This article first appeared on GuruFocus .
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Revenue:$445.5 million in Q2 2026, up 22% year-over-year and 10% sequentially.
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Gross Profit/Margin:Gross profit of $147.6 million, with gross margin at 33.1%, up 160 basis points year-over-year.
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GAAP Net Income:$46.6 million, or $1.00 per diluted share.
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Non-GAAP Adjusted Net Income:$32.5 million, or $0.70 per diluted share.
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Non-GAAP Operating Expenses:$108.6 million, or 24.4% of revenue.
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EBITDA:$83.5 million, or 18.7% of revenue.
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Cash Flow:Operating cash flow of $68.5 million; free cash flow of $34.8 million.
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Capital Expenditures:$33.6 million, or 7.5% of revenue.
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Inventory:Total inventory days decreased to 152 from 157 last quarter; finished goods days were 51.
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Automotive Revenue:Record level, representing 21% of product revenue; grew 15% sequentially and over 37% year-over-year.
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Industrial Revenue:Grew 5% sequentially and over 24% year-over-year; represented 23% of product revenue.
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Computing Revenue:Grew 18% sequentially and 33% year-over-year; represented 28% of product revenue.
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Consumer Revenue:Increased almost 10% sequentially and 17% year-over-year; represented 17% of product revenue.
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Communication Revenue:Decreased 7% sequentially and approximately 3% year-over-year; represented 11% of product revenue.
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Q3 2026 Guidance:Revenue expected to be approximately $510 million, plus or minus 3%; GAAP gross margin expected to expand to 35%, plus or minus 1%; non-GAAP adjusted EPS expected to be $1.05, plus or minus.
Release Date: August 05, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Revenue grew 22% year-over-year and 10% sequentially, marking the sixth consecutive quarter of double-digit growth.
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Automotive revenue hit a record 21% of product revenue, with strong market share gains across regions.
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Gross margin expanded 160 basis points year-over-year, with another 190 basis point sequential improvement expected in Q3.
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Non-GAAP EPS more than doubled year-over-year, with Q3 guidance implying a 2.8x year-over-year increase.
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The proposed acquisition of Elevate Semiconductor is expected to be immediately accretive, adding ~$50 million in revenue and expanding into the high-growth ATE market.
Negative Points
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Communication market revenue declined 7% sequentially and 3% year-over-year due to soft smartphone demand in China.
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Consumer market remains challenged by memory shortages and slower demand, limiting growth potential.
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Channel inventory is below the normal range, indicating potential supply constraints that could limit near-term shipments.
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The company faces pockets of supply constraints, particularly in power products, which could hinder ability to fully meet strong demand.
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Total inventory days remain high at 152, with increased raw material and work-in-process levels, posing a risk of excess inventory if demand softens.
Q & A Highlights
Q: Can you provide some color on your SPFAB status of revenue and profitability, utilization, and getting products qualified and moved in-house? A: Gary Yu (CEO): We don't provide a P&L for that particular wafer fab, but the progress on loading that wafer fab is continuing to grow. Key customers are starting to use wafers produced from the fab, and we believe utilization will continue to grow in the near future.
Q: Can you talk us through end-market expectations as we move into Q3 and potentially Q4, and rank your growth opportunities as you move into 2027? A: Emily Yang (SVP, Worldwide Sales and Marketing): For Q3, we expect growth from almost all end-market segments, driven mainly by AI-related applications, especially server motherboards. Automotive shows strong growth momentum from market share gains, and industrial is recovering from excess inventory. Consumer is typically a peak quarter in Q3, and networking should continue to grow. We don't provide Q4 guidance, but momentum is good, and next year should be stronger than usual.
Q: Some of your peers have reported constraints, notably for power product supply. Are you seeing any supply constraints, and will you be able to ship more without it, notably into data centers? A: Emily Yang (SVP, Worldwide Sales and Marketing): There are definitely pockets of areas that are more constrained than others due to very strong demand. Our focus is working with strategic customers to understand their true demand and prevent shortages or line-down issues. Gary Yu (CEO) added that leveraging the hybrid model, including internal wafer fabs and external partners, ensures capacity to support customers, with growth not limited by demand but supported by additional capacity.
Q: You mentioned capacity expansion efforts. Is that on the front end, and if so, what geographically are you building capacity? A: Gary Yu (CEO): We are improving utilization at our fabs and migrating from 6-inch to 8-inch wafers for more capacity, while also leveraging external partners in Korea and Taiwan. For assembly and testing, about 75% is done internally. We are selectively adding capacity for specific packages like DFN or CSP, which provide better value and service to key customers.
Q: What's the percentage of your production that's currently internal fab versus outsourced? A: Gary Yu (CEO): It's about 50-50 at this moment.
Q: Can you talk through the rationale for the recent Elevate Semiconductor acquisition and any aspects we might not be thinking of? A: Gary Yu (CEO): Elevate is a fabless semiconductor company specializing in ICs for automated test equipment (ATE). It complements our analog and mixed-signal portfolio with highly differentiated IP and higher-margin products, including low-power, high-density signal chain and data converters. We see strong product and market synergies, expanding our exposure to the attractive ATE market and enabling us to become an ATE platform solution provider. The combined addressable market is estimated at $1 billion or more.
Q: Given the strength of demand, do you feel you're shipping through consumption, and are there any concerns about double ordering or channel inventory building? A: Emily Yang (SVP, Worldwide Sales and Marketing): Channel inventory decreased both in dollars and weeks, and is lower than the normal range of 11 to 14 weeks. We don't see double booking or double shipments building up channel inventory at this moment. We are trying to balance ship-through, but we're not there yet, so this is not a concern.
Q: Can you provide more color on the Q3 guidance, particularly the expected 14% sequential revenue growth and 190 basis point gross margin improvement? A: Brett Whitmire (CFO): For Q3, we expect revenue of approximately $510 million, plus or minus 3%, representing a 30% year-over-year increase and 14% sequential increase. GAAP gross margin is expected to expand to 35%, plus or minus 1%, driven by continued utilization improvements. Non-GAAP adjusted EPS is expected to be $1.05, plus or minus.
Q: Can you elaborate on the AI infrastructure opportunity and how it's impacting your end markets? A: Emily Yang (SVP, Worldwide Sales and Marketing): AI infrastructure is becoming an increasingly important growth driver spanning multiple end markets. In a typical AI infrastructure platform, our content can attach across server motherboards, power networks, networking switches, storage, and high-speed optical interconnect. The estimated total content opportunity is approximately $266, a meaningful increase compared to $109 for AI server platforms alone. With several new products scheduled for release, we are well positioned to expand content and gain share as AI platforms scale in power density and complexity.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
