Texas Instruments (TXN) Plunges 5.45% to 2025 Low on Trade Policy Shifts, Operational Adjustments

Shares of Texas Instruments (TXN) fell 4.06% on Friday, marking a two-day decline of 5.45% and pushing the stock to its lowest level since May 2025, with an intraday drop of 4.17%. The sell-off reflects growing investor concerns over near-term challenges, including demand volatility linked to U.S. trade policies and operational adjustments.

Recent volatility has been driven by shifting demand patterns tied to U.S. tariffs on Chinese goods. A surge in customer orders during January to April 2025, fueled by anticipation of tariffs announced by former President Donald Trump, was followed by a sharp post-April slowdown. This boom-bust cycle has exposed the semiconductor industry to structural risks, as trade policy uncertainty distorts supply chains and complicates revenue forecasts.

Strategic financial moves, including $1.6 billion in CHIPS Act grants, have provided a buffer but not fully offset the strain of high capital expenditures. The company’s capital spending has constrained free cash flow, slowing its share buyback program—a key driver of investor returns. While TXN’s forward P/E ratio of 32.45 is lower than the industry average, its PEG ratio of 2.97 suggests investors are pricing in slower growth expectations amid sector-wide challenges.

Operational restructuring is another focal point. TXN announced layoffs at U.S. 150-millimeter wafer facilities and plans to phase out older manufacturing plants, redirecting resources to newer facilities. In China, layoffs in technical and customer-facing roles, coupled with a significant price hike on 60,000 products, highlight efforts to counterbalance declining margins and regulatory risks. These moves, however, signal a broader cost-cutting strategy that may weigh on short-term sentiment.

Investor sentiment remains mixed. The stock’s recent underperformance relative to the S&P 500 and the technology sector—down 1.31% in the past month—highlights its vulnerability to sector-specific headwinds. While long-term investors remain cautiously optimistic about TXN’s defensive positioning and growth-oriented investments, mixed analyst estimates and a Zacks Rank of #3 (Hold) underscore the cautious outlook. The upcoming October 21 earnings report will be critical in assessing the company’s ability to navigate these challenges and maintain profitability.