Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported July 21, 2026 · Beat 6 of last 7 quarters
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Vicor's strong quarter and raised guidance underscore the accelerating demand for advanced power delivery solutions in AI data centers, particularly Vertical Power Delivery. The company's capacity constraints and plans for a second fab highlight the broader supply chain bottleneck in AI infrastructure power components. The expanding IP licensing practice, driven by ITC enforcement, could reshape the competitive landscape for AI power delivery.
Vicor reported Q2 revenue of $143.4 million, up 26.9% sequentially, with advanced products revenue up 45% to $94.2 million. The company recognized $15 million in royalty revenue from a new licensing agreement, which contributed to the strong sequential growth. Gross margin improved to 58%, up 280 basis points sequentially, though product gross margin was pressured by one-time costs related to fab reconfiguration. Backlog increased 26% sequentially to $379.7 million, with book-to-bill above 1. The company also received a $14.3 million CHIPS Act investment tax credit refund from the IRS in July.
Management raised full-year 2026 revenue guidance to over $600 million, up from the prior 'nearly $570 million' target, driven by a new licensing agreement and strong product demand. They expect Q3 revenue to increase nearly 10% sequentially, with double-digit sequential growth in advanced products revenue. The company reiterated its long-term financial objectives of $2.5 billion in revenue at 70% gross margins and 40% operating income, which will require a second chip fab. Management noted they are down-selecting two sites for the second fab, which could support 2-3x the capacity of the first fab, with a decision expected in the next few weeks. They also expect margin expansion as capacity utilization improves, and they are planning to engage with selected customers on second-generation VPD development systems starting this quarter, with production ramps expected late 2027/2028.
“With current gains greater than 40 and current density up to five amps per millimeter squared, Vicor's second-generation VPD is way ahead of all generation one competitive solutions.”
on Second-gen VPD competitive advantage
“We are in a privileged position that with limited capacity, we have the opportunity to select those engagements that make sense strategically for the long term, and that's what we're doing. We're not sold out, but we're approaching capacity utilization.”
on Capacity and customer selectivity
“We have a huge efficiency advantage relative to these competitive alternatives, but that doesn't mean we can't play a support role for those alternatives and capture significant business.”
on IVR support role and efficiency advantage
Do you still feel like you're on track to secure ramp designs with either a hyperscaler or other OEM customers for a second gen VPD over the next 12 to 18 months?
Patrizio confirmed development is complete for the baseline 3A/mm² chipset with the lead customer, and demo systems are being built to showcase to other customers. He noted two companies have approached Vicor to provide a building block for IVRs, which is an incremental opportunity. He emphasized that competitive solutions are barely capable of 1A/mm², while market needs are already above that and rising.
Can you help us understand the dynamics of product gross margins, which appear down sequentially when backing out royalty revenue?
Jim Schmidt explained that product gross margins were pressured by one-time costs related to moving equipment around in the first fab to make space for new equipment, which could not be capitalized. He expects product gross margins to improve as utilization and absorption increase.
How big will the second fab be? Will it be able to do $1.5 billion, or do you expect it to be able to do more in revenue?
Patrizio said they are down-selecting two sites that can support a considerable expansion, potentially 2x to 3x the first fab. He clarified that the $2.5 billion revenue target requires a second fab, and the buildout will be phased to avoid premature depreciation.