Monolithic Power Systems Q3 Earnings Call Highlights

Key Points

• Monolithic Power Systems reported record quarterly revenue of $1.2 billion, up 22% sequentially and 63% year over year, driven by demand across enterprise data, communications, automotive and industrial markets.
• Enterprise data remains the primary growth engine, with management raising its expected year-over-year growth floor to 150%. MPS is expanding its customer base and developing vertical power-delivery, module and future 800-volt solutions, although broader 800-volt adoption is expected mainly in 2028.
• The company is expanding into optical communications, clock drivers, high-speed data converters, automotive 48-volt systems, robotics and building automation, while repurchasing more than $450 million of stock and targeting gradual gross-margin improvement within its 55%–60% range.

Monolithic Power Systems NASDAQ: MPWR reported third-quarter revenue of $1.2 billion, surpassing $1 billion in quarterly sales for the first time as demand expanded across enterprise data, communications, automotive and industrial applications.

Revenue rose 22% from the second quarter of 2026 and 63% from the prior-year period, according to VP and CFO Tony Balow. The company said its production capacity exceeded $6 billion of annual revenue support during the quarter and is expected to reach $8 billion in the second half of 2027, with a longer-term objective of $10 billion.

“Overall, we see accelerated growth,” Balow said. “Our diversified growth strategy is paying off.”

Enterprise Data Growth Remains Central

Enterprise data continued to be the company’s largest growth driver. Balow raised the company’s floor for year-over-year enterprise-data growth to 150%, compared with a previous floor of 130%, citing third-quarter results and expectations for the fourth quarter.

Balow said MPS has seen demand from existing customers while also broadening its customer base, including through internally developed artificial-intelligence design tools. The company has also expanded into desktop AI designs and a longer tail of smaller customers that could develop into larger accounts over time.

Management said the enterprise-data opportunity is not dependent on a near-term transition to 800-volt architectures. Balow said the company’s confidence is instead based on its current customer base, new customer additions, increasing adoption of modules and content gains as new platforms are introduced.

Chairman, President and CEO Michael Hsing said rising power requirements in GPUs have reinforced the case for vertical power delivery and modules. He said that, as power increases, available perimeter space becomes constrained, making vertical designs more practical.

The company is sampling gallium nitride-based solutions for 800-volt data-center architectures alongside its silicon-carbide offerings. Hsing said customers can select either technology, though MPS is taking a cautious approach toward GaN reliability. Balow said the company continues to expect 800-volt architecture ramps to begin late in 2027, with more meaningful activity in 2028.

Communications, Memory and New Product Areas

Communications was another major contributor to growth, fueled by optical modules and the company’s switch business. Balow said the combination of those two drivers became more apparent in the third quarter, and he expects communications to be MPS’s second-fastest-growing end market for the year, behind enterprise data.

Looking into 2027, MPS expects optical-module growth to benefit from the transition to 1.6 technology, which management said offers both volume and content gains. The company also expects continued expansion of sockets in switching applications.

In storage and compute, Balow said DDR5 power-management integrated circuits have been the primary growth driver, while hard-disk-drive and solid-state-drive products have also posted healthy growth over the past year. Notebook demand has been weaker in the near term because of downstream memory constraints, he said, but management remains constructive on the longer-term notebook opportunity.

Hsing said MPS is adding clock drivers and registered clock driver products alongside its power-management portfolio. He said these products are expected to contribute revenue in 2027 or 2028 and address a market larger than power management alone.

The company also disclosed its first large high-speed data-converter design win, which management expects to begin ramping next year. Balow said the win is not expected to materially affect 2026 results, with more information to come as the ramp develops.

Automotive, Robotics and Building Automation

In automotive, MPS received its first orders for 48-volt power solutions and expects design wins involving 48-volt and zonal architectures to support growth in 2027. Balow said automotive demand has been diverse across customers and geographies, including the U.S., Europe, Asia and China.

The company also began ramping robotic solutions using sensor and motor-control products in multiple regions. Hsing said robotics remains at an early stage but could become a larger opportunity as AI-based vision and recognition technologies improve. Balow said third-quarter industrial growth was broad-based, while 2026 remains focused on accumulating design wins in robotics and other applications that can support future revenue.

Hsing also discussed MPS’s building-automation ambitions, which he previously characterized as a potential $40 billion to $50 billion market. The company has begun installing technologies at a 1 million-square-foot building in China, including work involving 800-volt power supplies and buildingwide applications. He said the opportunity will require substantial software development and will take time to develop commercially.

Capacity, Margins and Capital Allocation

MPS repurchased more than $450 million of its stock during the third quarter. Management said its fabless operating model gives it flexibility to add manufacturing capacity without requiring a substantial increase in capital intensity.

Balow said the company intends to keep capacity ahead of demand rather than use capacity milestones as specific revenue guidance. He added that channel inventory remains near the lean end of MPS’s normal five-to-eight-week range, while internal inventory is not limiting sales.

On profitability, Balow said gross margin increased by 10 basis points in the third quarter, while the midpoint of fourth-quarter guidance implied another 10-basis-point increase. He reiterated MPS’s 55% to 60% gross-margin range and said the company intends to expand margins gradually rather than make sharp changes from quarter to quarter.

Management said it is absorbing part of rising costs while sharing some increases with customers. Balow said pricing has not been a significant contributor to recent revenue growth and that the company’s focus is on protecting gross margins rather than using pricing to drive sales growth.

About Monolithic Power Systems (NASDAQ:MPWR)

Monolithic Power Systems, Inc NASDAQ: MPWR is a semiconductor company that designs, develops and markets high-performance power-management solutions. Its products help regulate, convert, distribute and control electrical power in electronic systems, supporting applications that require efficient and reliable power delivery.

The company's portfolio includes integrated circuits, power modules, battery-management products, motor drivers, LED drivers and related analog and mixed-signal semiconductor solutions.

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