TEXAS INSTRUMENTS INC 10-Q

MD&A

ITEM 2. Management’s discussion and analysis of financial condition and results of operations Overview We design and manufacture semiconductors that we sell to electronics designers and manufacturers all over the 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. Our strategy to maximize long-term free cash flow per share growth has three elements: 1. A great business model that is focused on analog and embedded processing products and built around four sustainable competitive advantages. The four sustainable competitive advantages are powerful in combination and provide tangible benefits: (a) A strong foundation of manufacturing and technology that provides lower costs and greater control of our supply chain. (b) A broad portfolio of analog and embedded processing products that offers more opportunity per customer and more value for our investments. (c) The reach of our market channels that gives access to more customers and more of their design projects, leading to better insight and knowledge of customer needs and the opportunity to sell more of our products into each design. (d) Diversity and longevity of our products, markets and customer positions that provide less single point dependency and longer returns on our investments. Together, these competitive advantages help position TI in a unique class of companies capable of generating and returning significant amounts of cash for our owners. We make our investments with an eye towards long-term strengthening and leveraging of these advantages. 2. Discipline in allocating capital to the best opportunities. This spans how we select R&D projects, develop new capabilities, invest in manufacturing capacity or how we think about acquisitions and returning cash to our owners. 3. Efficiency, which means constantly striving for more output for every dollar spent. We believe that our business model with the combined effect of our four competitive advantages sets TI apart from our peers and will for a long time to come. We will invest to strengthen our competitive advantages, be disciplined in capital allocation and stay diligent in our pursuit of efficiencies. Finally, we will remain focused on the belief that long-term growth of free cash flow per share is th