Are the 2028 targets of $5.5B revenue, 31% gross margin, and 20% op margin still reasonable given current market improvements? How should investors think about capital allocation (dividends, buybacks, M&A, CapEx) over the next 12 months?

Joel affirmed the 2028 targets are still valid, though timing was impacted by inventory digestion and tariffs. He stated 2026 is the year for Vishay 3.0 to 'take off.' Dave noted CapEx still has runway, cash is lower, and a restructuring plan needs funding. Buybacks are less likely at current share prices, dividends are set (increase TBD by Board), and M&A may be revisited. “Yes. The targets are still there. Those are the targets. The timing of the targets was impacted by the inventory digestion that took longer into the first quarter of 2025.”

What is the impact of higher material costs and expedites on the Q2 gross margin guide? How is Vishay thinking about pricing for the year given tightness in passives and AI MOSFETs?

Dave stated material prices and ASPs are expected to largely cancel each other out in the Q2 guide. Joel explained that pricing increases began in Q4 last year for metal-impacted products, with small ASP benefit in Q1, and further improvements expected in Q2 (1.5% ASP increase) and Q3. “Peter, we started increasing pricing in the fourth quarter of last year, dependent on the metal impact product by product.”

What is Vishay's total AI data center exposure (semiconductor and passive) and what are the revenue growth expectations for this year?

Joel stated AI revenue was under $100 million last year and will be 'well above that' in 2026, with a 'nice step-up in growth.' He highlighted MOSFETs, diodes, polymer tantalum, current sense resistors, and magnetics. He noted gaining business through ODMs and actively working to get Vishay on bills of materials for programs where they might be missing a technology. “Last year, we said we were under $100 million. And this year, we'll be well above that. I don't want to put a number on it at the moment.”

VSH

Vishay (VSH) Q1 FY26 earnings call: guidance and Q&A

Earnings call· Mar 2026 (Q1 FY26)· Information Technology· May 13, 2026

Source: earnings call transcript

Executive summary

Vishay Q1 FY26 — Strong Revenue Growth and Backlog Expansion Driven by Vishay 3.0 Strategy

Vishay Intertechnology delivered a strong Q1 FY26, exceeding revenue guidance and demonstrating the effectiveness of its Vishay 3.0 growth strategy. The company saw broad-based revenue growth across all end markets and channels, driven by increased volume and market share gains, with a significant increase in book-to-bill and backlog. While capacity expansion efforts led to negative free cash flow, management reiterated confidence in its long-term revenue and margin targets, expecting 2026 to be a year of substantial growth as market conditions improve and investments yield returns.

Highlights

Revenue of $839 million exceeded guidance range of $800M-$830M, increasing 4.8% sequentially and 17.3% YoY.
Total company book-to-bill was 1.34, up from 1.2 in Q4 FY25, with backlog increasing 21% to $1.6 billion.
Gross margin expanded to 21.0%, exceeding guidance, with Newport fab reaching gross profit neutral.
Cash conversion cycle improved to 116 days from 125 days in Q4 FY25, driven by disciplined working capital management.
Industrial power revenue increased 6.5% sequentially, marking the fifth consecutive quarter of gains, with strong bookings in Americas and Europe.

Concerns

Free cash flow was negative $47 million due to high CapEx, reflecting capacity expansion plans.
GAAP effective tax rate remained elevated at 40-50% due to low pretax income.
Raw materials and WIP inventory increased due to rising metal prices and building buffer stock for geopolitical uncertainties.
SG&A expenses increased sequentially to $154 million from $142 million, primarily due to higher stock and bonus compensation.

Guidance & targets

Category	Target	Timeline	Confidence
Revenue	$875M-$905M high materiality	Q2 · FY26	High
Gross Margin	22.0% +/- 50 bps high materiality	Q2 · FY26	High
Depreciation Expense	~$54M medium materiality	Q2 · FY26	High
Depreciation Expense	$216M medium materiality	FY26	High
SG&A Expenses	$155M +/- $3M medium materiality	Q2 · FY26	High
GAAP Effective Tax Rate	40-50% medium materiality	Q2 · FY26	Medium
Free Cash Flow	Negative high materiality	FY26	High
Capital Expenditure	$400M-$440M high materiality	FY26	High
Revenue	$5.5B high materiality	FY28	High
Gross Margin	31% high materiality	FY28	High
Operating Margin	20% high materiality	FY28	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Automotive Mostly reflecting solid OEM demand in the Americas and Europe as customers continue to increase electronic content and start hybrid and EV programs. Asia revenue was weighed down a bit by Lunar New Year and Q4 pull-ins. Order intake increased due to Vishay 3.0 business approach to support new vehicle programs in Europe and China. Vishay is now the top supplier of resistors to multiple OEMs launching new EV platforms.	—	—	2.7%	—
Industrial Power Fifth consecutive quarter of sequential gains. Demand continued to grow primarily for electrical power transmission and power management, renewable energy and smart metering, factory automation and security systems. Americas ramping up production for new projects supporting AI infrastructure. Europe and China continue to supply smart grid programs. Bookings were up sharply in the Americas and Europe. Won 2 new grid development projects in the U.K.	—	—	6.5%	—
Aerospace Defense Strong demand from the U.S. government with spending approved to replenish munitions programs and with production ramping up in allied countries in Asia. U.S. defense contractors have just begun to increase orders for resistors, capacitors and custom magnetics. Long runway to drive growth as countries expand defense budgets and new multiyear programs start this year.	—	16.8%	14.1%	—
Healthcare Demand from long-standing customers, particularly in the Americas. Continuing to see success from efforts to leverage the breadth of the portfolio, cross-selling semis and passives. Design work remained around wearables, patient monitoring and implantables.	—	11.1%	4.5%	—
Other (Telecom, Computing, Consumer) Demand in China for AI-related applications was flat, reflecting the impact of the Lunar New Year and some shipments pulled into Q4. Continued to receive orders for quick delivery in Asia, mainly for high-voltage MOSFETs used in AI power applications. Customers adding passive technologies and AI power management solutions. Increasing activity from telecom customers in Americas supporting AI optical communication network switches (800 gigabits and 1.6 terabits). Europe telecom sales increased 33% with customers forecasting higher demand for 2026 versus 2025. Starting to receive requests for components for 6G networks.	—	25.8%	flat	—

VSH operating KPIs by quarter

VSH operating KPIs stated on its earnings calls, by fiscal quarter
KPI	This call Mar 2026 Q1 FY26	Jun 2026 Q2 FY26	Change vs prior quarter
Book-to-bill	1.34 ratio Total company book-to-bill at quarter end was 1.34, up from 1.2 in the [indiscernible]. Source: earnings call transcript	1.32 ratio Book-to-bill for Q2 was 1.32 with semis at 1.23 and passives higher at 1.40. Source: earnings call transcript	-1.5%
Book-to-bill Semiconductors	1.47 ratio For semis, book-to-bill was 1.47 and for passives, it was 1.23. Source: earnings call transcript	1.23 ratio Book-to-bill for Q2 was 1.32 with semis at 1.23 and passives higher at 1.40. Source: earnings call transcript	-16.3%
Book-to-bill Passives	1.23 ratio For semis, book-to-bill was 1.47 and for passives, it was 1.23. Source: earnings call transcript	1.4 ratio Book-to-bill for Q2 was 1.32 with semis at 1.23 and passives higher at 1.40. Source: earnings call transcript	+13.8%
Backlog	$1.6B As a result, backlog increased 21% to $1.6 billion at quarter end or 5.7 months. Source: earnings call transcript	$1.9B As a result, our total backlog grew 18% to $1.9 billion or 6.1 months. Source: earnings call transcript	+18.8%
Backlog	5.7 months As a result, backlog increased 21% to $1.6 billion at quarter end or 5.7 months. Source: earnings call transcript	6.1 months As a result, our total backlog grew 18% to $1.9 billion or 6.1 months. Source: earnings call transcript	+7%
Capital expenditures 12-inch fab in Germany	~$87M Total CapEx for the quarter was $111 million, including approximately $87 million for our new 12-inch fab in Germany. Source: earnings call transcript	~$66M Total CapEx for the quarter was $95 million, including approximately $66 million for our new 12-inch wafer fab in Germany. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Orderbook & backlog

Total Company Book-to-Bill 1.34 Q1 FY26 end

up from 1.2 in Q4 FY25

Order growth momentum was broad-based across regions, channels, technologies, and end markets.

Semiconductors Book-to-Bill 1.47 Q1 FY26 end

Passives Book-to-Bill 1.23 Q1 FY26 end

Total Backlog $1.6B Q1 FY26 end

increased 21%

Represents 5.7 months of revenue. Customers proactively placing orders based on longer visibility (1-year forecasts) and building safety stock (Asia for AI, all regions for automotive/industrial).

EMS Americas Book-to-Bill 1.45 Q1 FY26 end

grew

Aerospace Defense Americas Book-to-Bill 1.4 Q1 FY26 end

continued to build in Q2

Orders for defense are in very early innings.

Product announcements

Product	Type	Timeline
750-volt Gen 2 planner MOSFETs	launch	Q1 FY26
1,700-volt platforms	roadmap	next couple of quarters
1,200-volt trench MOSFET	update	last quarter

Deals & partnerships

SK Keyfoundry Collaboration to add capacity for AI-related applications.

Working towards releasing 2 products to production in Q3 FY26.

Capital programs

12-inch Fab in Germany underway

Period spend: $87M

Nearly all of the 12-inch fab investment will be spent during the first half of 2026, reaching capital intensity peak. Equipment installation started in Q1, planned to finish in Q2.

Newport 8-inch Wafer Fab for Silicon Carbide underway

Start: Q1 FY26

Setting up Newport to be an 8-inch wafer fab for silicon carbide, following the release of 1,200-volt trench MOSFETs.

Risks & headwinds

Elevated GAAP Effective Tax Rate Q2 FY26

40-50% for Q2 FY26

Mitigation:Expected to become more predictable and in line with historical average as earnings grow.

Ongoing Metals and Material Cost Pressures Q1 FY26, continuing into Q2 FY26

Offsetting higher volumes, impacting gross margin.

Mitigation:Partially offset by ASP increases; built into Q2 gross margin guidance.

Inefficiencies due to ramping up of new direct labor heads Q2 FY26

Included in Q2 gross margin guidance.

Geopolitical Uncertainties Q1 FY26

Impacted raw materials and WIP inventory.

Mitigation:Built buffer stock in raw materials and WIP inventory to ensure supply to customers.

Impact of inventory digestion and tariffs on long-term targets Past (Q1 FY25) and ongoing impact

Delayed timing of 5-year plan revenue and margin targets.

Mitigation:Vishay 3.0 strategy and capacity expansion are positioning the company for accelerated growth in 2026.

What to watch in Q2 FY26

12-inch Fab Equipment Installation

Q2 FY26

Current Started in Q1 FY26

Target Finished in Q2 FY26

Why it matters

Completion of equipment installation is a key milestone for the 12-inch fab, which is central to Vishay's capacity expansion and future growth, particularly for non-automotive production starting mid-2027.

At our 12-inch fab in Germany, we've started to install equipment during the quarter and plan to finish in the second quarter.

Find out whether VSH delivers this. Inve re-checks your case every morning.

Q&A highlights

Did Vishay gain share against Nexperia in automotive, and how much did it benefit revenue? Was Newport fab still a negative to gross margins in Q1, and is it expected to be negative in Q2?

Joel confirmed share gains in automotive, driven by multi-sourcing efforts and site approvals for Newport. Dave stated Newport was gross profit neutral exiting Q1, but had costs in Jan/Feb. They will stop giving specific Newport impact guidance as its costs are co-mingled. Automotive qualifications are needed to fill the fab.

“Regarding the share gain, yes, we're gaining share. We've been working very closely on automotive as well as OEMs to make sure there's multi-sources on programs where there may have been previously.”

asked by Ruplu Bhattacharya · answered by Joel Smejkal

2 min read 5 chapters

Detailed narrative

Vishay 3.0 Strategy Execution

The company's Vishay 3.0 transformation and growth strategy, initiated three years prior, is yielding results. This includes heavy CapEx investment in high-growth, high-margin product lines, adding subcontractors for manufacturing flexibility, expanding product portfolios, and increasing FAE involvement for design support and solutions. The strategy aims to position Vishay as a reliable supplier with expanded capacity, ready to scale with customers and drive market share gains.

Market Share Gains and Customer Engagement

Vishay is actively gaining market share, particularly in the automotive sector, by becoming a reliable supplier with expanded capacity. The company is collaborating with OEMs and Tier 1s on technology roadmaps and demand planning, leading to increased orders from previously inactive or underserved customers. Efforts include supporting new vehicle programs in Europe and China, and becoming a top resistor supplier for new EV platforms.

AI-Related Demand and Product Focus

Demand for AI-related applications remains strong, with Vishay positioning itself to increase participation. The company is supplying high-voltage MOSFETs, polymer capacitors, power inductors, and current sense resistors for AI power management solutions. Vishay is also working on next-generation designs for server power, optical communication modules, and high-bandwidth network switches, actively seeking to get its technologies on bills of materials for new programs.

Capacity Expansion and Fab Progress

Vishay is holding to its CapEx plan of $400M-$440M for 2026, with about half allocated to the 12-inch fab in Germany, where equipment installation is underway for mid-2027 non-automotive production. The Newport facility continues to ramp wafer production, with 4 Tier 1 automotive customer audits completed and 2 more planned for Q2, aiming for further share gains and approvals.

Silicon Carbide Strategy

The company released 750-volt Gen 2 planner MOSFETs for automotive and industrial platforms and plans to release 1,700-volt platforms over the next couple of quarters. Following the release of 1,200-volt trench MOSFETs using an external fab, Newport is now being set up as an 8-inch wafer fab for silicon carbide, indicating a strategic shift towards in-house production for this technology.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.