Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 5, 2026 · Beat 5 of last 7 quarters
The Buildout is a website built on agentic AI tools, currently in beta, and could have factual errors.
Diodes' accelerating growth, driven by AI server and data center demand, underscores the broadening semiconductor content opportunity within AI infrastructure beyond just GPUs and accelerators. The company's expanding timing, power management, and interface portfolio, along with the ElevATE acquisition targeting ATE, positions it to benefit from the AI buildout's increasing power density and system complexity. The strong guidance and capacity expansion signal sustained investment in the AI supply chain.
Diodes reported Q2 revenue of $445.5 million, up 22% YoY and 10% sequentially, with record global POS and a fifth consecutive quarter of double-digit YoY growth. Gross margin expanded to 33.1%, and non-GAAP EPS of $0.70 more than doubled YoY. Automotive revenue reached a record 21% of product revenue, while computing grew 18% sequentially and 33% YoY, driven by AI server and data center demand. The company announced the proposed acquisition of ElevATE Semiconductor, a fabless ATE IC company, and guided Q3 revenue to ~$510 million with further margin expansion.
Management guided Q3 revenue to approximately $510 million ±3%, representing 30% YoY and 14% sequential growth at the midpoint, with GAAP gross margin expanding to 35% ±1% and non-GAAP EPS of $1.05 ±$0.10. They reiterated progress toward their 3-year financial targets of $2 billion annual revenue and over $4 non-GAAP EPS. The proposed ElevATE Semiconductor acquisition is expected to be immediately accretive, adding ~$50 million revenue in the first 12 months post-close with >20% CAGR over four years and gross margin significantly above corporate average. Management highlighted continued capacity expansion across internal fabs (GFAB, SPFAB), 6-inch to 8-inch migration, and selective back-end packaging capacity adds, while noting strong demand and pockets of supply constraints. They expect growth across all end markets in Q3, led by AI-related applications and automotive, with industrial recovery and consumer seasonality also contributing.
“As the fifth consecutive quarter of double-digit year-over-year growth, this quarter serves as a further confirmation of strengthening demand in overall market, combined with expanding content across our analog and power solutions in our key focus areas of automotive, industrial and AI server-related applications.”
on Demand strength and growth drivers
“Overall, AI infrastructure is becoming an increasingly important growth driver for Diodes that spans multiple end markets. AI should be viewed not as a single application, but as a broad system-level ecosystem.”
on AI infrastructure opportunity
“Our channel inventory decreased both in terms of dollars and weeks again this quarter with the weeks lower than our normal range of 11 weeks to 14 weeks.”
on Channel inventory and double ordering
Can you provide some color on your SPFAB, status of revenue and profitability, maybe where things stand on utilization and getting products qualified and moved in-house?
Gary Yu noted that while they don't provide a P&L for the wafer fab, loading continues to grow, key customers are starting to use wafers produced there, and utilization should continue to improve in the near future.
Some of your peers have reported some constraints, notably for power product supply. Are you seeing any supply constraint? Will you be able to ship more without it, notably into data center?
Emily Yang acknowledged pockets of supply constraints due to strong demand, but emphasized focus on strategic customers and preventing shortages. Gary Yu added that leveraging their hybrid model and adding capacity in internal fabs and back-end packaging will support future growth.
Can you talk maybe through some of that color or maybe rationale [on ElevATE]? It seems like a really great fit. But just kind of curious if there's anything about that acquisition that maybe we're not thinking of or haven't really understood yet, do you think?
Gary Yu explained that ElevATE complements Diodes' analog and mixed-signal portfolio with differentiated IP in high-performance signal chain and data converters, creating product and market synergies, expanding exposure to the ATE market, and increasing the addressable market to at least $1 billion.