Diodes (DIOD) Q1 2026 Earnings Transcript

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DATE

Thursday, May 7, 2026 at 5 p.m. ET

CALL PARTICIPANTS

• President and CEO — Gary Yu
• Chief Financial Officer — Brett Whitmire
• Senior Vice President of Worldwide Sales and Marketing — Emily Yang

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TAKEAWAYS

• Revenue -- $405.5 million, up 22.1% year over year and 3.5% sequentially, reaching the high end of guidance and exceeding typical first-quarter seasonality.
• Gross Margin -- 31.8%, up 70 basis points from last quarter, attributed to a higher share of automotive and industrial business and better utilization.
• GAAP Net Income -- $15.0 million, or $0.32 per diluted share, compared to a loss of $4.4 million in the prior year and income of $10.2 million last quarter.
• Non-GAAP Adjusted Net Income -- $19.8 million, or $0.43 per diluted share, up from $8.8 million year over year and $15.7 million last quarter.
• EBITDA -- $49.4 million, or 12.2% of revenue, versus $26.2 million, or 7.9% of revenue, in the prior year and $41.9 million, or 10.7% of revenue, last quarter.
• Operating Expenses (Non-GAAP) -- $103.9 million, or 25.6% of revenue, excluding items outlined in management’s prepared remarks.
• Automotive and Industrial Revenue -- Combined 44% of product revenue, a two-percentage-point increase over the prior quarter, with automotive up 3.8% sequentially and over 32% year over year; industrial up to 24% of product revenue, representing 13.2% sequential growth and over 31% year over year.
• Inventory Days -- Total inventory days at quarter-end were 157, down from 161 last quarter and 187 a year ago; finished goods inventory at 55 days.
• Free Cash Flow -- $32.4 million, an increase of $20.0 million over the previous quarter.
• Cash and Investments -- $409.0 million in cash, cash equivalents, restricted cash, and short-term investments; working capital totaled $891.0 million; total debt of $55.0 million.
• Capital Expenditures -- $31.9 million, equating to 7.9% of revenue, within the targeted annualized range of 5%-9% of revenue.
• Geographic Revenue Mix -- Asia accounted for 77% of sales, Europe 14%, and North America 9%.
• Q2 2026 Guidance -- Revenue expected at $435 million, plus or minus 3%; GAAP gross margin at 32.8%, plus or minus 1%; non-GAAP adjusted EPS guided to $0.60, plus or minus $0.10.
• Channel Inventory -- Declined both in dollar and week terms, now at the lower end of the Company's typical 11 to 14 week range, suggesting end-market demand is real rather than restocking.

SUMMARY

Management introduced three-year financial targets, aiming for $2 billion annual revenue, $700 million gross profit, and over $4 non-GAAP EPS. Leadership identified design wins and new product introductions in automotive, industrial, and data-center segments as drivers of future expansion. The Company noted "operating leverage" as earnings more than doubled year over year, underscoring improvements beyond topline growth.

• Gary Yu said, this quarter is the sixth consecutive quarter of double-digit year-over-year growth and the highest percentage increase since 2021.
• Emily Yang stated, pricing really stabilized, and it is mainly driven by product mix change.
• Management signaled manufacturing and cost efficiency to further drive margin expansion. as a core element of ongoing strategy.
• Emily Yang highlighted, We have not seen restocking behavior going on, either in distribution or in our customer base, at this moment.
• The Company has begun shipping from its Greenock and South Portland wafer fabs to key customers, with expectations of normalization at those sites by 2027 to 2028.
• AI infrastructure demand, especially for power supply units, networking, and optical modules, was cited as a catalyst across multiple reporting segments, not just compute.
• Q2 guidance reflects a continuation of both above-seasonal growth and margin improvement consistent with multi-year targets.

INDUSTRY GLOSSARY

• POS (Point-of-Sale): Sales of product made by channel partners directly to end customers, used by Diodes Incorporated to monitor end-market demand and channel inventory health.
• LDO (Low Dropout Regulator): A type of voltage regulator that can operate with a very small input-to-output voltage differential, critical for battery-powered and low-voltage applications.
• ESD (Electrostatic Discharge): The sudden flow of electricity between two electrically charged objects, a protection consideration in integrated circuits and system design.
• ADAS (Advanced Driver-Assistance Systems): Automotive electronic systems that assist drivers—referenced in connection with design wins for interface and level shifter ICs.
• MCU (Microcontroller Unit): An integrated circuit designed for embedded applications, mentioned in the context of power supply solutions.
• OCP (Overcurrent Protection): Circuit protection feature or device referenced in power management components for USB Power Delivery ports.

Full Conference Call Transcript

Operator: [inaudible] Good afternoon, and welcome to Diodes Incorporated’s first quarter 2026 financial results conference call. At this time, all participants are in a listen-only mode. At the conclusion of today’s conference call, instructions will be given for the question-and-answer session. If anyone needs assistance at any time during the conference call, please signal an operator. As a reminder, this conference call is being recorded today, Thursday, 05/07/2026. I would now like to turn the call over to Leanne Sievers of Shelton Group Investor Relations. Leanne, please go ahead.

Leanne Sievers: Good afternoon, and welcome to Diodes Incorporated’s first quarter 2026 financial results conference call. I am Leanne Sievers, President of Shelton Group, Diodes Incorporated’s investor relations firm. Joining us today are Diodes Incorporated’s President and CEO, Gary Yu; CFO, Brett Whitmire; Senior Vice President of Worldwide Sales and Marketing, Emily Yang; and Vice President of Marketing and Investor Relations, [inaudible]. I would like to remind our listeners that the results announced today are preliminary as they are subject to the Company finalizing its closing procedures and customary quarterly review by the Company’s independent registered public accounting firm. As such, these results are unaudited and subject to revision until the Company files its Form 10-Q for its quarter ended 03/31/2026.

In addition, management’s prepared remarks contain forward-looking statements that are subject to risks and uncertainties, and management may make additional forward-looking statements in response to your questions. Therefore, the Company claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. Actual results may differ from those discussed today, and therefore we refer you to a more detailed discussion of the risks and uncertainties in the Company’s filings with the Securities and Exchange Commission, including Forms 10-K and 10-Q.

Any projections as to the Company’s future performance represent management’s estimates as of today, 05/07/2026, and the Company assumes no obligation to update these projections in the future, except to the extent required by applicable law. Additionally, the Company’s press release and management’s statements during this conference call will include discussions of certain measures and financial information in GAAP and non-GAAP terms. Included in the Company’s press release are definitions and reconciliations of GAAP to non-GAAP items, which provide additional details. Also, throughout the Company’s press release and management statements during this conference call, we refer to net income attributable to common stockholders as GAAP net income.

For those of you unable to listen to the entire call at this time, a replay will be available via webcast for 90 days in the Investor Relations section of Diodes Incorporated’s website at diodes.com. I will now turn the call over to Diodes Incorporated’s President and CEO, Gary Yu. Gary, please go ahead.

Gary Yu: Welcome, everyone, and thank you for joining us on today’s conference call. As announced in our press release earlier today, first quarter revenue grew 22% year over year and, above seasonal trends, increased 3.5% sequentially. This growth highlights a solid demand recovery and momentum that we are seeing across our key focus areas of automotive, industrial, and AI server-related applications. In fact, this quarter is the sixth consecutive quarter of double-digit year-over-year growth and the highest percentage increase since 2021. Revenue in Europe led growth as we continue to benefit from increased opportunities and orders from automotive customers, as well as improved demand for industrial applications.

Additionally, gross margin improved 70 basis points sequentially, due mainly to a higher revenue contribution from automotive and industrial, which totaled 44% of product revenue, combined with improving utilization. Notably, we delivered an over 100% year-over-year increase in quarterly earnings, clearly demonstrating the operating leverage in our model. After formally releasing our three-year interim financial targets earlier this year, which include reaching $2 billion in annual revenue, $700 million in gross profit, and over $4 in non-GAAP EPS, this quarter was a great first step toward executing on these goals. Content expansion, design-win momentum, and new product introductions will continue to be the cornerstone of our growth initiatives, combined with increased manufacturing and cost efficiency to further drive margin expansion.

With that, let me now turn the call over to Brett to discuss our first quarter financial results as well as our second quarter guidance in more detail.

Brett Whitmire: Thanks, Gary, and good afternoon, everyone. Revenue for the first quarter 2026 was $405.5 million, an increase of 22.1% over $332.1 million in the first quarter of 2025 and up 3.5% compared to $391.6 million in the fourth quarter of 2025. Gross profit for the first quarter was $128.8 million, or 31.8% of revenue, compared to $104.7 million, or 31.5% of revenue, in the prior-year quarter, and $121.9 million, or 31.1% of revenue, in the prior quarter. GAAP operating expenses for the first quarter were $109.0 million, or 26.9% of revenue.

On a non-GAAP basis, operating expenses were $103.9 million, or 25.6% of revenue, which excludes $3.9 million of amortization of acquisition-related intangible assets and $1.1 million of board and officer retirement expense. This compares to GAAP operating expenses in the first quarter 2025 of $103.4 million, or 31.1% of revenue, and $108.7 million, or 27.8% of revenue, in the prior quarter. Non-GAAP operating expenses in the prior quarter were $104.0 million, or 26.6% of revenue.

Total other income amounted to approximately $2.7 million for the quarter, consisting of $5.4 million in interest income, $2.5 million in unrealized gain on investments, and $0.1 million in other income, offset by $3.4 million in foreign currency losses, $1.2 million of impairment loss on an equity investment, and $0.7 million in interest expense. Income before taxes, equity in net earnings of equity investments, and non-controlling interest in the first quarter 2026 was $22.4 million, compared to a loss of $2.8 million in the prior-year period and $16.8 million in the previous quarter. Turning to income taxes, our effective income tax rate for the first quarter was approximately 19.9%.

For 2026, we continue to expect the tax rate for the full year to remain at approximately 18%, plus or minus 3%. GAAP net income for the first quarter was $15.0 million, or $0.32 per diluted share, compared to a net loss of $4.4 million, or a loss of $0.10 per diluted share, in the prior-year quarter, and net income of $10.2 million, or $0.22 per diluted share, last quarter. The share count used to compute GAAP income per share for the first quarter 2026 was 46.1 million shares.

Non-GAAP adjusted net income in the first quarter was $19.8 million, or $0.43 per diluted share, which excluded, net of tax, $3.2 million of acquisition-related intangible asset costs, $0.9 million in board and officer retirement expense, and $0.7 million of loss on investment. This compares to non-GAAP adjusted net income of $8.8 million, or $0.19 per diluted share, in the first quarter 2025, and $15.7 million, or $0.34 per diluted share, in the prior quarter. Excluding non-cash share-based compensation expense of $6.0 million for the first quarter, net of tax, both GAAP net income and non-GAAP adjusted net income would have increased by $0.13 per share.

EBITDA for the first quarter was $49.4 million, or 12.2% of revenue, compared to $26.2 million, or 7.9% of revenue, in the prior-year period, and $41.9 million, or 10.7% of revenue, in the prior quarter. We have included in our earnings release a reconciliation of GAAP net income to non-GAAP adjusted net income and GAAP net income to EBITDA, which provides additional details. Cash flow provided by operations was $64.3 million for the first quarter, a $26.2 million increase from the $38.1 million in the prior quarter. Free cash flow was $32.4 million, a $20.0 million increase over the fourth quarter, and included $31.9 million of capital expenditures.

Net cash flow was a positive $26.9 million despite higher CapEx spending compared to last quarter. Turning to the balance sheet, at the end of the first quarter, cash, cash equivalents, restricted cash, plus short-term investments totaled approximately $409.0 million. Working capital was approximately $891.0 million, and total debt, including long-term and short-term, was approximately $55.0 million. In terms of inventory, at the end of the first quarter, total inventory days were approximately 157 as compared to 161 last quarter, and down approximately 30 days from 187 days in the year-ago quarter. Finished goods inventory days were 55, compared to 59 days last quarter.

Total inventory dollars increased $21.2 million from the prior quarter to $492.8 million, consisting of a $24.0 million increase in raw materials, a $0.5 million increase in work in process, and a $3.3 million decrease in finished goods. Capital expenditures on a cash basis were $31.9 million for the first quarter, or 7.9% of revenue, which is within our targeted annualized range of 5% to 9% of revenue. Now, turning to our outlook, as you may have noticed in our press release, we have refined the presentation of our guidance to help simplify the information provided while also aligning to the three-year financial targets we introduced last quarter.

For the second quarter, we expect revenue to be $435 million, plus or minus 3%. At the midpoint, this represents an 18.8% increase year over year and a 7.3% increase sequentially, which will be the sixth consecutive quarter of double-digit year-over-year growth and another quarter of above-seasonal sequential growth. GAAP gross margin is expected to be 32.8%, plus or minus 1%. Non-GAAP adjusted EPS is expected to be $0.60, plus or minus $0.10. I will now turn the call over to Emily Yang.

Emily Yang: Thank you, Brett, and good afternoon. As Gary and Brett mentioned, revenue in the first quarter was at the high end of our guidance range, up 3.5% sequentially and above our typical seasonality of down 5%. This growth was mainly driven by strong demand in Europe followed by Asia. Year over year, first quarter revenue increased 22%. Our global POS increased sequentially, and our channel inventory decreased again this quarter, both in dollars and in weeks, which was at the lower end of our normal range of 11 to 14 weeks. We also continue to benefit from market supply disruption. We remain strategically selective and focused on long-term sustainable business and demand creation.

Looking at global sales in the first quarter, Asia represented 77% of revenue, Europe 14%, and North America 9%. In terms of our end markets, industrial was 24% of Diodes Incorporated’s product revenue, automotive 20%, computing 26%, consumer 17%, and communications 13% of product revenue. Our automotive and industrial revenue combined was 44% of product revenue, which was a two-percentage-point increase compared to last quarter, largely due to stronger demand in Europe. Now let me review the end markets in greater detail. Starting with automotive, revenue grew 3.8% sequentially and over 32% year over year. Overall demand was strong in the quarter and visibility continues to improve.

We are encouraged by the breadth and depth of our automotive design wins across all focus areas, including connected driving, comfort, style and safety, and electrification. With an expanding automotive-grade portfolio and strong engagements with OEM and Tier 1 customers, we are well positioned to benefit from the increase in dollar content per vehicle. In terms of design wins, we have seen strong momentum for interface and voltage level shifter ICs across ADAS, telematics, and infotainment platforms. With multiple customer wins, ESD and bidirectional protection devices, including protection for automotive Ethernet and in-vehicle networks, are being designed into next-generation communication platforms and body control modules.

Our portfolio of automotive-grade discrete products, including switching diodes, rectifiers, and protection devices, continues to enable reliable data and power paths. We are also securing increased adoption of power protection, power management, and control solutions across safety-critical systems and advanced lighting. Our ideal diode controllers are also seeing strong demand in reverse-battery-protection power trees, and our precision current-limited power switching is gaining traction for protected ECU power rails. We are also receiving solid demand for our low-IQ LDOs in MCU power supplies, and our brushed DC motor driver products experienced significant growth, particularly in automotive lighting, cooling, and motor applications. Our 48-volt matrix LED drivers are gaining traction in dynamic rear lighting applications, enabling adaptive signaling and distinctive vehicle design.

Additionally, our silicon carbide MOSFETs in innovative topside-cooling packages are gaining momentum in traction inverters, on-board chargers, and high-voltage DC-DC converters, while our low VCE(sat) bipolar devices continue to win designs in battery management systems and vehicle radar. Turning to industrial, revenue grew to 24% of product revenue from 22% last quarter, representing a 13.2% quarter-over-quarter growth and over 31% year over year. We have begun to see solid demand recovery in Europe followed by North America and Asia. Much of this strength in demand is being driven by AI infrastructures, and we expect this momentum will continue throughout the year.

Specifically, in AI server power supply units, our bipolar junction transistor portfolio has been winning designs, and our Hall sensors are being used in brushless DC fan applications for thermal management. Additionally, our rectifiers in battery backup units are enabling hot-swap functionality and supporting the scalable, resilient power architectures required by AI servers. We are also seeing broad market recovery across multiple applications like factory automation and medical equipment. From a design point of view, we are achieving increasing momentum across power, sensing, and imaging applications driven by automation and inspection systems. Our 650-volt silicon carbide diodes continue to gain traction in industrial power applications supporting higher efficiency and power density requirements.

Also during the quarter, our low-IQ LDO regulators received solid demand for power tools and industrial fan applications, supporting energy efficiency and battery-powered designs. Our LED drivers continue to gain traction in intelligent LED lighting applications for smart infrastructure and enterprise environments. Also in industrial, our voltage reference devices received strong demand from a variety of industrial power supply applications where accuracy and stability are essential. Our AOI contact image sensor products also achieved multiple design-ins across inspection-related applications, including IC inspection, battery film inspection, glass inspection, as well as document check and card scanners. In the computing market, although revenue decreased 3.7% to 26% of product revenue this quarter, revenue grew over 21% year over year.

During the quarter, we continued to see strong demand across AI server and data center applications. For other applications like notebook and motherboard, we saw demand moderate downward due to the overall softer market for these applications combined with the memory shortage. In high-performance computing and data infrastructure, key focus areas remain power management, protection, connectivity, timing, and signal integrity. High-power transient-protection products are being designed into server possible power-rail architectures, delivering ultra-high surge protection for mission-critical power rails. Our supervisory reset ICs and 5-volt low-RDS(on) switches are seeing strong demand across data center and SSD applications.

Additionally, our ISL portfolio, including voltage level shifters for SPI, I2C, and GPIOs, is increasingly being utilized in servers, AI servers, and workstations, with designs at leading hyperscale and AI customers. Our PCIe 6.0/7.0 MUX/buffers are also seeing adoption across multiple AI server platforms. As process migration drives SoC I/O voltages lower, eUSB adoption continues to accelerate, and design-ins and design wins for eUSB repeaters have become widespread across major PC OEMs and ODMs. Diodes Incorporated’s P-channel MOSFETs are being designed into desktop platforms for load-switch applications, while our OCP power switches continue to see solid demand in 15-watt source paths for USB Power Delivery ports in both desktops and docking stations.

Our 20-volt high-performance, low-noise LDOs also continue to gain traction in PC platforms, reflecting record design-win conversion. Additionally, in computing, our TVS protection devices have been widely adopted in USB Power Delivery 3-enabled docking platforms, providing robust transient and ESD protection, and our USB Power Delivery sink switches are seeing strong demand in multiport USB Power Delivery systems in laptops, supporting high power density and fast-charging requirements. In the consumer market, revenue increased 3.8% sequentially and over 26% year over year. We continue to see steady demand across personal gaming devices, charging, and home applications.

Rectifiers, Zener diodes, and super barrier rectifiers are gaining adoption in SSDs, tablets, and mini consumer computers, supporting efficiency, power conversion, and protection in space-constrained designs. Diodes Incorporated’s USB Power Delivery controllers and PWM controllers also continue to see growth in the consumer charging market, driven by fast-charging adoption and higher power requirements. Additionally, our LED drivers are winning designs in household appliances, enabling long lifetime and low power consumption, while our high-performance boost LED controllers are gaining traction in smart home lighting applications. Lastly, in the communications market, revenue increased 3.8% sequentially and over 17% year over year.

Growth in data traffic and bandwidth demand is driving enhancements in data center networking applications and increasing adoption of high-efficiency rectification solutions. Diodes Incorporated’s super barrier rectifier products are gaining momentum, supporting reliable device connectivity in high-speed network equipment. In parallel, our crystal oscillators and ultra-low-jitter timing solutions are seeing strong traction in SmartNIC cards and networking modules where systems are becoming smaller and more power dense. Our recently introduced ultra-low-RDS(on) CSP MOSFETs are targeting battery protection and power management applications, and these devices have been designed in by smartphone customers globally. Our battery FETs continue to gain traction in battery management systems as demand increases for more power-efficient and feature-rich mobile devices.

Complementing these designs, high-PSRR LDOs, level shifters, and data-line protection devices are also seeing strong momentum across smartphone applications. In wireless infrastructure, our 60-volt buck converters are being designed into RF power applications including base stations, radar systems, and other high-power wireless platforms. In summary, we have started out 2026 with strong growth momentum across our key focus areas of automotive, industrial, and AI server-related applications. Additionally, we are benefiting from ongoing demand improvement in both the automotive and industrial markets, which should continue to serve as a tailwind to our near-term growth, and when combined with our ongoing margin improvement, we are well aligned to deliver increasing earnings and cash flows towards the achievement of our three-year financial goals.

We will now open the call for questions.

Operator: We will now begin the question-and-answer session. To ask a question, you may press star then 1 on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question today is from Tristan Gerra with Baird. Please go ahead.

Tristan Gerra: Hi, good afternoon. I wanted to understand better the implications of tightening lead times on customer requalifications. Is that helping as people are getting more concerned about securing capacity for 2027, and what is your timing assumption as to when those requalifications and other product qualifications happen?

Emily Yang: Hi, Tristan. During the constrained supply market situation, customers are always more willing for qualifications, especially with a guarantee of long-term supply. So it is definitely beneficial. Overall, we are still going through a lot of process qualifications and improving the technology with our internal factories. I would say the progress is going well, but it is still going to take some time for us to ramp up more because the qualification process does take time. But all in all, we are on the right track and in the right direction.

Tristan Gerra: Okay, great. And then just two quick follow-ups, if I may. Based on your commentary, when do you think that you could get to the point where utilization rates are roughly the same, or at least all of your fabs are at normalized utilization rates? Is that kind of a late 2027 dynamic, or do we need to wait later? And then the second one, you touched a bit on the call about traction in data center with your products. I wanted to know how you are approaching the 800-volt opportunity in data center. There are a lot of very high-voltage regulators in each tray. I just wanted to understand better how you see that opportunity going forward. Thank you.

Gary Yu: Yes, Tristan, I will answer the first question first. We started to ship product produced from the two wafer fabs in Greenock and South Portland to our key customers since last year, and we are continuing to improve the loading in the next couple of years. As Emily mentioned, qualifications take some time, especially on the customer side. Even though during shortage periods customers shorten their qualification cycles to adapt more of our products, it still takes time. I would say probably in 2027 to 2028 you will see much more improvement on utilization at those two wafer fabs.

The rest of the wafer fabs that we have are at pretty good loading at this moment, and at the back end we are almost fully loaded at this moment. Regarding the 800-volt platform, we are positioning our technology to support this need. We have our silicon carbide MOSFETs for that, along with analog and discrete devices, so we can provide a very good solution to customers’ needs at this moment.

Emily Yang: Yes, so Tristan, let me add a little bit. With the 800-volt systems, especially on the AI power system or power supply side, we see the power supply unit as one opportunity and we also see the battery backup unit, among others. We definitely see across the board really good opportunities. Beyond silicon carbide, diodes, and MOSFETs, we also see a lot of isolation opportunities, sensors, and power-rail protection, as well as other analog and discrete content. All in all, it is very positive, and there is still a lot of potential for us to continue to expand. We are also focused on some of the new product introductions that we will share in the future.

We are very excited for this opportunity and will continue to pursue the new sockets in front of us.

Tristan Gerra: Great. Thank you very much.

Operator: Thank you, Tristan. The next question is from William Stein with Truist Securities. Please go ahead.

William Stein: Great, thanks for taking my questions. First, I hope you can help us understand your exposure to AI data centers across end markets. I think you have some in compute and some in comms. Can you first just make sure I am correct on that—that it is split across end markets—and then maybe give us an approximate sizing or percentage of total revenue in that end market?

Emily Yang: Yes, sure. I will. Overall, we see AI as a whole ecosystem; it is not just related to AI servers. Earlier, I talked about power supplies; this is actually under industrial. We are definitely seeing huge potential overall in this area. In networking—whether it is networking switches or routers—this is another area where we have seen a lot, and within networking I mentioned optical modules. This is also driven by AI. So I would say there are multiple areas, not just compute, where we see AI-related applications.

William Stein: But we do not have a sort of sizing of that?

Emily Yang: Sizing—so, I would say, beyond the AI servers where we have seen a lot of ramp already and expect the momentum to continue, we are also seeing very strong momentum on the power supply side, with a lot of new opportunities that are working toward the 800-volt systems that Tristan asked about earlier. Even in the data center and networking areas, because that is really the backbone of everything, we have seen really good momentum driven by some of the big networking companies.

William Stein: Okay, fair enough. Let me get to a couple of others if I can. There are a couple of other areas aside from data center AI that are capturing investors’ attention. One is low-earth-orbit satellites; another one is humanoid robotics. Can you talk to your exposure to these markets? Do you have anything in either of those two?

Emily Yang: Yes, I think humanoid robotics definitely is of key interest. We have not talked a lot because the volume is still pending to ramp, but we are seeing a lot of similarities. On top of that, if you think about automotive and other key areas, voltages are being driven higher and higher. All in all, on the robotics side, beyond the power-related content, we are also seeing a lot of plays around joint movements with requirements on MOSFETs and discretes, and a lot of power management as well. So, combined, it is a very big ecosystem that extends beyond what we are seeing at this moment.

William Stein: And satellites—low-earth orbit—anything there?

Emily Yang: For satellites, we are definitely engaging with a lot of customers working in this area. We will probably share a little bit more in the future.

William Stein: I will end it there. Thanks so much.

Gary Yu: Thank you.

Operator: The next question is from David Williams with Needham and Company. Please go ahead.

David Williams: Hey, good afternoon, everyone. Thanks, and congrats on the continued progress here.

Gary Yu: Thank you, David.

David Williams: Excuse me. Maybe first on the pricing trends—it looks like there was a little bit of pricing pressure in the quarter and maybe that is more mix than market dynamics. Can you talk about what you are seeing in terms of pricing? Are you seeing the typical type of erosion trends, or are we in a tight enough environment here that you can start to see that maybe flip around and get some pricing power?

Emily Yang: Hi, David. You are right. In Q1, what we have seen is pricing really stabilized, and it is mainly driven by product mix change. Typically, during constrained supply situations, you see prices more stabilized or even an upward trend. We are definitely seeing that in the overall market across all different end-market segments.

David Williams: Okay. Great. And then maybe just secondly—you mentioned Europe, I think, multiple times in the script, probably more than we have heard you talk about in the past. It feels like it is coming off the bottom here. As you look out across your markets and where things are improving, do you sense that any of the strength is coming from replenishment, or do you feel like it is real demand that is coming through and this is the inflection that we have been hoping for?

Emily Yang: This is real demand. If you refer back to our POS, point-of-sales, in distribution, we actually decreased channel inventory, both in terms of dollars as well as weeks. Usually, Q1 is a slower quarter for us, and seasonality would suggest down 5% to 6%. We actually achieved up 3.5%, and this is also reflected in the POS result, which increased quarter over quarter. What we are seeing is that demand is definitely real. We have not seen restocking behavior going on, either in distribution or in our customer base, at this moment.

David Williams: Great. Thanks so much, and best of luck on the quarter.

Emily Yang: Thank you.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Gary Yu for any closing remarks.

Gary Yu: Thank you, everyone, for participating on today’s call. We look forward to reporting our continued progress on next quarter’s conference call. Operator, you may now disconnect.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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