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    Q
    Earnings call· Mar 2026(Q1 FY26)

    Qnity Electronics Q1 FY26 earnings call Q

    May 12, 2026 Source

    Executive summary

    Qnity Electronics Q1 FY26 — Strong AI-driven Growth and Raised Full-Year Outlook

    Qnity Electronics delivered a record first quarter, driven by robust AI-linked demand and strong execution across both segments. The company is strategically positioned for the industry's shift from 2D shrink to 3D stack architectures, leveraging its materials expertise and integrated portfolio. Management raised its full-year outlook, reflecting confidence in continued momentum and operational leverage.

    Highlights

    5

    • Net sales increased 18% year-over-year to $1.3 billion, with organic sales up 17%.

    • Adjusted operating EBITDA grew 22% year-over-year to $411 million, expanding margin by 125 basis points to 31.3%.

    • Adjusted EPS rose 33% year-over-year to $1.08.

    • Interconnect Solutions (ICS) organic sales grew 22% year-over-year, driven by Advanced Packaging, Interconnects, and Thermal Management, which collectively grew over 50%.

    • Full-year 2026 guidance was raised across all key metrics, including net sales to $5.225B-$5.375B and adjusted EPS to $3.80-$4.14.

    Concerns

    1

    • Anticipated geopolitical inflation headwinds of approximately $20 million for the remainder of 2026 for raw materials and logistics costs.

    Guidance & targets

    13
    CategoryTargetConfidence
    Q2 FY26 Sequential Net Sales Growth
    mid-single digits
    medium materiality
    High
    Q2 FY26 Semiconductor Technologies Net Sales Growth
    roughly flat sequentially
    medium materiality
    High
    Q2 FY26 Semiconductor Technologies Operating EBITDA Margin
    mid-30s
    medium materiality
    High
    Q2 FY26 Interconnect Solutions Net Sales Growth
    high single-digit range sequentially
    medium materiality
    High
    Q2 FY26 Interconnect Solutions Operating EBITDA Margin
    mid- to high 20s
    medium materiality
    High
    Full Year FY26 MSI Wafer Start Growth
    mid-single digits to high single digits
    high materiality
    High
    Full Year FY26 Net Sales
    $5.225 billion to $5.375 billion
    high materiality
    High
    Full Year FY26 Adjusted Operating EBITDA
    $1.535 billion to $1.625 billion
    high materiality
    High
    Full Year FY26 Adjusted Earnings Per Share
    $3.80 to $4.14
    high materiality
    High
    Full Year FY26 Adjusted Free Cash Flow
    $500 million to $600 million
    high materiality
    High
    Full Year FY26 Capital Expenditures as % of Sales
    approximately 9%
    medium materiality
    High
    Longer-Term Capital Expenditures as % of Net Sales
    6%
    low materiality
    Medium
    Transformation Plan EBITDA Run Rate Benefit
    $100 million
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Semiconductor Technologies
    Performed in line with expectations, led by demand for advanced logic and HBM chips. Also benefited from ongoing improvements in mature nodes and NAND. Margin improvement driven by manufacturing efficiencies and favorable product mix, including $20 million of inventory restocking.
    Organic sales growth: 12% YoYAdjusted operating EBITDA margin: 36.4%Adjusted operating EBITDA margin sequential change: +130 bpsInventory restocking: $20 millionDemand drivers: advanced logic and HBM chipsUtilization: Fab utilization rates improvingNode activity: 3-nanometer volumes scaling, 2-nanometer meaningful activity, Angstrom era nodes (16, 14, 10) R&D focus
    		$722 million12%—36.4%
    Interconnect Solutions
    Exceptional quarter with impressive execution, driven by content and share gains in Advanced Packaging and Interconnect and Thermal Management. Capitalized on demand tailwinds from data centers and benefited from ramps on shorter cycle EOR wins. Margin improvement due to strong operating leverage on higher volumes and favorable mix.
    Organic sales growth: 22% YoYAdjusted operating EBITDA margin: 28.5%Adjusted operating EBITDA margin sequential change: +280 bpsCore areas growth (Advanced Packaging, Interconnects, Thermal Management): >50% YoY
    		$593 million22%—28.5%

    Operational metrics

    13
    Adjusted Operating EBITDA
    $411 millionup 22% YoY
    Q1 FY26

    Record quarter for Qnity, reflecting strong volumes, operating leverage, and favorable mix.

    Adjusted EPS
    $1.08up 33% YoY
    Q1 FY26

    Record quarter for Qnity.

    Cash and Short-Term Investments
    $850 million
    end of Q1 FY26

    Reflects strong liquidity position.

    Total Debt Outstanding
    $4 billion
    end of Q1 FY26

    Maintains balance sheet flexibility.

    Net Debt Leverage
    2.2x
    end of Q1 FY26

    Maintains balance sheet flexibility.

    Share Repurchases
    $25 million
    Q1 FY26

    Executed to offset normal equity dilution.

    Organic Sales Growth
    17%YoY
    Q1 FY26

    Reflects strong performance driven by AI-exposed end markets.

    Net Sales Growth
    18%YoY
    Q1 FY26

    Reported net sales growth.

    Net Sales Growth
    11%sequentially
    Q1 FY26

    Reported net sales growth.

    Inventory Days
    little over 100 days
    Q1 FY26

    Inventory remains healthy.

    Inventory Turns
    6x
    Q1 FY26

    Inventory turns are right where we like it.

    Data Centers as % of Portfolio
    approaching 20%
    Q1 FY26

    End market mix is increasingly moving towards high-value applications like data centers.

    R&D Portfolio Shift
    significantly
    since 2023 downturn

    Concerted effort to focus R&D on this part of the market, which is now paying dividends.

    Industry KPIs

    11
    MetricValueDetails
    Backlog order bookstrong
    Ai data center revenuecontinued momentum
    Fab capacity utilizationhigh 70s to low 80s%
    Bookings net order intakestrong
    Advanced packaging revenuecore growth driver
    Wfe industry spend outlookmid-single digits to high single digits%
    Design wins socket pipelinerecord year in 2025
    Inventory channel inventorylittle over 100 daysdays
    Node platform ramp schedulescaling
    End market segment revenue mixapproaching 20%%
    Strategic supply agreements customer prepaymentscollaboration with NVIDIA

    Product announcements

    4
    ProductTypeDetails
    New CMP materials (pads and advanced cleans)launch
    Lithography solutions (EUV sublayers)milestone
    AI PCB boards (fine lines, interconnect, copper interconnect products)milestone
    Thermal management portfolio (thermal pads, liquid gap fillers, face change materials)update

    Deals & partnerships

    2
    NVIDIAcollaboration

    New collaboration focused on advancing materials research and development for next-gen AI, high-performance computing, and Advanced Packaging. Combines Qnity's materials expertise with NVIDIA's modeling and simulation capabilities to accelerate development and improve manufacturing.

    Appleinclusion in program

    Inclusion in Apple's American manufacturing program, recognizing Qnity's role as a long-term trusted partner.

    Capital programs

    2
    Delaware Facility Expansionopened

    Benefit: 385,000 square foot facility

    Expanded footprint in the U.S. with the March opening of a 385,000 square foot facility in Delaware. The first line is already operational and in customer [indiscernible].

    Taiwan State-of-the-Art Siteunderway$61.5 million
    Period spend: 1/3 of $61.5 million

    Benefit: advanced production, clean rooms, warehousing, and R&D labs

    Announced a new state-of-the-art site in Taiwan with advanced production, clean rooms, warehousing, and R&D labs. Equipment installation and fit-out will be completed this year, with full operation expected in early 2027. Approximately one-third of the $61.5 million investment was made in Q1.

    Risks & headwinds

    2
    Geopolitical inflation headwindsremainder of 2026

    approximately $20 million

    Mitigation: Leveraging local-for-local operating model, working with a diversified supplier base across regions, adjusting inventory levels for critical materials, and taking targeted pricing actions to pass through incremental increases in input or logistics costs.

    Labor unrest in Korea (memory and foundry customers)near-term

    unquantified

    Mitigation: Closely monitoring news, daily conversations with customers, constant practice of rigorous scenario planning to be agile and resilient, and rapid response to unexpected shocks.

    Q&A highlights

    7

    What are the assumptions for mainstream recovery's impact on H2/2027, and what is the framework for new product ramps?

    Mainstream demand shows constructive signs with improving utilization rates (mid-70s last year to high 70s/low 80s in Q1), expected to continue improving. AI applications are extending into mainstream (edge computing, physical AI), powering the next wave. New Process of Record (POR) wins are strong across advanced technologies, including CMP materials for 2nm and Angstrom era nodes, lithography (EUV sublayers), AI PCB boards, and thermal management.

    “AI-led infrastructure growth is more than offsetting any softness in consumer electronics.”

    asked by Christopher Parkinson · answered by Jon Kemp

    2 min read5 chapters

    Detailed Narrative

    01

    Shift from Shrink to Stack Architectures

    Jon Kemp highlighted the semiconductor industry's fundamental shift from 2D shrink to 3D architectures, emphasizing stacking chips to unlock the next frontier of computing. This transition elevates the importance of advanced materials, integration, and reliability, playing directly to Qnity's strengths. The company's integrated portfolio is designed to manage complex integration at scale, addressing critical challenges like power efficiency, heat management, and signal integrity in next-generation stacked systems.

    02

    AI-Driven Growth and Operational Leverage

    Qnity reported its eighth consecutive quarter of strong profitable organic growth, with organic sales increasing 17% year-over-year. This robust performance is primarily attributed to ongoing momentum in AI-exposed end markets and next-generation technologies. The Interconnect Solutions (ICS) segment demonstrated exceptional organic sales growth of 22% year-over-year, driven by its Advanced Packaging, Interconnect, and Thermal Management businesses, which collectively grew over 50% year-over-year, reflecting strong operating leverage.

    03

    Strategic Capacity Expansion and Local-for-Local Model

    The company is actively executing a capital allocation strategy focused on bolstering manufacturing capacity and strengthening its local-for-local operating model. Key investments include the March opening of a 385,000 square foot facility in Delaware, with its first production line already operational. Additionally, a new state-of-the-art site in Taiwan, featuring advanced production, clean rooms, warehousing, and R&D labs, is scheduled to be fully operational in early 2027. These expansions are critical for meeting demand for CMP materials and enhancing operational agility.

    04

    End Market Diversification and Resilience

    Despite some softness in consumer electronics, Qnity's results demonstrated resilience, primarily due to its exposure to premium devices and the significant growth driven by AI-led infrastructure. The company's portfolio mix is increasingly diversifying beyond consumer electronics into high-value applications such as data centers, autonomous driving, and aerospace and defense. Data centers are now approaching 20% of the company's total portfolio, indicating a strategic shift towards more resilient and high-growth end markets.

    05

    Innovation and Customer Collaboration

    Qnity maintains a strong Process of Record (POR) position across both its Semiconductor Technologies and Interconnect Solutions segments, a result of continuous R&D investments and deep alignment with customer roadmaps. Recent strategic collaborations include a partnership with NVIDIA to advance materials research and development for next-generation AI, high-performance computing, and Advanced Packaging. The company's inclusion in Apple's American manufacturing program further underscores its role as a trusted partner in pioneering next-generation technology.

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