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TXN Starts Raising Prices: Can Higher ASPs Boost Profits in 2026?
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Key Takeaways
Texas Instruments began price increases that should contribute from the third quarter and beyond.
TXN expects only a small third-quarter pricing lift, with higher unit volumes driving most growth.
Texas Instruments posted 23% revenue growth and a 47.8% operating-profit jump in the second quarter.
Texas Instruments Incorporated (TXN - Free Report) is beginning to use pricing as an additional lever to improve its financial performance as semiconductor demand strengthens. During the second-quarter 2026 earnings call, management confirmed that the company has started implementing price increases after keeping prices broadly stable during the first half of 2026. The increases are being negotiated directly with customers and are expected to begin contributing in the third quarter and continue in the fourth quarter and beyond.
This is important because semiconductor prices typically decline by a few percentage points each year. Keeping prices flat in the first half already represented a positive shift for TXN. Now, higher prices could provide an additional boost to revenues and margins if customers accept the increases without significantly reducing orders.
However, management expects only a small pricing contribution to third-quarter growth. Most of the expected sequential revenue increase is likely to come from higher unit volumes, meaning pricing is not yet the main growth driver.
Texas Instruments entered this pricing cycle from a position of strength. Second-quarter revenues increased 23% year over year to $5.46 billion, while operating profit jumped 47.8% to $2.31 billion. Analog revenues rose 26%, providing a strong base for potential pricing benefits.
With demand improving across industrial, automotive and data center markets, Texas Instruments appears to have greater pricing power. If price increases expand through 2026, they could support revenue growth and help lift profits further.
What Are Texas Instruments’ Rivals Doing on Pricing?
Analog Devices (ADI - Free Report) is a key competitor to Texas Instruments in analog chips and has already shown how pricing can support profitability. In the third quarter of fiscal 2026, Analog Devices’ revenues rose 40% year over year to $4.02 billion, while adjusted gross margin expanded 330 basis points to 72.5%. A favorable mix, higher factory utilization and increased pricing aided third-quarter results.
Earlier in February 2026, Analog Devices increased global prices by an average of 15%. The pricing actions were expected to contribute about 50 basis points of sequential revenue growth in both the fiscal third quarter and fiscal fourth quarter.
ON Semiconductor (ON - Free Report) is another rival that competes with Texas Instruments in power management chips, analog integrated circuits and embedded processing systems, particularly for the automotive and industrial end markets. In April 2026, ON Semiconductor raised prices of selected semiconductor components, focusing heavily on power, industrial and data center segments.
In the second quarter of 2026, ON Semiconductor’s revenues increased 9.2% year over year to $1.604 billion. Non-GAAP gross margin expanded 170 basis points year over year and 80 bps sequentially to 39.3%. Favorable mix and improved manufacturing performance supported the increase, while pricing actions mainly offset higher raw-material and external-manufacturing costs.
TXN’s Price Performance, Valuation and Estimates
Shares of Texas Instruments have surged 50.8% year to date compared with the Zacks Semiconductor - General industry’s 28.2% growth.
Texas Instruments YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, TXN trades at a forward price-to-earnings ratio of 27.72, significantly higher than the industry’s average of 19.17.
Texas Instruments Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Texas Instruments’ 2026 and 2027 earnings implies a year-over-year increase of 55.1% and 16.8%, respectively. Estimates for 2026 and 2027 have been revised upward over the past 60 days.
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TXN Starts Raising Prices: Can Higher ASPs Boost Profits in 2026?
Key Takeaways
Texas Instruments Incorporated (TXN - Free Report) is beginning to use pricing as an additional lever to improve its financial performance as semiconductor demand strengthens. During the second-quarter 2026 earnings call, management confirmed that the company has started implementing price increases after keeping prices broadly stable during the first half of 2026. The increases are being negotiated directly with customers and are expected to begin contributing in the third quarter and continue in the fourth quarter and beyond.
This is important because semiconductor prices typically decline by a few percentage points each year. Keeping prices flat in the first half already represented a positive shift for TXN. Now, higher prices could provide an additional boost to revenues and margins if customers accept the increases without significantly reducing orders.
However, management expects only a small pricing contribution to third-quarter growth. Most of the expected sequential revenue increase is likely to come from higher unit volumes, meaning pricing is not yet the main growth driver.
Texas Instruments entered this pricing cycle from a position of strength. Second-quarter revenues increased 23% year over year to $5.46 billion, while operating profit jumped 47.8% to $2.31 billion. Analog revenues rose 26%, providing a strong base for potential pricing benefits.
With demand improving across industrial, automotive and data center markets, Texas Instruments appears to have greater pricing power. If price increases expand through 2026, they could support revenue growth and help lift profits further.
What Are Texas Instruments’ Rivals Doing on Pricing?
Analog Devices (ADI - Free Report) is a key competitor to Texas Instruments in analog chips and has already shown how pricing can support profitability. In the third quarter of fiscal 2026, Analog Devices’ revenues rose 40% year over year to $4.02 billion, while adjusted gross margin expanded 330 basis points to 72.5%. A favorable mix, higher factory utilization and increased pricing aided third-quarter results.
Earlier in February 2026, Analog Devices increased global prices by an average of 15%. The pricing actions were expected to contribute about 50 basis points of sequential revenue growth in both the fiscal third quarter and fiscal fourth quarter.
ON Semiconductor (ON - Free Report) is another rival that competes with Texas Instruments in power management chips, analog integrated circuits and embedded processing systems, particularly for the automotive and industrial end markets. In April 2026, ON Semiconductor raised prices of selected semiconductor components, focusing heavily on power, industrial and data center segments.
In the second quarter of 2026, ON Semiconductor’s revenues increased 9.2% year over year to $1.604 billion. Non-GAAP gross margin expanded 170 basis points year over year and 80 bps sequentially to 39.3%. Favorable mix and improved manufacturing performance supported the increase, while pricing actions mainly offset higher raw-material and external-manufacturing costs.
TXN’s Price Performance, Valuation and Estimates
Shares of Texas Instruments have surged 50.8% year to date compared with the Zacks Semiconductor - General industry’s 28.2% growth.
Texas Instruments YTD Price Return Performance
Image Source: Zacks Investment Research
From a valuation standpoint, TXN trades at a forward price-to-earnings ratio of 27.72, significantly higher than the industry’s average of 19.17.
Texas Instruments Forward 12-Month P/E Ratio
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Texas Instruments’ 2026 and 2027 earnings implies a year-over-year increase of 55.1% and 16.8%, respectively. Estimates for 2026 and 2027 have been revised upward over the past 60 days.
Image Source: Zacks Investment Research
Texas Instruments currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.