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    DIOD
    Earnings call· Jun 2026(Q2 FY26)

    DIODES INC /DEL/ Q2 FY26 earnings call DIOD

    Aug 5, 2026 Source

    Executive summary

    Diodes Q2 FY26 — Strong Revenue Growth and Margin Expansion Driven by AI and Automotive

    Diodes delivered a strong second quarter, extending its growth momentum with significant year-over-year revenue and non-GAAP earnings increases. The company's focus on automotive, industrial, and AI server-related applications continues to drive market share gains and content expansion. Strategic initiatives, including the ElevATE Semiconductor acquisition, are enhancing the product portfolio and contributing to improved profitability, positioning Diodes favorably towards its long-term financial goals.

    Highlights

    5

    • Revenue increased 22% year-over-year to $445.5 million, marking the fifth consecutive quarter of double-digit YoY growth.

    • Gross margin expanded by 160 basis points year-over-year to 33.1%, benefiting from cost and operating initiatives.

    • Non-GAAP earnings increased by over 100% year-over-year to $0.70 per diluted share.

    • Automotive revenue reached a record 21% of product revenue, growing 37% year-over-year.

    • ElevATE Semiconductor acquisition is immediately accretive, expected to add $50 million in revenue in the first 12 months post-close.

    Concerns

    2

    • Communication market revenue decreased 7% sequentially and approximately 3% year-over-year, primarily due to softness in the smartphone market in China.

    • Consumer market remained challenged by memory shortage and slower demand, despite some areas of strength.

    Guidance & targets

    6
    CategoryTargetConfidence
    Revenue
    $510 million +/- 3%
    high materiality
    High
    GAAP Gross Margin
    35% +/- 1%
    high materiality
    High
    Non-GAAP Adjusted EPS
    $1.05 +/- $0.10
    high materiality
    High
    Full-year 2026 Effective Income Tax Rate
    18% +/- 3%
    medium materiality
    Medium
    Annual Revenue
    $2 billion
    high materiality
    Medium
    Non-GAAP EPS
    over $4
    high materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Asia
    Represented 79% of total revenue in Q2 FY26. Strong demand in Asia was a key driver for overall revenue growth.
    		79%———
    Europe
    Represented 12% of total revenue in Q2 FY26.
    		12%———
    North America
    Represented 9% of total revenue in Q2 FY26. North America also contributed to global POS growth.
    		9%———
    Industrial
    Revenue increased 5% sequentially and over 24% year-over-year, representing 23% of product revenue. Benefits from strong demand across AI infrastructures, industrial automation, robotics, energy management, health care, and smart infrastructure.
    		23%24%5%—
    Automotive
    Revenue grew 15% sequentially and over 37% year-over-year, reaching a record 21% of product revenue. Driven by continuous business expansion, market share gains, and design win momentum in connected driving, comfort/style/safety, and electrification.
    		21%37%15%—
    Computing
    Revenue increased 18% sequentially and 33% year-over-year, making it the strongest growth driver. Driven by accelerating adoption across data center, AI server, cloud infrastructure, and storage platforms.
    		28%33%18%—
    Consumer
    Revenue increased almost 10% sequentially and 17% year-over-year, representing 17% of product revenue. Market remained challenged by memory shortage and slower demand, but saw strength in charging, USB power delivery, ESD protection, and level shifters.
    		17%17%10%—
    Communication
    Revenue decreased 7% sequentially and approximately 3% year-over-year, representing 11% of product revenue. Demand remains soft, especially in the smartphone market in China, but networking remains strong due to AI infrastructure investments.
    		11%-3%-7%—

    Operational metrics

    20
    Revenue
    $445.5 millionup 22% YoY vs $366.2 million; up 10% QoQ vs $405.5 million
    Q2 FY26

    Fifth consecutive quarter of double-digit year-over-year growth.

    Gross Profit
    $147.6 millionvs $115.3 million in Q2 FY25; vs $128.8 million in Q1 FY26
    Q2 FY26

    Gross profit margin was 33.1% in Q2 FY26, compared to 31.5% in Q2 FY25 and 31.8% in Q1 FY26.

    GAAP Operating Expenses
    $114.3 millionvs $105.9 million in Q2 FY25; vs $109 million in Q1 FY26
    Q2 FY26

    Includes $3.9 million amortization of acquisition-related intangible asset costs, $1.5 million Board and officer retirement expense, and $0.3 million acquisition-related costs.

    Non-GAAP Operating Expenses
    $108.6 millionvs $103.9 million in Q1 FY26
    Q2 FY26

    Excludes $3.9 million amortization of acquisition-related intangible asset costs, $1.5 million Board and officer retirement expense, and $0.3 million acquisition-related costs.

    Total Other Income
    $24.7 million
    Q2 FY26

    Breakdown of components contributing to total other income.

    Income Before Taxes
    $58 millionvs $53.2 million in Q2 FY25; vs $22.4 million in Q1 FY26
    Q2 FY26

    Income before taxes, equity and net earnings of equity investments and noncontrolling interest.

    GAAP Net Income
    $46.6 millionvs $46.1 million in Q2 FY25; vs $15 million in Q1 FY26
    Q2 FY26

    GAAP net income attributable to common stockholders.

    GAAP EPS
    $1.00vs $0.99 in Q2 FY25; vs $0.32 in Q1 FY26
    Q2 FY26

    Based on 46.4 million diluted shares.

    Non-GAAP Adjusted Net Income
    $32.5 millionvs $15 million in Q2 FY25; vs $19.8 million in Q1 FY26
    Q2 FY26

    Excludes net of tax, an $18.7 million gain on investments, $3.2 million of acquisition-related intangible asset costs, $1.2 million in Board officer retirement expense and $0.2 million in acquisition-related costs.

    Non-GAAP EPS
    $0.70vs $0.32 in Q2 FY25; vs $0.43 in Q1 FY26
    Q2 FY26

    Excludes net of tax, an $18.7 million gain on investments, $3.2 million of acquisition-related intangible asset costs, $1.2 million in Board officer retirement expense and $0.2 million in acquisition-related costs. Noncash share-based compensation expense of $8.9 million for Q2 FY26.

    EBITDA
    $83.5 millionvs $84.5 million in Q2 FY25; vs $49.4 million in Q1 FY26
    Q2 FY26

    Reconciliation of GAAP net income to EBITDA is provided in the earnings release.

    Cash flow provided by operations
    $68.5 million
    Q2 FY26

    Strong cash generation from operations.

    Net cash flow
    $32.9 million
    Q2 FY26

    Includes $10 million for the stock buyback program.

    Cash and investments balance
    $442 million
    Q2 FY26

    Cash, cash equivalents, restricted cash plus short-term investments at the end of Q2 FY26.

    Working capital
    $931 million
    Q2 FY26

    Working capital at the end of Q2 FY26.

    Total debt
    $40 million
    Q2 FY26

    Includes long-term and short-term debt at the end of Q2 FY26.

    Capital expenditures
    $33.6 million
    Q2 FY26

    Capital expenditures on a cash basis.

    Internal Assembly Testing Capacity
    75%
    current

    Percentage of assembly testing done internally.

    Fab vs Outsourced Production Split
    50-50
    current

    Split between internal fab production and outsourced production.

    AI Infrastructure Content Opportunity
    $267vs $109 per AI server platform
    per typical AI platform

    Estimated total content opportunity across combined AI application areas, representing a meaningful incremental increase.

    Industry KPIs

    9
    MetricValueDetails
    Lead times—
    Backlog order book—
    Ai data center revenue—
    Fab capacity utilization—
    Bookings net order intake—
    Design wins socket pipeline—
    Inventory channel inventory152 days (total inventory); 51 days (finished goods inventory)days
    Node platform ramp schedule—
    End market segment revenue mixIndustrial: 23%, Automotive: 21%, Computing: 28%, Consumer: 17%, Communication: 11%% of product revenue

    Deals & partnerships

    1
    ElevATE SemiconductorAcquisition of a fabless semiconductor company specializing in integrated circuits for automated test equipment (ATE).

    ElevATE complements Diodes' analog and mixed-signal product portfolio with highly differentiated IP and higher-margin products (low power, high density, high performance signal chain amplified and data converter). It enhances exposure to the attractive ATE market and expands share of wallet with existing customers. The combined entity can address an addressable market of over $1 billion.

    Risks & headwinds

    2
    Softness in smartphone market in ChinaQ2 FY26

    Communication market revenue decreased 7% sequentially and approximately 3% year-over-year.

    Mitigation: Networking remains strong with demand creation momentum supported by growing investments in AI infrastructures, enterprise networking, and next-generation mobile devices.

    Consumer market challengesQ2 FY26

    Market remained challenged by memory shortage and slower demand.

    Mitigation: Some areas of strength in charging, USB power delivery solutions, ESD protection devices for storage applications, and level shifters helped offset supply challenges.

    What to watch in Q3 FY26

    5

    Q3 FY26 Revenue Guidance Achievement

    next quarter
    Current$445.5 million (Q2 FY26 revenue)
    Target$510 million +/- 3%

    Why it matters

    Achievement of this guidance will confirm continued strong demand and the effectiveness of strategic growth initiatives, particularly in AI and automotive.

    As we look to the third quarter, we expect to extend our accelerating traction with revenue anticipated to increase 30% year-over-year and 14% sequentially at the midpoint.

    Q&A highlights

    6

    Can you provide color on the SPFAB's revenue, profitability, utilization, and product qualification status?

    Management stated they do not typically provide P&L for specific fabs but confirmed continued progress in loading the SPFAB and growing utilization. Key customers are starting to use products from this fab, and they expect utilization to continue growing.

    “Usually, we don't provide this kind of P&L for that particular wafer fab. But as I say so from a couple of quarters, and I do believe in the progress on loading that wafer fabs continue growing on that.”

    asked by Unknown Analyst · answered by Gary Yu

    2 min read5 chapters

    Detailed Narrative

    01

    Strategic Focus on High-Growth Applications

    Diodes continues to prioritize automotive, industrial, and AI server-related applications, which are driving consistent market share gains and increased content per system. Automotive revenue reached a record 21% of product revenue, growing 37% year-over-year. The company is expanding its product pipeline to support these key areas, leveraging its analog and power solutions.

    02

    Impact of Cost and Operating Initiatives

    Cost and operating initiatives implemented during the prior market slowdown🌐 are yielding measurable benefits, contributing to gross margin expansion and bottom-line improvement. Gross margin increased 160 basis points year-over-year to 33.1%, and non-GAAP earnings more than doubled. These actions have also bolstered cash flow, enabling reinvestment in growth and innovation.

    03

    AI Infrastructure as a Key Growth Driver

    AI infrastructure is an increasingly important growth driver, spanning multiple end markets like computing and industrial. Diodes' content opportunity in a typical AI infrastructure platform is estimated at $267, a significant increase from $109 in AI server platforms. New products scheduled for release are expected to further expand BOM content and socket penetration as AI platforms scale in power density and complexity.

    04

    Hybrid Manufacturing Strategy and Capacity Expansion

    Diodes is actively expanding its manufacturing capacity through a hybrid strategy, utilizing both internal wafer fabs (GFAB and SPFAB) and external partners. Efforts include improving utilization at internal fabs, migrating from 6-inch to 8-inch processes, and adding capacity in specific advanced backend packaging (e.g., CSP) to support strong demand and future growth.

    05

    End Market Performance and Outlook

    In Q2 FY26, computing revenue grew 18% sequentially and 33% year-over-year, driven by data center and AI server demand. Industrial revenue increased 5% sequentially and 24% year-over-year, benefiting from AI infrastructure and automation. Automotive revenue saw strong growth of 15% sequentially and 37% year-over-year. The communication market, however, experienced a decline of 7% sequentially and 3% year-over-year due to softness in smartphones, while networking remained strong.

    AI-generated summary of the company’s earnings call. Not investment advice.