Vishay Intertechnology, Inc. (VSH) | The Buildout — AI Infrastructure
The Verdict
Vishay makes the power-conversion and passive components that sit on circuit boards in AI servers, data-center power shelves and optical networking gear. Its pitch is breadth: one supplier that can populate much of a power board, mixing semiconductors and passives in a single portfolio. That breadth is why AI and data-center demand reaches Vishay through many parts at once rather than a single chip, and why the company shows up across several end markets at the same time.
| Market Cap | — |
| Revenue (TTM) | $4.2B |
| Revenue Growth | +42.0% |
| EBITDA Margin (TTM) | 8.7% |
| Net Cash | $206M |
| Earnings Beats | 1 of 7 |
| P/E (TTM) | — |
| EV/EBITDA (TTM) | — |
What We Like
- Book-to-bill has held above 1.3 for two straight quarters, and backlog grew from $1.3B to $1.9B over that span, ending Q2 2026 at 6.1 months of revenue.
- Revenue is rising in all six segments, every end market, every channel and all three regions; industrial revenue grew 30.1% y/y in Q2 2026, helped by smart grid, AI power and high-voltage DC.
- Record high bookings for resistors and inductors in Q2 2026, and Americas passive orders reached the highest level seen in more than 20 years.
- Pricing is broad: about one-third of running part numbers have announced increases, and Q2 2026 ASP rose 2% against the 1.5% expected.
- A $830M net equity raise was completed, the revolver was repaid in July, and cash plus short-term investments reached $1.3B.
What We’re Watching
- Newport's utilization waits on Tier 1 automotive PCN and program approvals; management says that step 'has taken a little time' and expects more approvals each month through year-end.
- The Germany 12-inch fab equipment installation slipped from Q2 to Q3 2026; nonautomotive production is still targeted for mid-2027.
- Adjusted gross margin was 22.6% in Q2 2026 against a 30% target anchored to 2028, and management says the last leg depends on a restructuring with no date.
- Distribution was 58% of Q2 2026 revenue, and management flagged that non-AI customer escalations are 'increasingly concerning' — the classic double-ordering risk.
The demand, order-book and margin evidence points to a strengthening business: two above-guidance quarters, a backlog that grew about 46% over two quarters, and pricing that is landing. The risk is that the upside is gated by things Vishay does not fully control — customer qualification cadence at Newport, foundry wafers due in Q3 2026, the 12-inch fab in mid-2027, and a margin bridge whose last leg needs an unscheduled restructuring. The open question is whether the order book reflects consumption or stockpiling, and whether the capacity gates open on the timeline management gave.
Earnings
Q2 2026 adjusted revenue was $919M, above the top end of guidance, up 9.5% sequentially and 21% year over year on an adjusted basis; GAAP revenue was $889M. GAAP gross margin was 23.3% and adjusted gross margin 22.6%, and adjusted operating margin rose to 5.8% from 2.6% in Q1. Book-to-bill was 1.32.
| Metric | Q2 FY2026 | Q1 FY2026 | Q2 FY2025 | YoY |
|---|---|---|---|---|
| Revenue | $1.7B | $839M | $762M | +126.7% |
| Gross margin | 22.2% | 21.0% | 19.5% | +270bps |
| EBITDA | $132M | $80M | $78M | +68.8% |
| EPS | $0.25 | $0.05 | $0.01 | +1584.6% |
| Book-to-bill | 1.32 | 1.34 | n/a | — |
| Backlog | $1.9B / 6.1 months | $1.6B / 5.7 months | n/a | — |
Demand related to AI applications continues to accelerate, leading numerous customers to place orders beyond 52 weeks to make sure they have a place in our production loading.— Joel Smejkal, President and CEO, 2026-08-05
Management tone: Management's tone moved from telling investors the inflection was coming to pointing at it as delivered. Executives were more specific on pricing, describing the increases as real and quick, and highlighted the margin milestone arriving a quarter early. They again declined to quantify AI revenue or wafer counts, and volunteered that Newport's PCN program approvals have taken a little time.
Management Guidance
For Q3 2026, management guided revenue of $945-975M and adjusted gross margin of 24.0% ±50bps, a quarter earlier than its goal of exiting the year at 24%. Depreciation is guided to about $54M in the quarter and about $215M for the year, and the effective tax rate to 35-40%. Free cash flow is guided negative. Management reaffirmed the 30% gross-margin target at a 2028 anchor and said it is not pulling it into 2027.
Trajectory
Revenue has risen sequentially for six straight quarters, from $715M in the March 2025 quarter to $839M in Q1 2026 and $919M adjusted in Q2 2026. The sequential growth rate eased through 2025 (+6.6%, +3.7%, +1.3%) and then re-accelerated (+4.8% in Q1 2026, +9.5% in Q2). On margins, Q2 adjusted gross margin was 22.6% versus a 21.0% gross margin in Q1, and Q3 is guided to 24.0%; the company points to volume, a 2% ASP gain, channel mix and cost savings, partly offset by metals, materials and logistics costs and ramp inefficiencies.
The Model
The model projects FY+1 revenue of $3,710M and EBITDA of $456M, a 12.3% margin, and FY+2 revenue of $4,400M and EBITDA of $713M, a 16.2% margin. The near-term case rests on the order book converting as foundry wafers arrive in Q3 2026 and polymer capacitor capacity comes online by year-end. FY+2 assumes the German 12-inch fab starts nonautomotive production in mid-2027 and the margin levers — volume, pricing, cost savings and footprint optimization — keep working.
| Metric | FY2025 | Next FY (E) | Following FY (E) |
|---|---|---|---|
| Revenue | $3.1B | $3.7B | $4.4B |
| YoY Growth | — | +20.9% | +18.6% |
| EBITDA | $282M | $456M | $713M |
| EBITDA Margin | 9.2% | 12.3% | 16.2% |
Projections are the median of 5 independent model runs. The model’s revenue sits 11.4% above analyst consensus.
For Q3 2026, management guided revenue of $945-975M and adjusted gross margin of 24.0% ±50bps, a quarter earlier than its goal of exiting the year at 24%. Depreciation is guided to about $54M in the quarter and about $215M for the year, and the effective tax rate to 35-40%. Free cash flow is guided negative. Management reaffirmed the 30% gross-margin target at a 2028 anchor and said it is not pulling it into 2027.
What Could Go Right — and Wrong
- Foundry wafers from the Korean and China foundries arrive in Q3 2026 and AI MOSFET and diode revenue steps up in the second half.
- Newport program approvals convert into utilization each month through year-end, opening Itzehoe capacity.
- Gross margin continues past the guided 24% after Q3 as volume, ASP, cost savings and channel mix compound.
- Pricing broadens beyond one-third of running part numbers and backlog repricing keeps landing.
- Free cash flow turns positive after the capacity build as capital intensity declines from 10.5%.
- Newport PCN approvals stall further, delaying the MOSFET margin recovery.
- The German 12-inch fab slips past mid-2027, pushing capacity and margin benefits to the right.
- Gross margin rolls over before 24% as metals, materials and ramp inefficiencies offset volume and pricing.
- The distribution channel, 58% of Q2 2026 revenue, corrects and turns the order book into cancellations.
- The restructuring behind the last leg of the margin bridge is delayed or never scheduled, keeping the 30% target out of reach.
Looking Ahead
The next twelve months turn on whether Vishay can convert demand into revenue. Foundry wafer capacity is due in Q3 2026, the German 12-inch fab installation is to complete in Q3 with engineering wafers toward year-end, polymer capacitor capacity is due by year-end, and Newport program approvals are expected to accumulate monthly. Gross margin is guided to 24.0% in Q3, with the 30% target still anchored to 2028. Free cash flow is guided negative for 2026.
- Q3 2026Foundry wafers ramp — Korean and China foundry capacity comes on board to feed AI wafers
- Q3 2026SK Keyfoundry release — Two products move to production for AI-related applications
- Q3 202612-inch install completes — German fab equipment installation wraps; engineering wafers next
- Q3 2026Q3 guidance test — Revenue $945-975M; adjusted gross margin 24.0% ±50bps
- End of 2026Polymer capacity added — Current sites expand; new La Laguna, Mexico site comes online
- Mid-202712-inch production starts — Nonautomotive production begins at the German 12-inch fab
Financials
Annual Summary
| Metric | FY2024 | FY2025 | TTM | YoY |
|---|---|---|---|---|
| Revenue | $2.9B | $3.1B | $4.2B | +4.5% |
| Gross Margin | 21.3% | 19.4% | 20.9% | 190bps |
| EBITDA | $216M | $282M | $361M | +30.2% |
| EBITDA Margin | 7.4% | 9.2% | 8.7% | +181bps |
| Net Income | −$31M | −$9M | $36M | +71.2% |
| Free Cash Flow | −$146M | −$89M | −$7M | — |
| Net Cash | — | — | — | — |
Key Ratios (Trailing)
- P/E TTM—
- EV/EBITDA TTM—
- EV/Revenue TTM—
- Price/FCF TTM—
- Gross Margin (TTM)20.9%
- EBITDA Margin (TTM)8.7%
- Net Margin (TTM)0.9%
- ROIC3.8%
- FCF Conversion-1.9%
- SBC / Revenue0.6%
The Company
Vishay manufactures one of the world's largest portfolios of discrete semiconductors and passive electronic components — the parts that control power and condition signals on circuit boards. The semiconductors are MOSFETs, diodes and optoelectronic components; the passives are resistors, inductors and capacitors. It serves the automotive, industrial, computing, consumer, telecommunications, military, aerospace and healthcare markets, and reports in six technology segments.
The company runs roughly 49 manufacturing sites across the U.S., Europe, Israel, India, China, Taiwan, Malaysia, the Philippines, Japan, Mexico and the Dominican Republic. It operates its own front-end wafer fabs — Newport in South Wales and a 12-inch fab in Germany — while also placing technology at foundries in Korea and China, and it has begun an initiative to bring more back-end assembly and test in house. The current strategy, branded Vishay 3.0, directs capacity toward higher-margin customers and products rather than chasing factory utilization.
Business Segments
Competitive Landscape
The 10-K names rivals for every product line, and the business spans both commodity and non-commodity markets. Vishay's differentiation is breadth — management says it can populate more than 80% of the components on a power application board, combining semis and passives — plus what the filing calls the broadest portfolio of resistor products worldwide. Management also says competitors' inability to supply is converting into escalation orders for Vishay.
- InfineonNamed in Vishay's 10-K among MOSFET competitors; not discussed further.
- Named in the MOSFET, diode and optoelectronic competitor sets in the 10-K.
- NexperiaNamed in the MOSFET and diode competitor sets in the 10-K.
- MurataNamed in the resistor, inductor and capacitor competitor sets in the 10-K.
- YageoNamed in the resistor, inductor and capacitor competitor sets in the 10-K.
Supply Chain
Vishay sits upstream of AI servers and data-center power gear. It buys foundry wafers and makes the MOSFETs, diodes, resistors, inductors and capacitors that go on the board. Customers are mostly distributors, OEMs and EMS companies, and AI demand reaches it through the whole bill of materials.
More on VSH: Earnings recap