Texas Instruments executive tempers near-term expectations for Sherman factory campus

Texas Instruments executives are playing conservative when it comes to discussing online production plans for the newly announced factory production in Sherman in the coming years.

At a conference with analysts on Tuesday in Scottsdale, Arizona, Rafael Lizardi, TI’s chief financial officer, was asked if the semiconductor chip maker’s potential $ 30 billion plan would include up to four factories along US Highway 75 in Grayson County building, a faster increase in demand meant valuing than his colleagues.

“I think a lot of people were surprised, especially by the Sherman announcement, although I think people understand it’s a long way off,” said Credit Suisse’s John Pitzer while moderating the panel with Lizardi.

Lizardi responded that TI is preparing for the “possibility” that demand for its chips will grow faster than expected. The company’s semiconductors, made from 300-millimeter wafers, are widely used in the automotive and industrial markets.

“You spend the money, you build the buildings and if the demand is not what you thought you can always leave it,” said Lizardi. “But if demand is stronger than in previous years, then we are prepared for it.”

Lizardi said the new factories cost about $ 1 billion each to build, but will generate $ 5 billion to $ 6 billion in annual revenue for several decades once they produce chips.

“The upside potential is so high – in terms of revenue margins, free cash flow, free cash flow per share at the end of the day – compared to construction costs,” said Lizardi.

TI announced earlier this month that it has selected Sherman as the location for a new campus that could potentially house four chip manufacturing plants and employ 3,000 people. It will begin building the first two in 2022 with the option to build more in the future if needed, and expects production at the first plant to begin in 2025.

If TI completed all four plants and invested an estimated $ 30 billion in American computer chips, it would be one of the largest corporate investments the state of Texas has ever seen. Sherman prevailed against a location in Singapore.

Sherman City officials slashing major development tax breaks are betting the factories will be a boon to the local economy.

After Lizardi’s presentation to analysts, Texas Instruments told the Dallas Morning News that the company’s plans for the Sherman site “remain unchanged.”

“Construction of the first and second factories is slated to begin in 2022, with production from the first new factory expected as early as 2025,” TI spokeswoman Ellen Fishpaw said in a statement.

The company has not publicly made an estimate of when the second factory would start production. Fishpaw reiterated that all campus expansion will be driven by future customer demand.

Lizardi told analysts that TI’s capital spending will increase over the next year and said the company will reveal more details in February.

The company is also close to completing a new $ 3.1 billion semiconductor plant in Richardson adjacent to an existing TI facility on Renner Road.

[ad_1]
https://www.dallasnews.com/business/technology/2021/11/30/texas-instruments-executive-tempers-near-term-expectations-for-sherman-factory-campus/