Texas Instruments executives are playing their hand conservatively when it comes to discussing plans for bringing newly announced factory production online in Sherman over the coming years.
At a conference Tuesday with analysts in Scottsdale, Ariz., TI chief financial officer Rafael Lizardi was asked if the semiconductor chipmaker’s potential $30 billion plan to build as many as four factories along U.S. Highway 75 in Grayson County meant it saw demand growing at a faster rate than its peers.
“I think a lot of people were surprised, especially by the Sherman announcement, even though I think people understand it’s far out,” Credit Suisse’s John Pitzer said while moderating a panel with Lizardi.
Lizardi responded that TI was preparing for the “possibility” that demand for its chips grows faster than anticipated. The company’s semiconductors, fabricated from 300-millimeter wafers, are used broadly across the automotive and industrial markets.
“You spend the money, you build the buildings and then, if demand is not quite what you thought, you can always let them sit,” Lizardi said. “But, if demand does come in stronger than in previous years, then we’re ready for it.”
Lizardi said the new factories cost around $1 billion each to build but generate from $5 billion to $6 billion a year in revenue for several decades once they’re producing chips.
“The potential upside is so high — in terms of revenue margins, free cash flow, free cash flow per share at the end of the day — vs. the cost of building,” Lizardi said.
TI announced earlier this month it selected Sherman as the site of a new campus that could potentially house four chip-producing plants and employ 3,000 workers. It’s beginning construction on the first two in 2022 with the option to build out more in the future as needed and has said that it expects production will begin at the first plant in 2025.
If TI were to complete all four plants, investing an estimated $30 billion in American-made computer chips, it would be one of the largest corporate investments the state of Texas has ever seen. Sherman won out over a site in Singapore.
Sherman city officials who cut large tax breaks for the development 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 on the first and second factories is set 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 hasn’t publicly provided an estimate on when the second factory would begin production. Fishpaw reiterated that the full campus buildout will be determined by future customer demand.
Lizardi told analysts that TI’s capital expenditures will be increasing next year and said the company would give more details in February.
The company also is nearing completion on a new $3.1 billion semiconductor plant in Richardson next to an existing TI facility off Renner Road.
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December 01, 2021 at 06:25AM
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Texas Instruments executive tempers near-term expectations for Sherman factory campus - The Dallas Morning News
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