors, customers and other key stakeholders on environmental, social and governance (ESG) matters has led to new and more stringent reporting standards and disclosure requirements.
Added
We may be subject to increased scrutiny from government entities, shareholders and others on how these incentives are used and spent. Such incentives could be subject to reduction, modification, clawback or termination, and such changes to these incentives could adversely affect our results of operations, financial condition and reputation.

Item 2. Properties

Properties — owned and leased real estate

2 edited+0 added−0 removed2 unchanged
Biggest changeThis may include land leases. ** Leased. Our facilities in the United States contained approximately 15.9 million square feet at December 31, 2022, of which approximately 0.3 million square feet were leased. Our facilities outside the United States contained approximately 10.3 million square feet at December 31, 2022, of which approximately 1.6 million square feet were leased.
Biggest changeThis may include land leases. ** Leased. Our facilities in the United States contained approximately 16.1 million square feet at December 31, 2023, of which approximately 0.4 million square feet were leased. Our facilities outside the United States contained approximately 12.7 million square feet at December 31, 2023, of which approximately 2.4 million square feet were leased.
At the end of 2022, we occupied substantially all of the space in our facilities. Leases covering our currently occupied leased facilities expire at varying dates, generally within the next five years. We believe our current properties are suitable and adequate for their intended purpose.
At the end of 2023, we occupied substantially all of the space in our facilities. Leases covering our currently occupied leased facilities expire at varying dates, generally within the next five years. We believe our current properties are suitable and adequate for their intended purpose.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed1 unchanged
Biggest changePeriod 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) October 1, 2022 through October 31, 2022 3,911,118 $ 155.52 3,898,320 $ 21.65 billion November 1, 2022 through November 30, 2022 498,612 168.56 498,612 21.56 billion December 1, 2022 through December 31, 2022 496,066 169.32 496,066 21.48 billion Total 4,905,796 (b) $ 158.24 (b) 4,892,998 $ 21.48 billion (c) (a) All open-market purchases during the quarter were made under the 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 and September 15, 2022, respectively.
Biggest changePeriod 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) October 1, 2023 through October 31, 2023 329,147 $ 149.62 318,738 $ 21.21 billion November 1, 2023 through November 30, 2023 76,200 148.19 76,200 21.20 billion December 1, 2023 through December 31, 2023 17,652 157.14 17,652 21.20 billion Total 422,999 (b) $ 149.67 (b) 412,590 $ 21.20 billion (c) (a) All open-market purchases during the quarter were made under the 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, and September 15, 2022, respectively.
ITEM 5. Market for Registrant’s common equity, related stockholder matters and issuer purchases of equity securities TI common stock is quoted on The Nasdaq Global Select Market under the ticker symbol TXN. At December 31, 2022, we had 11,694 stockholders of record. The following table contains information regarding our purchases of our common stock during the fourth quarter of 2022.
ITEM 5. Market for Registrant’s common equity, related stockholder matters and issuer purchases of equity securities TI common stock is quoted on The Nasdaq Global Select Market under the ticker symbol TXN. At December 31, 2023, we had 11,261 stockholders of record. The following table contains information regarding our purchases of our common stock during the fourth quarter of 2023.
(b) In addition to open-market purchases, 12,798 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 December 31, 2022, this amount consisted of the remaining portion of the $12.0 billion authorized in September 2018 and the $15.0 billion authorized in September 2022.
(b) In addition to open-market purchases, 10,409 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 December 31, 2023, this amount consisted of the remaining portion of the $12.0 billion authorized in September 2018 and the $15.0 billion authorized in September 2022.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

28 edited+4 added−9 removed22 unchanged
Biggest changeSee Note 8 to the financial statements. Our provision for income taxes was $1.28 billion compared with $1.15 billion. This increase was primarily due to higher income before income taxes and lower discrete tax benefits compared to 2021. Our effective tax rate, which includes discrete tax items, was 12.8% in 2022 compared with 12.9% in 2021.
Biggest changeInterest and debt expense of $353 million increased $139 million due to the issuance of additional long-term debt. See Note 8 to the financial statements. Our provision for income taxes was $908 million compared with $1.28 billion. This decrease was due to lower income before income taxes.
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. 17 ◦ Because we own much of our manufacturing capacity, a significant portion of our operating cost is fixed.
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. 18 ◦ Because we own much of our manufacturing capacity, a significant portion of our operating cost is fixed.
Actual future write-offs of inventory for salability and obsolescence reasons may differ from estimates and calculations used to determine valuation allowances due to changes in customer demand, customer negotiations, technology shifts and other factors. Commitments and contingencies See Note 10 to the financial statements for a discussion of our commitments and contingencies. 21
Actual future write-offs of inventory for salability and obsolescence reasons may differ from estimates and calculations used to determine valuation allowances due to changes in customer demand, customer negotiations, technology shifts and other factors. Commitments and contingencies See Note 10 to the financial statements for a discussion of our commitments and contingencies. 22
Discussion of 2020 items and year-to-year comparisons between 2021 and 2020 that are not included in this Form 10-K can be found in “Management’s discussion and analysis of financial condition and results of operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.
Discussion of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in “Management’s discussion and analysis of financial condition and results of operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.
Our results of operations provides details of our financial results for 2022 and 2021 and year-to-year comparisons between 2022 and 2021.
Our results of operations provides details of our financial results for 2023 and 2022 and year-to-year comparisons between 2023 and 2022.
For Years Ended December 31, 2022 2021 Cash flow from operations (GAAP) $ 8,720 $ 8,756 Capital expenditures (2,797) (2,462) Free cash flow (non-GAAP) $ 5,923 $ 6,294 Revenue $ 20,028 $ 18,344 Cash flow from operations as a percentage of revenue (GAAP) 43.5 % 47.7 % Free cash flow as a percentage of revenue (non-GAAP) 29.6 % 34.3 % 20 Critical accounting estimates Our accounting policies are more fully described in Note 2 of the consolidated financial statements.
For Years Ended December 31, 2023 2022 Cash flow from operations (GAAP) $ 6,420 $ 8,720 Capital expenditures (5,071) (2,797) Free cash flow (non-GAAP) $ 1,349 $ 5,923 Revenue $ 17,519 $ 20,028 Cash flow from operations as a percentage of revenue (GAAP) 36.6 % 43.5 % Free cash flow as a percentage of revenue (non-GAAP) 7.7 % 29.6 % Critical accounting estimates Our accounting policies are more fully described in Note 2 of the consolidated financial statements.
Short-term investments used cash of $826 million in 2022 compared with $1.65 billion in 2021. As we continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning, our capital expenditures are expected to be higher than historical levels. In August 2022, the U.S. government enacted the U.S.
Short-term investments provided cash proceeds of $682 million in 2023 compared with $826 million of cash used in 2022. 20 As we continue to invest to strengthen our competitive advantage in manufacturing and technology as part of our long-term capacity planning, our capital expenditures are expected to continue to be higher than historical levels.
While all of these end markets represent good opportunities, we place additional strategic emphasis on designing and selling our products into the industrial and automotive markets, which we believe represent the best long-term growth opportunities.
While all of these end markets represent good opportunities, we place additional strategic emphasis on designing and selling our products into the industrial and automotive markets, which we believe represent the best long-term growth opportunities. Our focus on analog and embedded processing allows us to generate strong cash flow from operations.
Financial condition At the end of 2022, total cash (cash and cash equivalents plus short-term investments) was $9.07 billion, a decrease of $672 million from the end of 2021. Accounts receivable were $1.90 billion, an increase of $194 million compared with the end of 2021.
Financial condition At the end of 2023, total cash (cash and cash equivalents plus short-term investments) was $8.58 billion, a decrease of $492 million from the end of 2022. Accounts receivable were $1.79 billion, a decrease of $108 million compared with the end of 2022.
Income taxes In determining net income for financial statement purposes, we must make certain estimates and judgments in the calculation of tax provisions and the resultant tax liabilities and in the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense.
We consider the following accounting policies to be those that are most important to the portrayal of our financial condition and that require a higher degree of judgment. 21 Income taxes In determining net income for financial statement purposes, we must make certain estimates and judgments in the calculation of tax provisions and the resultant tax liabilities and in the recoverability of deferred tax assets that arise from temporary differences between the tax and financial statement recognition of revenue and expense.
Operating profit was $10.14 billion, or 50.6% of revenue, compared with $8.96 billion, or 48.8% of revenue. Other income and expense (OI&E) was $106 million of income compared with $143 million of income. See Note 11 to the financial statements. 18 Interest and debt expense of $214 million increased $30 million due to the issuance of additional long-term debt.
Operating profit was $7.33 billion, or 41.8% of revenue, compared with $10.14 billion, or 50.6% of revenue. Other income and expense (OI&E) was $440 million of income compared with $106 million of income, due to higher interest income. See Note 11 to the financial statements.
Financing activities for 2022 used $6.72 billion compared with $3.14 billion in 2021. In 2022, we received net proceeds of $1.49 billion from the issuance of fixed-rate, long-term debt and retired maturing debt of $500 million. In 2021, we received net proceeds of $1.50 billion from the issuance of fixed-rate, long-term debt and retired maturing debt of $550 million.
In 2023, we received net proceeds of $3.00 billion from the issuance of fixed-rate, long-term debt and retired maturing debt of $500 million. In 2022, we received net proceeds of $1.49 billion from the issuance of fixed-rate, long-term debt and retired maturing debt of $500 million.
See Note 4 to the financial statements for a reconciliation of the U.S. statutory corporate tax rate to our effective tax rate. Net income was $8.75 billion compared with $7.77 billion. EPS was $9.41 compared with $8.26.
Our effective tax rate, which includes discrete tax items, was 12.2% in 2023 compared with 12.8% in 2022. See Note 4 to the financial statements for a reconciliation of the U.S. statutory corporate tax rate to our effective tax rate. Net income was $6.51 billion compared with $8.75 billion.
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).
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).
Days of inventory at the end of 2022 were 157 compared with 116 at the end of 2021. 19 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, revolving credit facility.
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, revolving credit facility. As of December 31, 2023, our credit facility was undrawn, and we had no commercial paper outstanding.
Although we believe the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different from what is reflected in the historical income tax provisions and accruals. As part of our financial process, we must assess the likelihood that our deferred tax assets can be recovered.
Although we believe the estimates are reasonable, no assurance can be given that the final outcome of these matters will not be different from what is reflected in the historical income tax provisions and accruals. Inventory valuation allowances Inventory is valued net of allowances for unsalable or obsolete raw materials, work in process and finished goods.
Segment results – 2022 compared with 2021 Analog (includes Power and Signal Chain product lines) 2022 2021 Change Revenue $ 15,359 $ 14,050 9 % Operating profit 8,359 7,393 13 % Operating profit % of revenue 54.4 % 52.6 % Analog revenue increased in both product lines, led by Signal Chain.
EPS was $7.07 compared with $9.41. 19 Segment results – 2023 compared with 2022 Analog (includes Power and Signal Chain product lines) 2023 2022 Change Revenue $ 13,040 $ 15,359 (15) % Operating profit 5,821 8,359 (30) % Operating profit % of revenue 44.6 % 54.4 % Analog revenue decreased in both product lines about equally.
Dividends paid in 2022 were $4.30 billion compared with $3.89 billion in 2021, reflecting an increased dividend rate, partially offset by fewer shares outstanding. We used $3.62 billion to repurchase 22.2 million shares of our common stock compared with $527 million used in 2021 to repurchase 2.9 million shares.
Dividends paid in 2023 were $4.56 billion compared with $4.30 billion in 2022, reflecting an increased dividend rate. We used $293 million to repurchase 1.8 million shares of our common stock compared with $3.62 billion used in 2022 to repurchase 22.2 million shares. Employee exercises of stock options provided cash proceeds of $263 million compared with $241 million in 2022.
Days sales outstanding at the end of 2022 were 37 compared with 32 at the end of 2021. Inventory was $2.76 billion, an increase of $847 million from the end of 2021.
Days sales outstanding at the end of 2023 were 39 compared with 37 at the end of 2022. Inventory was $4.00 billion, an increase of $1.24 billion from the end of 2022. Days of inventory at the end of 2023 were 219 compared with 157 at the end of 2022.
Other (includes DLP ® products, calculators and custom ASIC products) 2022 2021 Change Revenue $ 1,408 $ 1,245 13 % Operating profit * 528 393 34 % Operating profit % of revenue 37.5 % 31.6 % * Includes acquisition charges and restructuring charges/other Other revenue increased $163 million, and operating profit increased $135 million.
Other (includes DLP ® products, calculators and custom ASIC products) 2023 2022 Change Revenue $ 1,111 $ 1,408 (21) % Operating profit * 502 528 (5) % Operating profit % of revenue 45.2 % 37.5 % * Includes restructuring charges/other Other revenue decreased $297 million, and operating profit decreased $26 million.
Operating profit increased primarily due to higher revenue and associated gross profit. Embedded Processing (includes microcontrollers and processors) 2022 2021 Change Revenue $ 3,261 $ 3,049 7 % Operating profit 1,253 1,174 7 % Operating profit % of revenue 38.4 % 38.5 % Embedded Processing revenue increased. Operating profit increased primarily due to higher revenue and associated gross profit.
Operating profit decreased primarily due to lower revenue and higher manufacturing costs. Embedded Processing (includes microcontrollers and processors) 2023 2022 Change Revenue $ 3,368 $ 3,261 3 % Operating profit 1,008 1,253 (20) % Operating profit % of revenue 29.9 % 38.4 % Embedded Processing revenue increased due to the mix of products shipped.
CHIPS and Science Act, which provides funding for manufacturing grants and research investments and establishes a 25% investment tax credit for certain investments in U.S. semiconductor manufacturing. We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and to apply for other incentives provided by the legislation.
In August 2022, the U.S. government enacted the U.S. CHIPS and Science Act, which provides funding for manufacturing grants and research investments and establishes a 25% investment tax credit for certain investments in U.S. semiconductor manufacturing.
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.
We had $2.96 billion of cash and cash equivalents and $5.61 billion of short-term investments as of December 31, 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.
As of December 31, 2022, our credit facility was undrawn, and we had no commercial paper outstanding. Cash flows from operating activities for 2022 were $8.72 billion, a decrease of $36 million due to higher cash used for working capital as we continued to strategically build our inventory, offset by higher net income.
Cash flows from operating activities for 2023 were $6.42 billion, a decrease of $2.30 billion due to lower net income and higher cash used for working capital, as we continued to strategically build inventory. Investing activities for 2023 used $4.36 billion compared with $3.58 billion in 2022.
Investing activities for 2022 used $3.58 billion compared with $4.10 billion in 2021. Capital expenditures were $2.80 billion compared with $2.46 billion in 2021 and were primarily for semiconductor manufacturing equipment and facilities in both periods, including the purchase of our 300-mm semiconductor factory in Lehi, Utah, during 2021.
Capital expenditures were $5.07 billion compared with $2.80 billion in 2022 and were primarily for semiconductor manufacturing equipment and facilities in both periods.
Free cash flow was $5.92 billion and represented 29.6% of revenue. During 2022, we invested $3.37 billion in R&D and SG&A, invested $2.80 billion in capital expenditures and returned $7.91 billion to shareholders through dividends and stock repurchases.
Our cash flow from operations of $6.42 billion underscored the strength of our business model, the quality of our product portfolio and the benefit of 300mm production. Free cash flow was $1.35 billion and represented 7.7% of revenue. During 2023, we invested $3.69 billion in R&D and SG&A, invested $5.07 billion in capital expenditures and returned $4.85 billion to shareholders.
Restructuring charges/other was $257 million compared with $54 million due to integration charges at our Lehi, Utah, manufacturing facility in both periods, which were partially offset by gains on sales of assets in 2021. The charges associated with our Lehi facility transitioned to cost of revenue once production began in December 2022. See Note 11 to the financial statements.
This increase was primarily due to higher employee-related costs as we invest to strengthen our competitive advantages. Restructuring charges/other in the year-ago period was $257 million due to preproduction costs at our Lehi, Utah, manufacturing facility. These costs transitioned primarily to cost of revenue after production began in December 2022. See Note 11 to the financial statements.
As a percentage of revenue, gross profit increased to 68.8% from 67.5%. Operating expenses (R&D and SG&A) were $3.37 billion compared with $3.22 billion, as a result of increased investments in R&D and inflation.
Gross profit of $11.02 billion was down $2.75 billion, or 20.0%, primarily due to lower revenue and, to a lesser extent, higher manufacturing costs associated with planned capacity expansion and reduced factory loadings. As a percentage of revenue, gross profit decreased to 62.9% from 68.8%. Operating expenses (R&D and SG&A) were $3.69 billion compared with $3.37 billion.
Removed
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.
Added
Details of financial results – 2023 compared with 2022 Revenue of $17.52 billion decreased $2.51 billion, or 12.5%, primarily due to lower revenue from Analog, partially offset by higher revenue from Embedded Processing.
Removed
After a sustained period of growth, a market correction began in 2022. As a result, demand for our products weakened, and we expect this to continue into 2023. During this time, we will continue to manage our operating plan and expenses with a steady hand as we focus on long-term investments to strengthen our competitive advantages.
Added
Operating profit decreased primarily due to higher manufacturing costs, partially offset by higher revenue.
Removed
Gross margin of 68.8% reflected the quality of our product portfolio, as well as the efficiency of our manufacturing strategy, including the benefit of 300-mm production. Our focus on analog and embedded processing allows us to generate strong cash flow from operations. Our cash flow from operations of $8.72 billion underscored the strength of our business model.
Added
We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods, and we have submitted applications for the manufacturing grants provided by the legislation. See Note 11 to the financial statements. Financing activities for 2023 used $2.14 billion compared with $6.72 billion in 2022.
Removed
Details of financial results – 2022 compared with 2021 Revenue of $20.03 billion increased $1.68 billion, or 9.2%, due to 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 $13.77 billion was up $1.40 billion, or 11.3%, primarily due to higher revenue.
Added
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).
Removed
Employee exercises of stock options provided cash proceeds of $241 million compared with $377 million in 2021. We had $3.05 billion of cash and cash equivalents and $6.02 billion of short-term investments as of December 31, 2022.
Removed
We consider the following accounting policies to be those that are most important to the portrayal of our financial condition and that require a higher degree of judgment.
Removed
If recovery is not likely, the provision for taxes must be increased by recording a reserve in the form of a valuation allowance for the deferred tax assets that are estimated not to be ultimately recoverable.
Removed
Our judgment regarding future recoverability of our deferred tax assets may change due to various factors, including changes in U.S. or international tax laws and changes in market conditions and their impact on our assessment of taxable income in future periods.
Removed
These changes, if any, may require adjustments to the valuation allowances and an accompanying reduction or increase in net income in the period when such determinations are made. Inventory valuation allowances Inventory is valued net of allowances for unsalable or obsolete raw materials, work in process and finished goods.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed4 unchanged
Biggest changeAs of December 31, 2022, we had forward currency exchange contracts outstanding with a notional value of $387 million to hedge net balance sheet exposures (including $118 million to sell Japanese yen, $78 million to sell British pounds and $49 million to buy Chinese yuan). Similar hedging activities existed at year-end 2021.
Biggest changeAs of December 31, 2023, we had forward currency exchange contracts outstanding with a notional value of $328 million to hedge net balance sheet exposures (including $102 million to sell Japanese yen, $77 million to sell British pounds and $58 million to buy Chinese yuan). Similar hedging activities existed at year-end 2022.
Because interest rates on our long-term debt are fixed, changes in interest rates would not affect the cash flows associated with long-term debt. Equity risk Long-term investments at year-end 2022 include the following: • Investments in mutual funds – includes mutual funds that were selected to generate returns that offset changes in certain liabilities related to deferred compensation arrangements.
Because interest rates on our long-term debt are fixed, changes in interest rates would not affect the cash flows associated with long-term debt. Equity risk Long-term investments at year-end 2023 include the following: • Investments in mutual funds – includes mutual funds that were selected to generate returns that offset changes in certain liabilities related to deferred compensation arrangements.
Changes in prices of the mutual fund investments are expected to offset related changes in certain deferred compensation liabilities. Non-marketable equity securities and certain venture capital funds are stated at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. Investments in the remaining venture capital funds are stated using the equity method.
Changes in prices of the mutual fund investments are expected to offset related changes in certain deferred compensation liabilities. Nonmarketable equity securities and certain venture capital funds are stated at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. Investments in the remaining venture capital funds are stated using the equity method.
Because most of the aggregate non-U.S. dollar balance sheet exposure is hedged by forward currency exchange contracts, which are based on year-end 2022 balances and currency exchange rates, a hypothetical 10% plus or minus fluctuation in non-U.S. currency exchange rates relative to the U.S. dollar would result in a pretax currency exchange gain or loss of approximately $3 million.
Because most of the aggregate non-U.S. dollar balance sheet exposure is hedged by forward currency exchange contracts, which are based on year-end 2023 balances and currency exchange rates, a hypothetical 10% plus or minus fluctuation in non-U.S. currency exchange rates relative to the U.S. dollar would result in a pretax currency exchange gain or loss of approximately $4 million.
Gains or losses from changes in the fair value of these total return swaps generally offset the related losses or gains on the deferred compensation liabilities. 22
Gains or losses from changes in the fair value of these total return swaps generally offset the related losses or gains on the deferred compensation liabilities. 23
The mutual funds hold a variety of debt and equity investments. • Investments in venture capital funds – includes investments in limited partnerships (accounted for under either the equity method or at cost with adjustments to observable market changes or impairments). • Equity investments – includes non-marketable (non-publicly traded) equity securities. Investments in mutual funds are stated at fair value.
The mutual funds hold a variety of debt and equity investments. • Investments in venture capital funds – includes investments in limited partnerships (accounted for under either the equity method or at cost with adjustments to observable market changes or impairments). • Equity investments – includes nonmarketable (nonpublicly traded) equity securities. Investments in mutual funds are stated at fair value.
As of December 31, 2022, a hypothetical 100 basis point increase in interest rates would decrease the fair value of our investments in cash equivalents and short-term investments by about $15 million and decrease the fair value of our long-term debt by $566 million.
As of December 31, 2023, a hypothetical 100 basis point increase in interest rates would decrease the fair value of our investments in cash equivalents and short-term investments by about $22 million and decrease the fair value of our long-term debt by $891 million.

Other TXN 10-K year-over-year comparisons