Vishay Targets $775M Q3 2025 Revenue Amid AI, Automotive, and Smart Grid Growth

Key Highlights from Vishay Intertechnology's Q2 2025 Earnings Call

Vishay Intertechnology, a leading manufacturer of discrete semiconductors and passive components, reported strong performance in the second quarter of 2025. The company’s revenue increased sequentially by 7% to $762 million, meeting expectations. This growth was driven across all end markets and regions, with both semiconductors and passives contributing positively.

Joel Smejkal, President and CEO, highlighted that the inventory correction cycle is largely behind the company. Industry inventories for passives have normalized, with only minor excesses remaining in the semiconductor segment. He noted that order momentum remains strong in areas such as smart grid infrastructure and AI power applications, with a book-to-bill ratio of 1.02 for the quarter. July saw an improvement in the semiconductor segment, with the ratio rising to 1.07.

Smejkal emphasized that over the past two and a half years, the company has invested approximately $775 million to expand capacity for high-growth, higher-margin products. This investment ensures that Vishay has the necessary capacity to capitalize on the early stages of the current market upturn.

The CEO also outlined strategic initiatives aimed at re-engaging inactive customers, expanding design opportunities, and advancing its silicon carbide strategy. These efforts are designed to position Vishay for long-term megatrends such as e-mobility and sustainability.

Revenue Growth Across Segments

Automotive revenue grew by 4% quarter-over-quarter, while industrial revenue increased by 9%. Aerospace/defense revenue rose by 5%. Smejkal attributed this growth to strength in AI, smart grid, and automotive sectors. AI-related revenue from the "other" segment increased by 9%, and the customer base continued to expand.

Under the Vishay 3.0 plan, the company is making progress on capacity expansion projects. For 2025, capital spending is targeted between $300 million and $350 million, with 70% allocated to high-growth product lines.

David E. McConnell, CFO, provided details on the financial results. Second-quarter revenues reached $762 million, a 7% increase compared to the first quarter. Gross profit was $149 million, resulting in a gross margin of 19.5%, which fell within the guidance range. McConnell noted the impact of currency fluctuations, one-time SG&A benefits, and challenges at the Newport fab on MOSFET segment margins.

Outlook for Q3 2025

For the third quarter of 2025, Vishay expects revenues to reach $775 million, plus or minus $20 million. This represents a 2% volume increase, factoring in seasonality in Europe. The projected gross margin for the quarter is 19.7%, with a potential range of +/- 50 basis points. The Newport fab is expected to have a negative impact of 160 to 185 basis points.

Depreciation expense is anticipated at $54 million, and SG&A expenses are forecasted at $138 million, plus or minus $2 million. McConnell stated that the company plans to maintain its dividend and consider opportunistic share repurchases based on U.S. liquidity levels.

Financial Performance and Cash Flow

Revenues for the quarter were $762 million, up 7% from the prior quarter. Gross profit reached $149 million, with a 19.5% margin. EBITDA was $75 million (9.8% margin), and adjusted EBITDA was $64 million (8.3% margin). GAAP EPS was $0.01 per share, compared to a loss of ($0.03) in Q1. Adjusted loss per share was ($0.07).

Inventory levels increased to $755 million, with inventory days outstanding at 109 days. Operating cash outflow was $9 million, influenced by $56 million in tax payments and $65 million in CapEx. Free cash flow for the quarter was negative $73 million. Cash and short-term investments stood at $479 million, with $185 million outstanding on the revolver.

McConnell reported that backlog in dollars increased to $1.2 billion, equivalent to 4.6 months of supply.

Analyst Questions and Management Responses

During the Q&A session, analysts raised several concerns, including the impact of the Newport fab on gross margins. McConnell responded that the team is working to build inventory and start shipping products in Q3 and Q4, aiming to reduce the negative impact to the lower end of the projected range.

Regarding the decline in MOSFET gross margins, McConnell explained that manufacturing inefficiencies have been corrected and that the company is continuing to expand its AI customer list, which should help improve margins in subsequent quarters.

Analysts also inquired about the impact of tariffs on the P&L. Smejkal noted that the impact was less than 4% in Q1 and is expected to remain similar in Q2 and Q3. He also mentioned that M&A opportunities are always under consideration, particularly in the semiconductor sector.

Market Sentiment and Strategic Shifts

Analysts expressed a neutral-to-slightly-positive sentiment, with some skepticism regarding the normalization of margins and the sustainability of the current upturn. However, management maintained a confident tone throughout the call, emphasizing execution on strategic initiatives and capacity readiness.

Compared to the previous quarter, the tone shifted from cautious optimism to more confidence, bolstered by positive order trends and backlog growth. Analysts remained probing but less concerned about inventory overhang or tariff risks than in Q1.

Quarter-over-Quarter Comparison

Revenue increased from $715 million in Q1 to $762 million in Q2. The book-to-bill ratio remained above 1, with slightly higher performance in the passive segment. Gross margin improved from 19.0% to 19.5%. GAAP EPS swung from a loss of ($0.03) to $0.01.

Guidance for Q3 is higher than Q2, reflecting management’s increased confidence in a market upturn, especially in AI, smart grid, and automotive sectors.

Strategic priorities have shifted toward capacity readiness and fast-turn demand, with a focus on expanding the customer base and product portfolio. Analysts’ attention has moved from inventory digestion and tariff impacts in Q1 to margin normalization and growth sustainability in Q2.

Risks and Concerns

Management cited ongoing manufacturing inefficiencies in the MOSFET segment, though corrective actions are underway. The Newport fab continues to impact margins, with normalization not yet achieved. Tariff exposure remains limited, with less than 4% of revenue affected by Chinese manufacturing returning to the U.S., but it is being closely monitored.

Some customer program adjustments in the semiconductor segment have affected short-term order flow. Management is also monitoring seasonality in Europe and possible design changes at key customers as potential risks.

Final Takeaway

Vishay Intertechnology emphasized that its capacity expansions and strategic investments position the company to fully participate in an emerging market upturn. Backlog growth and increased customer engagement support a positive outlook for the second half of 2025. The company remains focused on maintaining reliable supply, expanding its role in high-growth segments like AI, automotive, and smart grid infrastructure, and continuing disciplined capital allocation. Management believes these efforts will allow Vishay to capture growth opportunities while managing margin headwinds and industry dynamics.