TI’s Cash Machine
TI’s purchase of bankrupted fabs and equipment in the dog days of 2009 and 2010 will pay off in low capex for the next few years, says TI CFO Kevin March.
“Capital expenditures hit a new low and we expect them to stay low,” says March.
TI’s 2012 capex was 4% of revenues. “We believe we can continue to operate at 4-7% of revenue for several years,” says March.
As a result of these very inexpensive purchases of capacity, half of TI’s current capacity is not being used and will be there for TI to grow into.
Although this results in under-utilisation charges of $170m – the effects on cash flow are good.
2012 free cash flow was $1bn. “As we fill up these low-priced capacities the resulting cash flow should be strong,” says March.