What Vishay Intertechnology (VSH) Said on Its Q3 Earnings Call

Key Points

• Record Q3 results: Revenue rose 24% year over year to $979 million, beating guidance, while gross margin reached 25.5% and earnings were $0.37 per share.
• Demand and orders strengthened: Bookings climbed 15%, lifting backlog to $2.2 billion, or 6.6 months of sales. Industrial growth and AI applications were key drivers, with Vishay targeting nearly $200 million in AI revenue this year.
• Growth expected to continue: Vishay forecast Q4 revenue of $990 million and gross margin of 26%. It lowered its 2026 capital-spending outlook to $350 million–$400 million as capacity expansions continue.

Vishay Intertechnology NYSE: VSH reported record third-quarter 2026 revenue of $979 million, driven by stronger demand for its electronic components and higher prices. The company also forecast further revenue growth in the fourth quarter, despite year-end holiday closures.

Third-quarter sales rose 24% from a year earlier and 6.6% from adjusted second-quarter revenue, exceeding the company’s guidance range of $945 million to $975 million. CEO Joel Smejkal said demand was robust across industrial, automotive, aerospace, defense and artificial intelligence applications.

Gross margin rose to 25.5%, more than 200 basis points above the prior quarter, as higher volumes and improved pricing helped offset inflationary costs. Earnings were $0.37 per share, with no non-GAAP adjustments, compared with $0.19 in the second quarter and adjusted earnings of $0.04 a year earlier.

Orders and industrial demand climb

Bookings increased 15%, bringing quarter-end backlog to $2.2 billion, equivalent to 6.6 months. The overall book-to-bill ratio was 1.29, including 1.28 for semiconductors and 1.31 for passive components. A ratio above 1 indicates orders exceeded sales during the period.

Smejkal said some customers were placing orders with visibility extending as far as 18 months to secure supply through 2027. He said the company was monitoring for duplicate orders but had not seen significant evidence of them.

Industrial revenue rose 12% sequentially and 43% year over year, supported by power management, smart grid and industrial automation projects. Smejkal also cited record demand for polymer capacitors used in AI server applications. He said Vishay was pushing to generate close to $200 million in AI revenue this year, compared with approximately $100 million last year.

Automotive revenue increased 4% from the second quarter and 7% from a year earlier. Smejkal expects automotive sales to be flat in the fourth quarter, which he described as a 12-week period, while saying rising electronic content in vehicles should support longer-term demand. Aerospace and defense revenue grew 4% sequentially and 23% year over year.

Distribution revenue rose 9% sequentially and 30% year over year. Global distribution inventory remained at 18 weeks, while point-of-sale revenue increased 5% from the prior quarter and 26% from a year earlier. Smejkal said distributors wanted to replenish stock but were finding it difficult because customers continued to consume the components.

Fourth-quarter outlook and spending

Vishay expects fourth-quarter revenue of $990 million, plus or minus $15 million, and gross margin of 26%, plus or minus 50 basis points. CFO Dave McConnell said the gross-margin outlook exceeds the company’s goal of exiting the year at 24% by 200 basis points.

The company lowered its full-year capital expenditure expectation to $350 million to $400 million from a prior plan of $400 million to $440 million, citing extended equipment delivery and installation lead times. It expects full-year free cash flow to be close to break-even as it continues capacity investments and significantly reduces its accounts receivable securitization program.

Third-quarter operating cash flow was $146 million, while free cash flow was $98 million, up from $10 million in the second quarter. Vishay ended the quarter with $1.1 billion in cash and short-term investments after using approximately $300 million of proceeds from its July stock offering to repay its revolving credit balance.

Capacity expansion continues

Smejkal said Vishay had invested $253 million in its facilities through the first three quarters, nearly all for incremental capacity. At its new 12-inch wafer fabrication facility in Germany, the company is preparing to run engineering wafers in early 2027 and plans to begin production of non-automotive parts in the second half of the year.

The company is also increasing loading at Korean foundries to support AI demand and expanding polymer tantalum capacitor capacity. Smejkal said semiconductor back-end operations remain a priority for margin improvement, with the company hoping to announce something by year-end.

McConnell said Vishay would provide more detail on 2027 capital spending on its next call. He added that capital intensity should decline as revenue rises and that potential government subsidies could reduce net spending on the back-end and 12-inch fab projects.

About Vishay Intertechnology (NYSE:VSH)

Vishay Intertechnology, Inc is a global manufacturer of electronic components used in industrial, automotive, computing, telecommunications, consumer electronics, aerospace and defense, and medical applications. The company's portfolio includes passive components and semiconductor products that support power management, signal processing, sensing, connectivity and energy conversion.

Its products include resistors, capacitors, inductors, diodes, rectifiers, power MOSFETs, optoelectronic components, sensors, transducers and related power and circuit-protection devices.

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