Monolithic Power Systems Q1 Earnings Call Highlights

Key Points

• MPS reported record Q1 revenue of $804 million, up 7% sequentially and 26% year‑over‑year, driven by a 33% sequential surge in the communications end market (optical modules and switches).
• Management raised its enterprise data growth “floor” to about 85% year‑over‑year based on extended ordering and stronger backlog visibility, noting the change reflects backlog confidence rather than a fundamental shift in demand drivers.
• The company increased its manufacturing capacity target from $4 billion to about $6 billion and plans to move process nodes from around 60nm toward 40–45nm, while prioritizing silicon carbide modules for 800V data‑center power and GaN for low‑voltage applications.

Monolithic Power Systems NASDAQ: MPWR reported record first-quarter 2026 revenue and pointed to accelerating demand in several end markets, led by communications and enterprise data, during its quarterly earnings call.

Record revenue driven by communications strength

Vice President of Finance Tony Balow said the company delivered record quarterly revenue of $804 million, up 7% from the fourth quarter of 2025 and up 26% from the first quarter of 2025. Balow attributed the quarter’s performance to “continued innovation,” “consistent execution,” and what he described as “the resilience of our diversified market strategy.”

Balow highlighted that the communications end market grew 33% sequentially, driven by power solutions for optical modules and switches. He also said pipelines in automotive and enterprise data, including server, continued to accelerate as the company won “multiple new projects across customers and regions.”

Enterprise data outlook raised as backlog extends

In the Q&A, multiple analysts focused on enterprise data trends. Responding to Deutsche Bank analyst Ross Seymore, Balow said MPS continues to see CPU as a tailwind in 2026 and noted the difficulty of cleanly separating “AI solutions and CPU” within enterprise data. “We continue to see the transition to modules,” Balow said, adding that “plain server has been a tailwind, and we think it will continue to be so.”

TD Cowen analyst Joshua Buchalter asked about segment drivers behind the company’s growth outlook. Balow said MPS had previously guided to 30%–40% year-over-year enterprise data growth, then increased expectations to a “50% floor” on the prior call. Based on ordering patterns that continued through the first quarter, Balow said the company was now “comfortable raising that floor up to around 85% year-over-year growth.”

Balow emphasized that the increase was tied to better visibility and extended ordering patterns. In a later exchange with Wolfe Research analyst Chris Caso, Balow said the higher enterprise data growth floor was “not because there’s been a fundamental change in the growth drivers,” but rather “more comfort about what’s in backlog.”

CEO and Founder Michael Hsing repeatedly downplayed the value of forecasting specific quarterly ramps by application, saying MPS focuses on delivering the “best product” and “winning more socket,” with design wins eventually becoming revenue.

Manufacturing capacity goal moves higher; technology roadmap discussed

On manufacturing, Truist Securities analyst William Stein asked about the company’s capacity expansion and process technology. Hsing said MPS remains “around the 60 nanometers” and may move down to “40–45 nanometers” to support higher power density needs. He described the push as part of a long-running trend: “We keep doing the same things in the last 20 years. We just do better than our competitors.”

Balow said MPS has continued to increase capacity beyond its original $4 billion plan, with a new goal of reaching $6 billion in the near future. He also reiterated that the company’s prior $4 billion capacity plan was “very geographically diverse, both inside and outside of China,” aligning with a strategy focused on supply chain diversity.

Product and market themes: modules, 800V, silicon carbide, robotics, and DDR5 interface sampling

Management described multiple initiatives and areas of customer engagement during the call:

• Modules and power density: Hsing repeatedly cited MPS’s focus on “total monolithic power solutions,” including integrating functions in a way that can enable a “single piece of silicon” versus competitors using multiple chips. In communications, he pointed to increasing data rates and constrained space in optical formats, calling power density “critical.”
• 800V data center power bus: In response to Needham’s Quinn Bolton, Hsing said the company is “sampling” and “co-develop[ing]” 800-volt systems with customers and “our customers’ customers.” He said MPS’s approach for 800 volts is based on silicon carbide. Hsing also said the industry still has “a lot of things [that] has to be resolved” around 800-volt data centers but added, “our [product] for that application is ready.”
• GaN positioning: Hsing said the company has developed gallium nitride technology, but “it’s not for 800 volts,” describing it as targeted for “low voltage and lower powers.” When asked by Citi’s Kelsey Chia about the focus on silicon carbide for 800-volt step-down versus GaN, Hsing cited silicon carbide’s history and reliability and said MPS does not sell silicon carbide FETs as standalone components, but rather integrates them into modules.
• Robotics and “physical AI”: Hsing said robotics volumes are “still low” this year but could “move the needle slightly,” while emphasizing it is “very difficult to predict” given the early stage of the trend. Balow said MPS is applying its typical playbook: “engage broadly and win all the designs we can,” while acknowledging the company can’t control customer ramp timing.
• High-speed interface sampling for DDR5: Balow noted the company has sampled its first high-speed interface products for DDR5 at major customers. Later, Stifel’s Tore Svanberg asked when the business might become material. Balow said he “wouldn’t really have that as being a contributor to 2026 revenue,” describing it as part of expanding MPS’s footprint.

Storage strength, notebook caution, channel inventory lean, and margins discussed

Balow told Deutsche Bank’s Seymore that the company’s storage and computing segment includes “2 separate businesses.” He said storage has remained strong, indexed to enterprise data center demand, with strength in “DDR5,” “HDD,” and “SSD” continuing from last year into the first quarter. By contrast, he said MPS remains “more cautious” on notebooks, citing potential headwinds tied to memory shortages or memory price elasticity and noting MPS “selectively play[s]” in lower-margin consumer areas.

Loop Capital’s Gary Mobley asked about distribution channel inventory and pricing. Balow said MPS does not have perfect visibility into distribution inventory, but what the company has seen is the channel has been “very lean” in 2025 and continuing into 2026, suggesting the company is “shipping to what demand is at the market.” On pricing, Hsing said some costs are higher and the company’s goal is “keeping our margin profiles.” Balow added that MPS is not taking broad-based price increases, but in cases where input costs rise or customers request expedited supply chains, the company may raise prices to stay within its gross margin model.

Wells Fargo’s Joe Quattrocchi asked about gross margin dynamics. Hsing said margins have been on the low end of the company’s model but added MPS continues to improve module yields and does not see major headwinds. Balow said the company has delivered consistently to its gross margin guide and noted that for the last four quarters gross margin was flat at 55.5%, which he described as the low end of its model range. For the second quarter, Balow said the company “had the confidence to increase incrementally” its gross margin guidance due to improved backlog visibility, but he also cautioned there could be “strong headwinds” in the second half, leading the company to remain cautious.

Closing the call, Balow thanked participants and said he looked forward to speaking with investors on the company’s next quarterly update.

About Monolithic Power Systems NASDAQ: MPWR

Monolithic Power Systems NASDAQ: MPWR is a fabless semiconductor company that designs and supplies high-performance power management solutions for a broad range of electronic systems. Founded in 1997 and headquartered in Kirkland, Washington, the company focuses on analog and mixed-signal integrated circuits that convert, regulate and monitor electrical power with an emphasis on efficiency, integration and power density.

MPS's product portfolio includes DC‑DC switching regulators, power modules, power management ICs (PMICs), LED drivers, battery-management ICs, motor drivers, and AC‑DC power solutions.

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