Texas Instruments (TXN.US) data center business is expected to surge by 50%, and the “bullish baton” of chip stocks has finally reached analog chips?

The Zhitong Finance App learned that Haviv Ilan, president and CEO of analog chip and embedded processing solution chip giant Texas Instruments (TXN.US), recently stated that the company's data center business is helping the company's overall demand for analog chip products to reach a recovery stage. Since this year, most popular chip stocks in the world have repeatedly reached record highs. In particular, chip stocks closely linked to AI computing power infrastructure — such as Nvidia, Broadcom, and TSMC, have had the strongest gains. Analog chip leaders such as Texas Instruments, Infineon, STMicroelectronics, and NXP have largely missed this wave of gains. However, as the data center construction process progresses rapidly, analog chips are expected to strongly lead the entire chip stock market.

“The communications business is indeed recovering. But data center-related businesses are probably the fastest recovering market. We're about to see very strong growth of around 50% here, and it's also almost creating a new spike in demand. So it's returning to its peak level around 2022.” Ilan said at the Communacopia+ Technology conference hosted by Wall Street financial giant Goldman Sachs.

Ilan pointed out that data centers are the fastest growing market for the company's analog chips and are driving Texas Instruments' performance into a strong recovery cycle. Texas Instruments can be described as having the broadest customer base and largest product range among chip manufacturers, so the company's performance and performance outlook data can be used as one of the predictors of the needs of various industries.

Texas Instruments is the world's largest manufacturer of analog chips and MCU chips. Its products perform simple but essential functions and are used in a wide range of applications around the world, such as converting power supplies to different voltages in electronic devices.

“This will be our fastest growing market this year, and I'm seeing more and more opportunities for companies to participate in larger games. And this speed of operation is not low. Probably between $1 billion and $1.2 billion. That's the strong level I expect us to end 2025, and I see huge future growth opportunities for Texas Instruments in the data center business.” Ilan added.

Massive expansion of AI data centers is driving the recovery of analog chips that have been in vain for a long time

Like other large chip makers, Texas Instruments is eager to benefit from the unprecedented wave of large-scale new construction and expansion of AI data centers, and large-scale AI data centers are the large-scale infrastructure necessary to show exponential growth in global AI computing power resources.

The company's CEO Ilan pointed out that Texas Instruments currently receives only a low single-digit percentage of revenue from the data center market, but “in my opinion, the huge room for growth will make it 20% of our market. Given the rate of growth in demand for analog chips brought about by it, this day is not too far from now,” Ilan said in an interview.

The demand for AI computing power brought about by generative AI applications and inference terminals dominated by AI agents can be called a “sea of stars”, which is expected to drive the AI computing power infrastructure market to continue to show exponential growth. “AI inference systems” are also Hwang In-hoon's biggest source of future revenue for Nvidia.

According to Wall Street investment giants Loop Capital and Wedbush, the global AI infrastructure investment wave with AI computing power hardware at the core is far from over; it is only just beginning. Driven by an unprecedented “storm of AI computing power demand,” the scale of this round of AI investment is expected to reach 2 trillion US dollars.

AI data centers can be described as the core large-scale infrastructure construction project in the AI era. They are essential for the efficient operation of generative artificial intelligence applications such as ChatGPT and the updating and iteration of AI models such as the GPT series. For Texas Instruments, the leader in analog chips, as tech giants such as Microsoft, Google, Meta, and Amazon advance rapidly in this unprecedented round of AI data center expansion and construction, it will catalyze analog chips from the end of 2022 to a strong recovery cycle where demand has been sluggish for a long time.

The analog chip can be called an irreplaceable “water, electricity and coal” for AI data centers. Driven by AI data centers for “higher power density, higher current, faster links, and stronger observability,” Texas Instruments's iconic power management (GaN, hot-plug/OR-ing/EFuse, multi-phase/Pol/Smart Power Stage), high-speed interconnect signal chain (PCIe 5.0 Redriver, ultra-low jitter clock), and monitoring isolation (INA/UCD/TMP/ISO/AMC/UCC) will be the most direct and flexible beneficiary product line.

In particular, heavyweight AI training/inference workloads push PSU and bus power to a new level, such as the 54V architecture+higher transient ratio, driving the value and demand of Texas Instruments' GaN front-end, hot-plug, OR-ing, eFuse and isolated measurement product lines to greatly increase. Furthermore, the board-level Vcore current and steep transients will drive Texas Instruments' multi-phase control+Smart Power Stage and high-current PoL to simultaneously expand large-scale capacity along with the “GPU/accelerator card power consumption curve”.

The road to recovery of analog chips is poised

According to the latest semiconductor industry outlook data recently released by the World Semiconductor Trade Statistics Organization (WSTS), the recovery in global chip demand is expected to continue from 2025 to 2026, and analog chips, where demand has continued to weaken since the end of 2022, are expected to enter a strong recovery curve.

Following a strong rebound in 2024, WSTS expects the global semiconductor market to grow by 11.2% in 2025, with a total value of US$709 billion. Mainly due to continued strong momentum in the GPU-led logic chip sector and the HBM-led storage sector, both fields are expected to achieve strong double-digit growth, thanks to continued strong demand in fields such as artificial intelligence inference systems, cloud computing infrastructure, and cutting-edge consumer electronics.

WSTS predicts that the global semiconductor market will grow 8.5% by 2026 to reach US$760.7 billion based on a strong recovery in 2025. The agency expects growth to be widespread in various regions and in a wide range of chip product categories including analog chips and MCUs. Among them, it is expected that memory chips will once again lead growth, logic and analog chips will also contribute significantly, and analog chips are expected to enter a strong recovery cycle.

According to a research report published by the international bank UBS (UBS), based on its evidence laboratory's inventory and pricing data monitoring of more than 100 distributors around the world, the current overall inventory and pricing trends in the semiconductor industry are improving. In particular, the continued digestion of MCU and analog chip inventories has alleviated market concerns about the imbalance between supply and demand.