Great writeup on your decision to sell TXN. I really appreciate the honesty about the opporunity cost, because so many people focus only on absolute returns. Your point about cyclical buisnesses being hard to time is spot on. I've made similar mistakes trying to catch the trough in semiconductor stocks. The comparsion to Visa is particularly insightful, paying similar multiples for vastly different predictability just doesn't make sense. Thanks for sharing the thought process behind this decision.
Interesting perspective on TXN's cyclicality issues. I wonder if Analog Devices (ADI) faces similar challenges, though they seem to have more diversified end-market exposure and a stronger positon in industrial and automotive analog chips. While both compete in analog semiconductors, ADI's focus on higher-margin signal processing and power management might provide more earnings stability through cycles. Your point about predictability being worth paying for really resonates - perhaps ADI's business model offers a slightly better risk-reward in the analog space compared to TXN's heavier exposure to consumer electronics and more volatile segments.
Thoughtful analysis on TXN. Your point about comparing Analog Devices is interesting - ADI has actually taken a diferent strategic approach post-Maxim acquisition. While TXN doubled down on in-house manufacturing with massive capex commitments, ADI went asset-light and focused on higher-margin mixed-signal products for industrial/automotive. The contrast is stark: TXN's capex intensity during the downcycle creates real operational leverage risk, whereas ADI's outsourced model provides more flexibility. You're right that neither has ASML's monopoly position, but ADI's focus on precision signal chain solutions (data converters, power management for mission-critical apps) gives them slightly stickier customer relationships than TXN's more commoditized analog offerings. That said, TXN's scale advantages in manufacturing are real - when the cycle turns, their integrated model should deliver superior returns. Your decision to exit makes sense given the opportunity cost, but interesting to watch how this analog duopoly plays out over the next decade. Both are navigating secular headwinds from increasing digital integration eating into traditional analog TAM.
This was an intriguing read. Personally I believe TXN's competitive ROIC indicates that its CAPEX will be put to good use and that its current downcycle has been overstated by investors. Frontloading their CAPEX, to me, is a strategic move by management. I will continue holding this in my personal portfolio and maintain faith that future earnings will reflect their competitive advantages.
Appreciate you reading and sharing your view. That’s a fair perspective, and I agree TXN’s capital allocation discipline is among the best in the industry. For me, it ultimately comes down to this sort of business model and earnings unpredictability not aligning with my investment philosophy.
I've made the same decision a while ago and luckily got out over $200. It's s great business but needs to reinvest massively right now for future growth. That's a painful transition during a downtown. It's also just not cheap enough for what they'll be able to deliver.
With highly cyclical and capital intensive businesses, you really need to time it perfectly to maximise returns for the risk. Agreed on valuation too, if it was still at 18 times forward earnings today it would be a very different decision.
Great writeup on your decision to sell TXN. I really appreciate the honesty about the opporunity cost, because so many people focus only on absolute returns. Your point about cyclical buisnesses being hard to time is spot on. I've made similar mistakes trying to catch the trough in semiconductor stocks. The comparsion to Visa is particularly insightful, paying similar multiples for vastly different predictability just doesn't make sense. Thanks for sharing the thought process behind this decision.
Interesting perspective on TXN's cyclicality issues. I wonder if Analog Devices (ADI) faces similar challenges, though they seem to have more diversified end-market exposure and a stronger positon in industrial and automotive analog chips. While both compete in analog semiconductors, ADI's focus on higher-margin signal processing and power management might provide more earnings stability through cycles. Your point about predictability being worth paying for really resonates - perhaps ADI's business model offers a slightly better risk-reward in the analog space compared to TXN's heavier exposure to consumer electronics and more volatile segments.
Thoughtful analysis on TXN. Your point about comparing Analog Devices is interesting - ADI has actually taken a diferent strategic approach post-Maxim acquisition. While TXN doubled down on in-house manufacturing with massive capex commitments, ADI went asset-light and focused on higher-margin mixed-signal products for industrial/automotive. The contrast is stark: TXN's capex intensity during the downcycle creates real operational leverage risk, whereas ADI's outsourced model provides more flexibility. You're right that neither has ASML's monopoly position, but ADI's focus on precision signal chain solutions (data converters, power management for mission-critical apps) gives them slightly stickier customer relationships than TXN's more commoditized analog offerings. That said, TXN's scale advantages in manufacturing are real - when the cycle turns, their integrated model should deliver superior returns. Your decision to exit makes sense given the opportunity cost, but interesting to watch how this analog duopoly plays out over the next decade. Both are navigating secular headwinds from increasing digital integration eating into traditional analog TAM.
This was an intriguing read. Personally I believe TXN's competitive ROIC indicates that its CAPEX will be put to good use and that its current downcycle has been overstated by investors. Frontloading their CAPEX, to me, is a strategic move by management. I will continue holding this in my personal portfolio and maintain faith that future earnings will reflect their competitive advantages.
Appreciate you reading and sharing your view. That’s a fair perspective, and I agree TXN’s capital allocation discipline is among the best in the industry. For me, it ultimately comes down to this sort of business model and earnings unpredictability not aligning with my investment philosophy.
I've made the same decision a while ago and luckily got out over $200. It's s great business but needs to reinvest massively right now for future growth. That's a painful transition during a downtown. It's also just not cheap enough for what they'll be able to deliver.
With highly cyclical and capital intensive businesses, you really need to time it perfectly to maximise returns for the risk. Agreed on valuation too, if it was still at 18 times forward earnings today it would be a very different decision.