Earnings Call Insights: Vishay Intertechnology (VSH) Q2 2025
Management View
- Joel Smejkal, President and CEO, reported that "revenue grew sequentially 7% to $762 million, in line with our guidance," with both semiconductors and passives seeing growth across all end markets and regions. Smejkal highlighted that "the inventory correction cycle is principally behind us," with industry inventories for passives normalized and only some excess remaining in semis. He described strong order momentum in smart grid infrastructure and AI power applications, noting a positive book-to-bill ratio of 1.02 for the quarter and an improvement in July for semis to 1.07.
- Smejkal stated, "Over the past 2.5 years, we have invested approximately $775 million to add capacity for high-growth, higher profit products...we have the incremental capacity for nearly all products to capture the early stage of this market upturn."
- The CEO underscored strategic initiatives to re-engage inactive customers, expand design opportunities, and advance the silicon carbide strategy, positioning Vishay for megatrends including e-mobility and sustainability.
- Automotive revenue increased 4% quarter-over-quarter, industrial revenue increased 9%, and aerospace/defense rose 5%. Smejkal cited strength in AI, smart grid, and automotive as key drivers, with AI-related revenue from the "other" segment up 9% and customer count expanding.
- Smejkal detailed ongoing progress in capacity expansion projects under the Vishay 3.0 plan, including a targeted $300 million to $350 million in 2025 capital spending, 70% of which is for high-growth product lines.
- David E. McConnell, CFO, stated, "Second quarter revenues were $762 million, up 7% compared to the first quarter...Gross profit was $149 million, resulting in a gross margin of 19.5% at the high end of our guidance." McConnell noted the impact of currency, one-time SG&A benefits, and Newport fab’s drag on MOSFET segment margins.
Outlook
- For Q3 2025, revenues are expected at $775 million, plus or minus $20 million, representing a 2% volume increase and accounting for seasonality in Europe. Gross margin is projected in the range of 19.7%, plus or minus 50 basis points, with Newport forecast to have a 160 to 185 basis point negative impact. Depreciation expense is expected to be $54 million for the quarter, and SG&A expenses are anticipated at $138 million, plus or minus $2 million.
- McConnell stated, "For 2025, we expect to maintain our dividend and opportunistically repurchase shares based on U.S. available liquidity in line with this policy."
Financial Results
- Revenues 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 increased to $755 million, with inventory days outstanding at 109 days. Operating cash outflow was $9 million, impacted 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, "Backlog in dollars increased to $1.2 billion and is now at 4.6 months."
Q&A
- Ruplu Bhattacharya, BofA Securities, asked about the Newport fab’s gross margin drag. McConnell responded, "They're working hard on getting the product, build wafers, and we're moving towards Q3 and Q4 starting to build inventory and start to ship product...So 160, we're hoping we'd be at the low end of that range."
- Bhattacharya questioned MOSFET gross margin decline. McConnell explained, "The MOSFET segment had some manufacturing inefficiencies that have been corrected in Q3...We're continuing on working on expanding our AI customer list, which will help with the margin improvement towards quarter 4."
- Bhattacharya asked about tariffs’ P&L impact. Smejkal stated, "In Q1, it was less than 4%, and we see about the same percentage in Q2 and Q3. It's a small percent."
- Bhattacharya inquired about M&A. Smejkal: "We always keep our eyes out for M&A opportunities. Semiconductor side, for sure, is something we look at...We continue to have that as a strategy."
- Kaykin Peng, JPMorgan, asked about above-seasonal trends for Q4. Smejkal replied, "Q4, the way the [ BiBa ] is building, at this point, we see that Q4 can be better than Q3."
- Peng sought color on demand drivers. Smejkal described strong momentum in AI, smart grid, automotive, and defense, noting, "I don't think that's the main driver here for us. I think these 4 application opportunities...are really what's driving us forward."
- On AI revenue and customer expansion, Smejkal said, "The customer count is definitely growing...it's really about expanding the part count as well as the customer count."
- Peng asked about a slipping semi customer program. Smejkal clarified, "The orders that we were planning for P6 and P7 have been adjusted because the design change to Bianca. And now we're working on the design side to make sure we're on that program."
Sentiment Analysis
- Analysts pressed for details on margin recovery, tariff exposure, M&A strategy, and demand visibility, reflecting a neutral-to-slightly-positive sentiment with some skepticism about margin normalization and sustainability of the upturn.
- Management maintained a confident tone in prepared remarks and during Q&A, emphasizing execution on strategic initiatives and capacity readiness with frequent references to "hoping," "expect," and "working hard."
- Compared to the previous quarter, management’s tone shifted from cautious optimism to more confident outlooks, bolstered by positive order trends and backlog growth. Analyst tone remains probing but less concerned about inventory overhang or tariff risk than in Q1.
Quarter-over-Quarter Comparison
- Revenue increased from $715 million in Q1 to $762 million in Q2. Book-to-bill remained above 1 but was slightly higher on the passive side for Q2. Gross margin rose 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, particularly in AI, smart grid, and automotive.
- Strategic priorities have shifted more toward capacity readiness and fast-turn demand, with management citing expansion in customer base and product portfolio, compared to Q1’s focus on inventory normalization.
- Analyst focus moved from inventory digestion and tariff impacts in Q1 to margin normalization and sustainability of growth 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; normalization is not yet achieved.
- Tariff exposure remains limited, with less than 4% of revenue affected by Chinese manufacturing returning to the U.S., but is monitored closely.
- Some customer program adjustments in semis affected short-term order flow.
- Management monitors seasonality in Europe and possible design changes at key customers as potential risks.
Final Takeaway
Vishay management emphasized that capacity expansions and strategic investments position the company to participate fully in an emerging market upturn, with backlog growth and increased customer engagement supporting a positive outlook for the second half of 2025. The company remains focused on maintaining reliable supply, expanding its role in high-growth segments such as 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.
Read the full Earnings Call Transcript
More on Vishay Intertechnology
- Vishay Intertechnology, Inc. (VSH) Q2 2025 Earnings Call Transcript
- Vishay Intertechnology, Inc. 2025 Q2 - Results - Earnings Call Presentation
- Vishay Intertechnology: Why The Bounce Has Likely Run Its Course For The Most Part
- Vishay Intertechnology Non-GAAP EPS of -$0.07 misses by $0.09, revenue of $762.25M beats by $6.18M
- Vishay Intertechnology Q2 2025 Earnings Preview
