IN Brief:
- Diodes reported Q2 revenue of $445.5 million, up 21.7% from a year earlier.
- Gross margin improved to 33.1% as analogue and power content expanded across key applications.
- The company expects approximately $510 million of Q3 revenue and a 35% gross-margin midpoint.
Diodes Incorporated reported second-quarter revenue of $445.5 million as demand strengthened across analogue and power-semiconductor applications in automotive, industrial, and AI-server equipment. Sales increased 21.7% from $366.2 million a year earlier and 9.9% from $405.5 million in the first quarter.
GAAP gross profit reached $147.6 million, producing a margin of 33.1%, compared with 31.5% a year ago and 31.8% in Q1. Adjusted net income was $32.5 million, more than twice the comparable 2025 figure, while operating cash flow reached $68.5 million.
The quarter was Diodes’ sixth consecutive period of double-digit year-on-year revenue growth, with the company recording expansion across all regions and a record level of point-of-sale activity. Management attributed part of the increase to higher semiconductor content in analogue and power applications, rather than relying solely on a recovery in end-equipment unit volumes.
Automotive electronics illustrate how that content can increase. Vehicles require power conversion, switching, protection, signal conditioning, timing, sensing interfaces, and connectivity around increasingly complex electronic architectures. Industrial automation uses many of the same component classes around motors, programmable controls, sensors, machine communications, and embedded processors.
AI servers extend the analogue and power requirement into a much higher-density environment. Accelerators and high-bandwidth memory receive most of the attention, but the surrounding system needs voltage regulation, power switches, protection devices, interface components, clocking, and signal-conditioning circuits. Increasing rack power and communication speed can therefore raise demand for semiconductor content well beyond the headline compute devices.
Factory utilisation has also begun improving. Semiconductor manufacturing carries substantial fixed costs, meaning a higher level of wafer and assembly output can support better margins when production increases without equivalent growth in overhead. Diodes expects that effect to continue into the third quarter, although utilisation remains exposed to the usual semiconductor risks of inventory adjustment and changes in end-market demand.
The company expects Q3 revenue of approximately $510 million, plus or minus 3%, which at the midpoint would represent about 14% sequential growth and 30% growth from the previous year. GAAP gross margin is forecast at 35%, plus or minus one percentage point, a further increase from the 33.1% reported for Q2.
Diodes is also extending its analogue and mixed-signal range through a proposed acquisition of ElevATE Semiconductor. The $250 million cash transaction, announced in July and still subject to closing conditions, would add integrated circuits for automatic test equipment. ElevATE specialises in high-density, low-power devices used inside semiconductor testers.
The move into ATE components introduces a different part of the semiconductor production chain. Automatic test systems require precision analogue circuitry to generate, route, and measure signals as finished devices are evaluated. Increasing chip complexity and production volumes can therefore create demand for tester electronics at the same time as they increase demand for the devices being tested.
Diodes expects ElevATE to contribute approximately $50 million of revenue during the first 12 months after completion, although that remains a forward-looking estimate and does not affect the current Q2 figures. The acquisition is expected to close during the second half of 2026, subject to regulatory and other customary conditions.
The immediate manufacturing picture remains one of higher utilisation, improving margin, and broad analogue and power demand. Revenue has risen from $366.2 million a year ago to $405.5 million in Q1 and $445.5 million in Q2, with the company now guiding towards roughly $510 million. The third quarter will test whether that acceleration can continue without rebuilding the excess inventories that have repeatedly followed stronger semiconductor cycles.
