Vishay Intertechnology (VSH) Q2 FY26 earnings call: guidance and Q&A

Inquired about current fab utilization, the percentage of manufacturing at foundries, expected wafer per month capacity for Newport and the new Germany fab, and the timeline for increased capacity.

Joel explained that foundries in Korea and China are coming online in Q3 FY26 to increase AI wafer capacity. For the Newport fab, automotive audits are nearing completion, which will increase utilization as programs are approved. The Germany 12-inch fab is on track for mid-2027 non-automotive production, but specific wafer counts were not disclosed, though good progress is being made.

“The 12-inch fab, we talk about first qualifying the nonautomotive commercial parts so we can run the fab much faster than Newport was started. That is still on target for mid-'27. As far as wafer counts, we're not ready to share that at this time. We are making good progress with the fabs and capacity.”

asked by Ruplu Bhattacharya · answered by Joel Smejkal

Asked about Vishay's exposure to MLCCs versus polymer tantalum, the importance of each for AI applications, and plans for polymer tantalum capacity expansion.

Joel clarified that Vishay's MLCC products are specialized for military and medical applications, though they see some orders for AI when other suppliers have long lead times. He emphasized that demand for polymer tantalum remains strong in automotive and AI, and Vishay is expanding its polymer output at current locations and a new site in La Laguna, Mexico.

“We still see the demand for polymer tantalum, polymer tantalum in automotive, polymer tantalum in AI. So I know there's some talk about MLCCs versus polymer, but we're still seeing demand grow for polymer. We're expanding our polymer output through the end of this year at the current locations that we're in, and we'll be expanding capacity at a new site in La Laguna, Mexico.”

asked by Ruplu Bhattacharya · answered by Joel Smejkal

Inquired about CapEx expectations for the current and next year, and the general framework for capital allocation between CapEx and buybacks.

Dave reiterated the FY26 CapEx guidance of $400 million to $440 million. He stated that while absolute dollar CapEx might remain high next year, capital intensity is expected to decrease. He also mentioned the policy to return at least 70% of free cash flow to stockholders, but noted that FY26 is expected to have negative free cash flow due to capacity expansion.

“I think what we would say though is our capital intensity will continue to drop back down to lower levels and not stay at the 11%, 10% range. Absolute dollars, it still may be a fairly high number, but as a percentage, as capital intensity number, it should drop.”

asked by Ruplu Bhattacharya · answered by David McConnell

Asked about the potential for further gross margin expansion beyond the accelerated 24% target and the trajectory towards the long-term 30% goal.

Joel outlined multiple levers for continued gross margin expansion, including increased volume, rising ASPs, strategic channel management prioritizing higher-margin customers, annual cost savings initiatives, maximizing Newport fab utilization, and the future economies of the Itzehoe 12-inch fab. He also mentioned reducing dependency on subcontractors for back-end finishing and factory optimization projects.

“We've got a series of initiatives that are going to help the margin. The short term is the volume for sure. The volume helps us with the variable margin. ASPs, we're increasing ASPs, and that's also helping the variable and gross margin.”

asked by David Williams · answered by Joel Smejkal

Inquired whether the current ordering pace indicates potential double ordering or if it remains rational.

Joel believes the ordering is "fairly rational" at this point, citing growing point-of-sale (POS) and decreasing distribution inventory. He explained that customers are placing orders further out due to concerns about high AI demand and the desire to secure products, rather than speculative double ordering. He stated the company will continue to monitor key metrics.

“I think at this point, it's still fairly rational. We look at items like the POS. The POS is growing for Vishay, so consumption is going out the door of distribution. The weeks of inventory has gone down each of the quarters.”

asked by David Williams · answered by Joel Smejkal

Asked about the strength of AI data center demand compared to initial expectations for the year.

Joel confirmed that demand for AI is growing strongly for both semiconductors and passives, with Vishay seeing increased part count on AI power management solutions. He noted that the company is pushing to be a bigger player in AI and is gaining opportunities due to competitors' inability to supply, indicating demand is robust and potentially exceeding initial expectations.

“Demand -- yes, demand for AI is growing with the hybrid model of semis and passives. We're getting more and more passives on the bill of materials. So that's growing. The MOSFETs, the diodes, we've been on the bill of materials.”

asked by David Williams · answered by Joel Smejkal

Asked if announced price increases are leading to customers pulling forward demand to lock in lower prices.

Joel stated that Vishay is quickly updating backlog with new prices, making it difficult for customers to get ahead of the increases. He noted that while Tier 1 automotive customers are trying to build safety stock, the dynamic business environment and full manufacturing lines make it challenging to pull anything ahead. He believes the price increases are real and effectively implemented.

“We see the intention, but the way we're doing the price increases, we are updating the backlog rather quickly. So to be able to try and get ahead of the queue and have a ship within weeks, we're updating the backlog to the new price. So we don't see that people are able to get ahead of it.”

asked by Melissa Dailey Fairbanks · answered by Joel Smejkal