Qnity Electronics (Q) Q4 FY25 earnings call: guidance and Q&A

What are the key metrics and assumptions, like MSI and PCBs, built into the 2026 EBITDA guidance?

Management expects MSI to grow mid-single digits in 2026, similar to 2025, and PCB indicators are in the same range. The guidance midpoint is anchored to these market estimates plus Qnity's outperformance and content advantage.

“we're expecting MSI to be mid-single digits, not terribly different from what we saw in 2025. And I would say on the printed circuit board side, we believe MSI is the best overall indicator. But if you look at the indicators around PCB, they're kind of in that same ballpark kind of that mid-single-digit range.”

asked by Bhavesh Lodaya · answered by Jon Kemp

Given the high single-digit sequential growth expected for Q1, how should we think about the quarterly cadence for the rest of 2026?

The business has seen less seasonality since the 2023 downturn. Q1 is expected to have high single-digit sequential growth, and consistent steady performance is anticipated through the year, with a slight peak in Q3, similar to 2025 after adjusting for spin-related timing shifts.

“At a high level, ever since we came out of the 2023 downturn, we've seen less seasonality in our business. And so as we move into 20 the guide we have for the first quarter, like we said, is high single digits. And we will expect to see consistent steady performance through the year.”

asked by Bhavesh Lodaya · answered by Michael Goss

Is Chemical Mechanical Planarization (CMP) used in advanced packaging, specifically for planarization before direct device connection?

Yes, CMP processes (pads, slurries, cleans) are used in advanced packaging and it's one of the fastest-growing areas. Planarization is critical for efficient copper-to-copper bonding and hybrid bonding in complex 3D structures.

“So at a high level, yes, the CMP processes, including pads, slurries, cleans are used in advanced packaging. It's one of the fastest growth areas within our advanced packaging portfolio.”

asked by John Ezekiel Roberts · answered by Jon Kemp

How should investors think about operating leverage in the Semiconductor Technologies and Interconnect Solutions segments throughout 2026, and what should be monitored?

In 2025, ICS showed strong operating leverage with 175 bps margin expansion due to high-value growth drivers (advanced packaging, interconnects, thermal management). Semi segment margins were in the mid-30s, impacted by R&D investments and product mix. Similar dynamics are expected in 2026, with ICS likely growing margins faster.

“I would expect kind of similar dynamics next year and we've talked about even going back to our Capital Markets Day that we believe that the Interconnect segment had opportunity to kind of grow margins at a faster pace than the semi. But over time, I think there's opportunity to do better in both segments.”

asked by Christopher Parkinson · answered by Jon Kemp

How do memory market dynamics, including potential demand destruction, impact ICS growth, and what are the expectations for China sales in 2026?

Qnity's memory exposure is 20% of its semi portfolio, primarily to unit-driven consumables for premium devices, which are expected to be resilient. China grew high single digits in 2025 (over 30% of sales) with normalized buying behavior. Faster growth is expected in other regions (Rest of Asia, Americas) in 2026.

“our exposure the memory market is about 20% of our semi portfolio. About 80% is on the logic side. And within memory, our exposure is largely driven to unit-driven consumables.”

asked by James Schneider · answered by Jon Kemp

What factors would push Qnity towards the low end (4.5% growth) or high end of its 2026 net sales guidance?

The low end would be driven by more significant constraints or demand destruction in the memory market than currently anticipated. The high end depends on customers' ability to scale new node transitions and bring incremental capacity online, leveraging Qnity's content growth tied to these advancements.

“When you think about kind of the low end of the range, what would have to happen for that to happen, it would be kind of more constraints really coming from the memory market and if that started to see kind of significant demand destruction that's outside the parameters of how we think the year is going to unfold.”

asked by Arun Viswanathan · answered by Jon Kemp

What innovations in advanced packaging, interconnects, and thermal management should investors be excited about in the ICS business over the next two years, and what content increases are expected?

ICS innovations include new copper interconnect chemistry for advanced packaging, upgrading circuit board technology to high layer count/HDI for signal reliability, and novel thermal solutions like pads, liquid gap fillers, and Phase Change Materials. All three areas grew over 20% in 2025, driven by increasing content wins and OEM partnerships, especially in data centers.

“On the thermal side, we've launched some new novel technologies in both thermal pads as well as gap filler -- liquid gap fillers. Some Phase Change Materials, and we're excited by other innovations and working closely with some of our OEM partners.”

asked by Melissa Weathers · answered by Jon Kemp

The high single-digit sequential growth for Q1 seems above normal seasonality. Is there anything unusual, and how does this impact expectations for Q2?

The strength is driven by structural demand shifts in end markets, particularly data centers and high-performance computing, which are overshadowing normal seasonal weakness from consumer electronics. This reflects Qnity's diversified portfolio. Steady demand is expected through the year, with a slight Q3 peak, and additional perspective will be provided as the year progresses.

“I think I'll go back to what I mentioned in my prepared remarks around some of the structural demand shift that we're seeing in some of our end markets. that as we get into really a lot of the strength in the current market environment is really driven by data center, the high-performance computing.”

asked by Aleksey Yefremov · answered by Jon Kemp