Texas Instruments Unleashes “Historic” $60 Billion US Chip Investment

In a move poised to reshape the landscape of American manufacturing and reinforce the nation’s technological sovereignty, computer chip behemoth Texas Instruments (TI) today announced an unprecedented investment exceeding $60 billion in its U.S. operations. This “largest investment in foundational semiconductor manufacturing in US history” comes amidst escalating pressure from the Trump administration to reshore critical supply chains and solidify domestic production capabilities.

The Dallas-based firm revealed ambitious plans to construct or significantly expand seven state-of-the-art chip-making facilities across three strategic sites in Texas and Utah. This monumental undertaking is projected to generate a staggering 60,000 direct and indirect jobs, injecting vital momentum into local economies and creating a new generation of skilled American workers. While a detailed timeline for the full investment was not immediately provided, the sheer scale of the commitment signals a long-term vision for robust U.S.-based semiconductor production.

A Strategic Imperative: Reshoring the Semiconductor Backbone

The announcement by TI is not an isolated event but rather the latest in a series of substantial pledges from major semiconductor players. Just last week, Micron Technology also significantly upped its planned U.S. spending to an astonishing $200 billion, signaling a collective industry shift towards greater domestic resilience. This trend is a direct response to mounting geopolitical tensions, global supply chain vulnerabilities exposed during recent crises, and a concerted effort by the U.S. government to regain leadership in a sector deemed crucial for national security and economic competitiveness.

“President Trump has made it a priority to increase semiconductor manufacturing in America,” stated U.S. Secretary of Commerce Howard Lutnick on Wednesday, underscoring the administration’s unwavering focus on this critical industry. “Our partnership with TI will support US chip manufacturing for decades to come, ensuring a stable and secure supply of these essential components for our industries and defense.”

However, the narrative surrounding these colossal investments is complex. Analysts suggest that while undeniably impactful, some of these major spending announcements also serve as strategic overtures to the current administration. President Trump has been vocal in his critiques of existing legislation, notably threatening to revoke the $52.7 billion CHIPS and Science Act, a bipartisan initiative introduced by his predecessor, Joe Biden. Furthermore, the President has repeatedly hinted at the possibility of imposing new tariffs on imported semiconductors, adding another layer of incentive for domestic production. Indeed, it’s worth noting that even before this latest declaration, the Biden administration had finalized a substantial $1.6 billion subsidy for TI in December, following the company’s prior commitment of at least $18 billion towards building three new facilities. This illustrates a continuity in the U.S. government’s bipartisan push to bolster domestic chip production, regardless of the political party in power.

The Scale of the Investment: A Deep Dive into TI’s Commitment

Texas Instruments’ commitment is truly monumental, dwarfing previous investments in the sector. The $60 billion allocation is earmarked for seven chip-making facilities across three major sites: Sherman and Richardson in Texas, and Lehi in Utah. These facilities are designed to operate on advanced 300mm (or 12-inch) wafers, which are larger and more efficient than traditional 200mm wafers, enabling the production of millions of individual chips per wafer with maximum efficiency.

At its largest and flagship U.S. site in Sherman, Texas, TI plans to invest up to $40 billion across four fabs: SM1, SM2, SM3, and SM4. SM1 is slated to begin initial production this year, remarkably just three years after its groundbreaking, demonstrating TI’s expedited approach. The exterior shell of SM2 is already complete, while SM3 and SM4 are positioned to meet future production demands and capacity scaling.

In Richardson, Texas, TI continues to ramp up production at RFAB2, its second fab in the city. Richardson is home to RFAB1, which made history in 2009 as the world’s first 300mm analog wafer fab, setting a precedent for large-scale 300mm analog production. The two Richardson fabs are connected, enhancing overall efficiency.

Further west, TI is also ramping up LFAB1 in Lehi, Utah, the company’s first 300mm fab in the state, which began production in 2022 after its acquisition in 2021. Construction is well underway on LFAB2, which will connect to LFAB1 as part of an integrated manufacturing campus, further boosting fab efficiency and long-term supply continuity.

Haviv Ilan, President and CEO of Texas Instruments, emphasized the strategic importance of this expansion, stating, “TI is building dependable, low-cost 300mm capacity at scale to deliver the analog and embedded processing chips that are vital for nearly every type of electronic system.” This extensive expansion highlights TI’s strategy to maintain its low-cost advantage and ensure a robust internal manufacturing capacity, aiming for over 95% of its production to be internal by 2030.

A Political Undercurrent: The Trump Administration’s Semiconductor Push

President Trump’s administration has made no secret of its “America First” stance, which extends robustly to critical technology sectors like semiconductors. The recent investment announcements, including TI’s, align directly with the administration’s policy goals to re-shore manufacturing and reduce reliance on foreign supply chains.

Trump has publicly voiced strong criticisms of the CHIPS and Science Act, calling it a “horrible, horrible thing” and suggesting its cancellation or significant modification. He argues that the act represents unnecessary subsidization and that broader tax reductions and elevated tariffs would be more effective in stimulating a “manufacturing renaissance” in the U.S. This rhetoric introduces a degree of uncertainty for companies planning long-term investments, even as they benefit from existing CHIPS Act provisions. Companies that have received grants or entered into agreements under the Biden administration’s CHIPS Act programs might face increased scrutiny and potential modifications to their contracts.

Beyond direct subsidies, the Trump administration’s semiconductor strategy includes the potential for significant tariffs on imports, including a universal 20% tariff on Chinese goods and a 25% tariff on all products from Canada and Mexico, with some exceptions. These protectionist measures are designed to make domestic production more competitive by increasing the cost of imported goods, thereby encouraging companies to manufacture within the U.S. While aiming to bolster U.S. competitiveness, these tariffs could also disrupt global supply chains and potentially lead to higher costs for consumers.

Furthermore, the administration has initiated Section 232 investigations on semiconductors and semiconductor manufacturing equipment, assessing the impact of imports on national security. Such investigations can lead to recommendations for further trade actions, including additional tariffs or import restrictions, further incentivizing domestic production. The overall policy direction under the Trump administration is a blend of export controls, deregulation, favorable tax policies, and tariffs, all geared towards strengthening the U.S.’s position in the global semiconductor landscape.

The CHIPS and Science Act: A Catalyst for Domestic Revival

The CHIPS and Science Act of 2022, signed into law by President Biden, was a landmark piece of legislation designed specifically to address the vulnerabilities in the U.S. semiconductor supply chain and revitalize domestic manufacturing. The Act authorized and appropriated roughly $280 billion in new spending through FY2027, with a significant portion dedicated to incentivizing onshoring of semiconductor manufacturing.

Of the $52.7 billion specifically allocated for semiconductor incentives, $39 billion is dedicated to manufacturing incentives, including direct grants and subsidies. As of December 2024, over $32 billion of this $39 billion had been allocated, with Texas Instruments receiving up to $1.61 billion in direct funding under the CHIPS Incentives Program for its previous $18 billion investment plans.

The impact of the CHIPS Act has been considerable. Since its enactment, companies in the semiconductor industry have announced over 100 projects across the country, totaling more than $540 billion in private sector investments. This surge includes not only greenfield fabs but also the refurbishment of legacy facilities, indicating a broad-based revitalization effort.

The Act addresses several critical areas:

• Strengthening U.S. Semiconductor Manufacturing Capabilities: By offering grants, tax credits (a 25% investment tax credit for capital expenses), and loan guarantees, the Act aims to make it financially attractive for companies to build and expand facilities in the U.S. This includes fostering regional manufacturing clusters, particularly in Arizona, New York, and Texas, to enhance distributed networks.
• Addressing Gaps in Legacy Chip Supply: While advanced chips get much attention, the Act also responds to the need for increased U.S. capability in producing mature node semiconductors, which are critical for defense, energy, and medical device applications and have been consistently undersupplied.
• Empowering Small and Medium-Sized Businesses (SMEs): The Act supports SMEs, which deliver critical technologies and components, through targeted grants, supplier development, and regional innovation clusters. This enhances supply chain diversity and integrates new manufacturing processes.
• Addressing Workforce Shortages: The U.S. semiconductor sector is projected to face a talent gap of approximately 67,000 engineers, technicians, and computer scientists by 2030. The CHIPS Act invests in training and education initiatives to bridge this gap, aiming to develop, attract, and retain a high-skilled workforce.
• Strengthening Research and Development (R&D): The Act allocates $13.7 billion for semiconductor R&D efforts, funding new institutes for leading-edge materials, chip design, and energy-efficient design. It also promotes public-private partnerships to foster innovation and commercialization.

Despite the bipartisan support and demonstrable impact, the political debate around the CHIPS Act continues, particularly concerning its funding mechanisms and the role of government subsidies versus market-driven incentives.

Foundational Chips: The Unsung Heroes of the Digital Age

Unlike cutting-edge artificial intelligence (AI) chip companies such as Nvidia, which focus on highly specialized processors for complex computational tasks, Texas Instruments primarily manufactures what are known as “foundational” or “analog and embedded processing” chips. These chips are the unsung heroes of the digital age, powering a vast array of everyday devices and critical infrastructure.

Foundational chips are essentially the workhorses of modern electronics. They perform essential functions such as managing power, accurately sensing and transmitting data, and providing core control or processing in countless designs. Their applications are ubiquitous, found in:

• Smartphones and Personal Electronics: Regulating power, managing sensors, and handling display drivers.
• Automotive Industry: From engine control units and infotainment systems to advanced driver-assistance systems (ADAS) and electric vehicle (EV) powertrains. TI’s strong presence in the automotive sector makes its chips crucial for the ongoing revolution in vehicle technology.
• Industrial Applications: Powering factory automation, robotics, energy management systems, and medical devices.
• Communications Equipment: Supporting broadband fixed-line access, wired networking, and wireless infrastructure.
• Enterprise Systems: Used in data centers, enterprise computing, and other critical business infrastructure.

The demand for these foundational chips is incredibly stable and resilient, driven by the increasing digitization and automation across all sectors. While they may not grab headlines like the latest AI accelerators, their pervasive use makes them indispensable. TI’s strategic focus on this $80 billion analog chip market positions it as a “must-have” supplier, offering steady cash flows due to the long product cycles (typically 5-10 years) of these components. This focus provides a distinct advantage compared to the more volatile and rapidly evolving AI chip market.

Global Competition and the Chinese Challenge

Despite its entrenched position and substantial investments, Texas Instruments faces increasing competition, particularly from Chinese manufacturers. China has made significant strides in developing its domestic semiconductor industry, aiming for greater self-sufficiency and reducing its reliance on foreign technology. This has led to a rise in Chinese firms producing lower-end, foundational chips, creating a more competitive landscape for companies like TI.

The geopolitical dimension of semiconductor manufacturing cannot be overstated. The global chip shortage during the COVID-19 pandemic highlighted the fragility of highly concentrated supply chains, with much of the world’s chip production centered in East Asia, particularly Taiwan (home to TSMC, the world’s largest chipmaker). This concentration presents national security concerns for the U.S., as it creates vulnerabilities to geopolitical events, trade disputes, or natural disasters.

China’s own substantial investments in its semiconductor industry, including reported plans for $142 billion in subsidies for chip manufacturing, research, and development, further underscore the global race for technological supremacy. The U.S. government’s export controls on advanced semiconductor technology to China, citing national security concerns, are an attempt to slow China’s progress in leading-edge chips, but the competition in foundational chips remains fierce.

TI’s strategy to expand its U.S. manufacturing footprint is, in part, a response to this global competition and the need to secure a more resilient supply chain, independent of potential geopolitical disruptions. By producing more chips domestically, TI aims to offer its customers greater geopolitical dependability and diverse sourcing options.

Texas Instruments’ Global Footprint and Strategic Customer Base

Texas Instruments boasts an extensive global operational footprint, with 15 manufacturing sites worldwide. These include wafer fabs, assembly and test factories, and multiple bump and probe facilities located across North America, Asia, Japan, and Europe. This global presence, combined with strategically located product distribution centers, allows TI to serve its vast customer base efficiently.

The company’s product portfolio is immense, comprising approximately 80,000 different products for over 100,000 customers globally. This broad reach signifies TI’s critical role across numerous industries. Its customers include some of the world’s most influential technology and automotive giants:

• Apple: The iPhone maker relies on TI’s foundational chips for various components within its devices, contributing to their power management, sensor integration, and overall performance.
• SpaceX: Elon Musk’s pioneering rocket firm utilizes TI chips in its advanced aerospace applications, where reliability and precision are paramount.
• Ford Motor Company: A titan of the motor industry, Ford integrates TI’s foundational chips into its vast range of vehicles, from traditional internal combustion engines to its rapidly expanding electric vehicle lineup.
• Medtronic: A leading medical technology company, Medtronic relies on TI’s high-quality, dependable chips for critical medical devices, where accuracy and safety are non-negotiable.
• NVIDIA: While known for AI chips, NVIDIA also collaborates with TI, with Jensen Huang, founder and CEO of NVIDIA, stating, “NVIDIA and TI share the goal to revitalise US manufacturing by building more of the infrastructure for AI factories here in the US.”

This diverse and prestigious customer base underscores the vital role TI plays in the global technology ecosystem. The company’s expansion of internal operations, aiming to control more than 95% of its production by 2030, is a strategic move to provide customers with unparalleled assurance of supply and geopolitical stability. This emphasis on internal manufacturing and a flexible supply chain is a key differentiator in an industry often reliant on outsourced fabrication.

Looking Ahead: The Future of US Semiconductor Manufacturing

Texas Instruments’ “historic” $60 billion investment marks a significant inflection point for U.S. semiconductor manufacturing. It is a powerful statement of intent, not just from TI but from the broader industry, signaling a decisive shift towards greater domestic production and supply chain resilience.

The journey ahead is not without its challenges. The construction of complex fabrication facilities requires flawless execution, immense capital expenditure, and a highly skilled workforce. Ensuring the timely completion of these projects and the availability of trained personnel will be crucial for realizing the full benefits of this investment. The ongoing political debate surrounding the CHIPS Act and potential tariff policies could also introduce uncertainties that require careful navigation by companies like TI.

However, the long-term strategic implications are profound. A robust domestic semiconductor base reduces reliance on offshore manufacturing hubs, bolstering national security and economic stability. It fosters innovation, creates high-paying jobs, and strengthens regional economies. By anchoring foundational chip production stateside, TI and its industry peers are not just building factories; they are actively rewriting the rules of global supply chains and laying the groundwork for sustained U.S. technological leadership in the decades to come. This investment represents a blueprint for a more self-sufficient and resilient future in the critical world of semiconductors.

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Photo source: Google

By: Montel Kamau

Serrari Financial Analyst

19th June, 2025