Vishay Intertechnology Q2 Earnings Call Highlights

Key Points

• Second-quarter performance exceeded expectations: Adjusted revenue reached $919 million, up 9.5% sequentially and 20.5% year over year, while adjusted EPS rose to $0.19 from a loss of $0.07 a year earlier.
• Demand and backlog strengthened: Book-to-bill was 1.32, backlog increased 18% to $1.9 billion, and growth was broad-based, led by industrial, AI-related, automotive, aerospace and defense markets. Distributor inventories declined while point-of-sale activity increased, supporting management’s view that demand remains healthy.
• Vishay raised its growth trajectory and expanded capacity: The company expects third-quarter revenue of $945 million to $975 million and a gross margin near 24%. It is investing heavily in its German 12-inch wafer fab and additional foundry, capacitor and semiconductor capacity to support AI-related demand.

Vishay Intertechnology NYSE: VSH reported second-quarter 2026 adjusted revenue of $919 million, above the high end of its guidance range, as demand increased across its semiconductor and passive-component businesses, end markets, sales channels and regions.

GAAP revenue was $889 million, reflecting $30 million in tariff refunds that the company said will be passed through to customers during the second half of 2026. Vishay said the refunds reduced both reported net revenue and cost of products sold, with no impact on gross profit. Management used adjusted revenue, excluding the tariff refunds, in discussing quarterly performance.

Adjusted revenue rose 9.5% from the first quarter and 20.5% from the year-earlier period. Chief Financial Officer David McConnell said the year-over-year increase was driven primarily by an 18% rise in volume, a 2% increase in average selling prices and a 1% foreign-currency benefit, mainly from the euro.

Bookings, backlog and demand trends

President and Chief Executive Officer Joel Smejkal said the company’s second-quarter book-to-bill ratio was 1.32, including 1.23 for semiconductors and 1.40 for passive components. Vishay recorded record bookings for resistors and inductors, and total backlog rose 18% to $1.9 billion, representing 6.1 months of backlog.

Smejkal said customers have been extending their ordering visibility as industry lead times lengthen and concerns over product availability persist. Many customers are forecasting six months ahead, while demand tied to artificial-intelligence applications has led some customers to place orders more than 52 weeks in advance, he said.

Management said it has announced price increases on about one-third of its running part numbers since the fourth quarter of 2025, citing higher costs for metals, materials and logistics. Some of those increases were reflected in second-quarter results. Smejkal told analysts that Vishay has been updating backlog pricing quickly, limiting customers’ ability to pull forward shipments ahead of the price changes.

Asked about the potential for double ordering, Smejkal said the company currently views order activity as “fairly rational.” He pointed to increasing point-of-sale activity at distributors and declining distributor inventory levels as indications that demand is being supported by consumption. Distribution inventory declined to 18 weeks at quarter-end from 20 weeks in the first quarter, while distributor point-of-sale rose 4.7% sequentially and 20.5% year over year.

Growth across end markets and channels

All reported end markets posted sequential and year-over-year revenue gains. Industrial revenue increased 16.2% from the first quarter and 30.1% from a year earlier, driven by demand for smart-grid, AI power, high-voltage DC and factory-automation projects. Smejkal said industrial represented more than half of Vishay’s sequential revenue increase.

Automotive revenue rose 3.6% sequentially and 10.1% year over year, reflecting demand associated with driver-assistance systems, autonomous-driving applications and hybrid and electric-vehicle platforms. Aerospace and defense revenue increased 4.2% from the prior quarter and 15.4% from the prior year, supported by U.S. defense programs and demand from customers in Asia and Europe.

Healthcare revenue grew 7% sequentially and 14.7% year over year. Revenue in the company’s “other” category, which includes telecom, computing and consumer markets, rose 11.3% sequentially and 28.4% from a year earlier, aided by AI-related programs, optical communication network switches and European 5G radio projects.

Distribution accounted for 58% of revenue in the second quarter, up from 55% in the first quarter. Distribution revenue rose 15.6% sequentially and 24.2% year over year. OEM revenue increased 1.7% sequentially and 16.8% year over year, while EMS revenue rose 3.2% sequentially and 10.8% year over year.

Margins, cash flow and capital investment

Vishay generated gross profit of $177 million. GAAP gross margin was 23.3%, while adjusted gross margin was 22.6%, exceeding the company’s guidance and improving from the prior quarter. McConnell attributed the expansion to higher volumes and improved pricing, partially offset by continued metals, materials and logistics cost pressures.

Adjusted operating margin rose to 5.8%, compared with 2.6% in the first quarter and 1.4% in the second quarter of 2025. Adjusted EBITDA margin increased to 11.4% from 9.3% in the first quarter. GAAP and adjusted earnings per share were both $0.19, compared with $0.05 in the first quarter and an adjusted loss of $0.07 per share a year earlier.

The company generated $105 million in operating cash flow and $10 million in free cash flow during the quarter. Capital expenditures totaled $95 million, including approximately $66 million for Vishay’s new 12-inch wafer fabrication facility in Germany.

During the quarter, Vishay completed a public offering of 17.25 million common shares, raising $830 million in cash after issuance costs. The company ended the quarter with $1.3 billion in cash and short-term investments and $238 million outstanding on its revolver. McConnell said Vishay used a portion of the offering proceeds to repay the revolver balance in July.

Third-quarter outlook and capacity plans

For the third quarter, Vishay expects revenue of $945 million to $975 million. At the midpoint, the outlook implies 4.5% sequential growth and 21.4% year-over-year growth, including the effect of European seasonality. The company expects gross margin of 24.0%, plus or minus 50 basis points, reaching its prior target of exiting 2026 at a 24% quarterly gross margin one quarter earlier than planned.

• Third-quarter SG&A expense is expected to be $155 million, plus or minus $3 million.
• Depreciation expense is expected to be about $54 million for the quarter and $215 million for the full year.
• Interest expense is expected to be approximately $7 million.
• The expected GAAP effective tax rate is 35% to 40%.

Smejkal said Vishay plans capital expenditures of $400 million to $440 million in 2026, with roughly half allocated to the German 12-inch fab. Equipment assembly at the facility has been completed, and installation is expected to finish in the third quarter. The company plans to begin running engineering wafers near year-end and remains on track to start non-automotive production in mid-2027.

Vishay is also ramping production through foundries in Korea and China to add wafer capacity for AI-related applications in the second half of 2026. The company is expanding polymer capacitor capacity and pursuing additional back-end semiconductor capacity, while continuing development work in silicon carbide and gallium nitride technologies.

About Vishay Intertechnology (NYSE:VSH)

Vishay Intertechnology, Inc is a global manufacturer of discrete semiconductors and passive electronic components, serving a wide range of industries including industrial, automotive, computing, consumer electronics, telecommunications, medical, and military/aerospace markets. The company's portfolio encompasses resistors, capacitors, inductors, sensors, diodes, rectifiers, MOSFETs and a variety of integrated circuit solutions. Vishay's components are used in power management, signal conditioning, circuit protection and sensing applications, supporting both standard and custom designs for original equipment manufacturers worldwide.

Originally founded in 1962 by Dr.

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