This article first appeared on GuruFocus .
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Total Revenue:$210 million, flat year-over-year.
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IC Revenue:$148 million, decreased 5% year-over-year.
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FPD Revenue:$62 million, increased 13% year-over-year.
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Gross Margin:31%.
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Operating Margin:20%.
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Diluted GAAP EPS:$0.54 per share.
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Non-GAAP Diluted EPS:$0.42 per share.
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Operating Cash Flow:$47 million, 22% of revenue.
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CapEx:$46 million, focused on Korean expansion and equipment installation.
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Total Cash and Short-term Investments:$638 million.
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Fiscal 2026 CapEx Guidance:$330 million.
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Fiscal Q3 Revenue Guidance:$207 million to $215 million.
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Fiscal Q3 Operating Margin Guidance:18% to 20%.
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Fiscal Q3 Non-GAAP Diluted EPS Guidance:$0.39 to $0.45 per share.
Release Date: May 28, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Photronics Inc ( NASDAQ:PLAB ) is experiencing strong demand for leading-edge memory and logic chips for AI applications, creating a multiyear growth opportunity.
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The company is making strategic investments in the US and Korea to strengthen its competitive position and expand capabilities into more advanced technology nodes.
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Photronics Inc ( NASDAQ:PLAB ) reported a 13% year-over-year increase in FPD revenue, driven by its capability to produce more complex, larger mask sizes and strong differentiation in AMOLED.
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The company's high-end US facility in Boise is qualified to produce masks at the 7-nanometer node, with ongoing work on even more advanced nodes.
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Photronics Inc ( NASDAQ:PLAB ) maintains a strong market share in Korea, with positive seasonality returning during fiscal Q2 after a slower start to the calendar year.
Negative Points
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The IC business decreased 5% year-over-year to $148 million, resulting in total fiscal Q2 revenue of $210 million, which was flat year-over-year.
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Several factors, including elevated fab utilization rates, memory supply constraints, and geopolitical uncertainty, have delayed design releases.
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The seasonal recovery following the Chinese New Year has not occurred to the extent anticipated, impacting near-term visibility.
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The semiconductor industry is experiencing higher-than-normal fab utilization rates, limiting capacity for additional design releases.
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The company faces limited visibility with a typical backlog of only one to three weeks, making demand inherently variable.
Q & A Highlights
Q: When did visibility start to become clouded in the quarter, given that Q2 guidance came in below expectations? A: Eric Rivera, President and CFO, explained that visibility started to become clouded when the conflict between Iran and the US began during the quarter. Additionally, high fab utilization rates also affected visibility. Frank Lee, Head of Asia Operations, added that the slowdown after the Chinese New Year was longer than anticipated, contributing to the clouded visibility.
Q: Have customers provided any timeline for when they expect to bring in new designs? A: Frank Lee noted that while customers remain optimistic about the midterm outlook, near-term visibility is limited. However, there has been some recovery in tape-outs since the beginning of May, although the company remains cautious.
Q: Are the customers deferring designs already in the pipeline, or is it more about new designs slowing down? A: Frank Lee clarified that the slowdown is happening at the design house level, where new design releases are delayed. This slowdown is not in the pipeline but at the very beginning of new design releases.
Q: Are there any specific levers to pull if demand stays soft for a few more quarters? A: Eric Rivera stated that there are very few levers to pull, as most costs are fixed. The product mix available to the market will determine the company's performance, with limited options for variable cost reductions.
Q: Regarding the Allen facility, will bringing new capacity online in a weak demand environment add depreciation costs and compress margins further? A: Eric Rivera mentioned that the Allen expansion is on track, with qualifications already started in Q3. The current economic environment is not expected to depress returns from the Allen expansion. Frank Lee added that the expansion is not only for capacity but also for technology upgrades, which will help increase market share in technology nodes.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
