10:20 AM EDT, 05/29/2024 (MT Newswires) -- (Updates with Texas Instruments ( TXN ) comment in sixth and seventh paragraphs.)

Elliott Investment Management made a $2.5 billion investment in Texas Instruments ( TXN ) and is urging the company to improve its free cash flow, the activist hedge fund said Tuesday.

Elliott said it sent a letter to the board of Texas Instruments ( TXN ) and is asking the company to "adopt a dynamic capacity-management strategy and introduce a free cash flow per share target of $9.00+ in 2026."

Texas Instruments' ( TXN ) "shareholder returns have lagged peers consistently over a multiyear period," the hedge fund said in the letter.

"Our diagnosis is simple: Investors are concerned that TI appears to have deviated from its longstanding commitment to drive growth of free cash flow per share," Elliott said.

Elliott added it believes "in the strategic merit of American semiconductor manufacturing leadership" and that Texas Instruments ( TXN ) is "the only analog company with proven industry leadership and proven technology to achieve this goal at scale."

In an emailed statement late Tuesday to MT Newswires, a Texas Instruments ( TXN ) spokesperson said the company received the letter and is reviewing it.

"As always, our focus is on continuing to make decisions that are in the best interest of TI and all of our shareholders," the spokesperson said.

Texas Instruments ( TXN ) shares fell 1.6% in recent trading Wednesday.

Price: 196.34, Change: -3.26, Percent Change: -1.63