May 28 (Reuters) - Activist investor Elliott has taken a stake worth $2.5 billion in Texas Instruments and urged the chipmaker to improve its free cash flow, CNBC reported on Tuesday.

Texas Instrument's shares rose more than 3% in premarket trading.

Elliott proposed that the company introduce a "dynamic capacity-management strategy", which would allow Texas Instruments to achieve free cash flow of as much as $9 a share by 2026, the report added, citing a letter. (Reporting by Akash Sriram in Bengaluru; Editing by Shinjini Ganguli and Shailesh Kuber)