UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2026
Or
☐Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from to .
Commission file number: 002-25577
DIODES INCORPORATED
(Exact name of registrant as specified in its charter)
Delaware
95-2039518
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification Number)
4949 Hedgcoxe Road, Suite 200, Plano, Texas
75024
(Address of principal executive offices)
(Zip code)
(972) 987-3900
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Common Stock, Par Value $0.66 2/3
DIOD
The NASDAQ Stock Market LLC
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
☒
Accelerated filer
☐
Non-accelerated filer
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
The number of shares of the registrant’s Common Stock outstanding as of May 4, 2026 was 45,944,734.
DIODES INCORPORATED AND SUBSIDIARIES
Table of Contents
Page
Part I – Financial Information
Item 1. Condensed Consolidated Financial Statements (Unaudited)
3
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
19
Item 3. Quantitative and Qualitative Disclosures About Market Risk
26
Item 4. Controls and Procedures
Part II – Other Information
Item 1. Legal Proceedings
27
Item 1A. Risk Factors
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Mine Safety Disclosures
Item 5. Other Information
Item 6. Exhibits
28
Signatures
29
PART I—FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)
March 31,
December 31,
2026
2025
Assets
Current assets:
Cash and cash equivalents
$
394,062
367,212
Restricted cash
5,144
5,134
Short-term investments
10,188
9,817
Accounts receivable, net of allowances of $3,959 and $4,095, respectively
304,461
307,055
Inventories
492,761
471,546
Prepaid expenses and other
96,057
96,198
Total current assets
1,302,673
1,256,962
Property, plant, and equipment, net
652,202
649,605
Deferred tax assets
58,287
59,297
Goodwill
182,288
183,437
Intangible assets, net
41,425
45,455
Equity investments
154,656
156,272
Operating lease assets
48,636
38,740
Other long-term assets
57,561
58,332
Total assets
2,497,728
2,448,100
Liabilities
Current liabilities:
Lines of credit
30,047
30,264
Accounts payable
169,198
149,376
Operating lease liabilities, current
12,124
10,666
Accrued liabilities and other
179,591
170,256
Income tax payable
18,771
16,336
Current portion of long-term debt
1,635
1,442
Total current liabilities
411,366
378,340
Long-term debt, net of current portion
23,704
24,224
Deferred tax liabilities
4,859
6,145
Unrecognized tax benefits
23,629
23,454
Operating lease liabilities
37,368
28,890
Other long-term liabilities
45,933
48,638
Total liabilities
546,859
509,691
Commitments and contingencies (See Note 10)
Stockholders' equity
Preferred stock - par value $1.00 per share; 1,000 shares authorized; no shares issued or outstanding
-
Common stock - par value $0.66 2/3 per share; 70,000 shares authorized; 55,948 and 55,883 issued; 45,940 and 45,875 outstanding, respectively
37,303
37,259
Additional paid-in capital
544,117
538,087
Retained earnings
1,800,400
1,785,439
Treasury stock, at cost, 10,008 shares
(372,109
)
(371,914
Accumulated other comprehensive loss
(120,305
(110,747
1,889,406
1,878,124
Noncontrolling interest
61,463
60,285
Total equity
1,950,869
1,938,409
Total liabilities and stockholders' equity
The accompanying notes are an integral part of these condensed consolidated financial statements.
-3-
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended
Net sales
405,467
332,113
Cost of goods sold
276,675
227,419
Gross profit
128,792
104,694
Operating expenses
Selling, general, and administrative
64,305
58,699
Research and development
40,615
38,627
Amortization of acquisition related intangible assets
3,944
5,824
Loss (gain) on disposal of fixed assets
143
(18
Other operating expense
20
266
Total operating expense
109,027
103,398
Income from operations
19,765
1,296
Other income (expense)
Interest income
5,445
5,813
Interest expense
(682
(467
Foreign currency (loss), net
(3,377
(183
Unrealized gain (loss) on investments
2,450
(4,032
Impairment of equity investment
(1,249
(5,817
Other income
91
617
Total other income (expense)
2,678
(4,069
Income (loss) before income taxes, equity in net earnings of equity investments, and noncontrolling interest
22,443
(2,773
Income tax provision
4,000
Equity in net earnings of equity investments
(2,341
6
Net income (loss)
16,102
(2,787
Less net income attributable to noncontrolling interest
(1,141
(1,650
Net income (loss) attributable to common stockholders
14,961
(4,437
Earnings (loss) per share attributable to common stockholders:
Basic
0.33
(0.10
Diluted
0.32
Number of shares used in earnings per share computation:
45,919
46,370
46,138
-4-
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
Unrealized gain on defined benefit plan, net of tax
1,729
3,361
Unrealized (loss) gain on derivative instruments, net of tax
(4,261
2,875
Unrealized foreign currency (loss), net of tax
(7,026
(1,414
Comprehensive income
6,544
2,035
Less: Comprehensive income attributable to noncontrolling interest
Total comprehensive income attributable to common stockholders
5,403
385
-5-
CONDENSED CONSOLIDATED STATEMENTS OF EQUITY
Common stock
Treasury stock
Additional paid-in
Retained
Accumulated other comprehensive
Total Diodes Incorporated stockholders'
Noncontrolling
Total
Shares
Amount
capital
earnings
loss
equity
interest
Balance, December 31, 2025
55,883
$37,259
(10,008)
$(371,914)
$538,087
$1,785,439
$(110,747)
$1,878,124
$60,285
$1,938,409
Total comprehensive income
(9,558)
1,141
Net changes in noncontrolling interest
37
Common stock issued for share-based plans
65
44
(44)
Share-based compensation
7,579
Stock buyback
(195)
Tax related to net share settlement
(1,505)
Balance, March 31, 2026
55,948
$37,303
$(372,109)
$544,117
$1,800,400
$(120,305)
$1,889,406
$61,463
$1,950,869
Balance, December 31, 2024
55,621
$37,083
(9,288)
$(338,100)
$523,744
$1,719,298
$(146,724)
$1,795,301
$73,646
$1,868,947
(4,437)
4,822
1,650
596
(4,680)
(4,084)
62
42
(42)
6,386
(1,450)
Balance, March 31, 2025
55,683
$37,125
$529,234
$1,714,861
$(141,902)
$1,801,218
$70,616
$1,871,834
-6-
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Cash flows from operating activities
Adjustments to reconcile net income (loss) to net cash flows from operating activities, net of effects of acquisitions
Depreciation
31,257
30,080
Amortization of intangible assets
Share-based compensation expense
Deferred income taxes
301
(147
Investment (gain) loss
(121
4,020
1,249
5,817
Gain (loss) on disposal of fixed assets
Interest income from derivative financial instruments
(3,418
(4,257
Other
938
(275
Changes in operating assets:
Change in accounts receivable
1,129
22,922
Change in inventory
(23,073
3,234
Change in other operating assets
2,077
469
Changes in operating liabilities:
Change in accounts payable
20,578
2,181
Change in accrued liabilities
2,759
(14,763
Change in income tax payable
2,816
(2,923
Change in other operating liabilities
53
980
Net cash flows from operating activities
64,313
56,743
Cash flows from investing activities
Acquisition, net of cash acquired
(4,565
Purchases of property, plant, and equipment
(31,874
(15,894
Proceeds from sale of property, plant, and equipment
77
58
Proceeds from short-term investments
1,289
Purchases of short-term investments
(447
(2,065
Purchases of equity securities
(455
Cash paid for hedge termination
(3,184
(6,890
(796
(391
Net cash flows from investing activities
(36,679
(28,458
Cash flows from financing activities
Advances on lines of credit and short-term debt
14,110
3,209
Repayments of lines of credit and short-term debt
(13,739
(3,180
Proceeds from long-term debt
3,715
3,489
Repayments of long-term debt
(3,540
(3,355
Taxes paid related to net share settlement
(1,505
(1,450
(135
(31
Net cash flows from financing activities
(1,094
(1,318
Effect of exchange rate changes on cash and cash equivalents
320
(733
Change in cash and cash equivalents, including restricted cash
26,860
26,234
Cash and cash equivalents, beginning of period, including restricted cash
372,346
314,724
Cash and cash equivalents, end of period, including restricted cash
399,206
340,958
Supplemental Cash Flow Information
Interest paid during the period
427
397
Taxes paid during the period
1,874
5,130
Non-cash investing and financing activities:
Accounts payable balance related to the purchase of property, plant, and equipment
22,423
11,138
-7-
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 – Summary of Operations and Significant Accounting Policies
BACKGROUND
Diodes Incorporated (Nasdaq: DIOD), delivers high-quality semiconductor products to the world’s leading companies in the automotive, industrial, computing, consumer electronics, and communications markets. We leverage our expanded product portfolio of analog and power solutions combined with a flexible hybrid manufacturing model that meet customers’ needs. Our broad range of application-specific products, delivered through a total solutions sales approach and supported by global operations including engineering, testing, manufacturing, and customer service, enable us to be a premier provider for high-growth markets.
Basis of Presentation
The unaudited condensed consolidated financial data at December 31, 2025 are derived from audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2025 filed with the Securities and Exchange Commission (“SEC”) on February 10, 2026 (“Form 10-K”). The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q. Accordingly, the unaudited condensed consolidated financial statements do not include all information and footnotes necessary for a fair statement of financial position, operating results, and cash flows in conformity with GAAP for complete financial statements. These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and related notes contained in our Form 10-K. All significant intercompany balances and transactions have been eliminated in consolidation. In the opinion of management, all adjustments (consisting of normal recurring adjustments and accruals) considered necessary for a fair statement of the operating results for the periods presented have been included in the interim periods. Operating results for the three months ended March 31, 2026 are not necessarily indicative of the results that may be expected for other interim periods or the year ending December 31, 2026.
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates. As permitted under GAAP, interim accounting for certain expenses, including income taxes, are based on full year forecasts. For interim financial reporting purposes, income taxes are recorded based upon estimated annual effective income tax rates taking into consideration discrete items occurring in a quarter.
Dollar amounts and share amounts are presented in thousands, except per share amounts, unless otherwise noted. Certain prior period balances were reclassified to conform to the current condensed consolidated financial statement presentation.
Recently Issued Accounting Pronouncements
The Financial Accounting Standards Board (“FASB”) issued the following Accounting Standards Updates (“ASU”) which could have potential impact to the Company’s consolidated financial statements:
In December 2025, the FASB issued ASU 2025-10, “Government Grants (Topic 832) Accounting for Government Grants Received by Business Entities (“ASU 2025-10”). ASU 2025-10 establishes authoritative guidance on the accounting for government grants received by business entities. The amendments in ASU 2025-10 require that a government grant received by a business entity should not be recognized until:
The amendments in this update require that a grant related to an asset be recognized on the balance sheet as a business entity incurs the related costs for which the grant is intended to compensate, either as:
For public business entities, the amendments in this update are effective for annual reporting periods beginning after December 15, 2028, and interim reporting periods within those annual reporting periods. The Company is currently evaluating the impact this amended guidance may have on its consolidated financial statements.
In December 2025, the FASB issued ASU 2025-09 to amend certain aspects of its hedge accounting guidance to better reflect an entity’s risk management activities in the financial statements. The guidance expands the hedged risks permitted to be aggregated in a group of individual forecasted transactions and increases the variable price components eligible to be designated as the hedged risk in the forecasted purchase or sale of non-financial assets. For public business entities, the provisions of ASU 2025-09 are effective for
-8-
fiscal years beginning after December 15, 2026. Early adoption is permitted. Management is currently evaluating the requirements under this new standard.
In July 2025, the FASB issued ASU 2025-05, “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”). ASU 2025-05 provides a practical expedient that all entities can use when estimating expected credit losses for current accounts receivable and current contract assets arising from transactions accounted for under ASC 606, Revenue from Contracts with Customers. Under this practical expedient, an entity is allowed to assume that the current conditions it has applied in determining credit loss allowances for current accounts receivable and current contract assets remain unchanged for the remaining life of those assets. ASU 2025-05 is effective for fiscal years beginning after December 15, 2025, and interim reporting periods in those years. Entities that elect the practical expedient and, if applicable, make the accounting policy election are required to apply the amendments prospectively. In the first quarter of 2026, the Company adopted this standard which did not have a material impact on the Company’s consolidated financial statements.
In May 2025, the FASB issued ASU 2025-03, “Business Combination and Consolidation: Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity” (“ASU 2025-03”). ASU 2025-03 provides clarifying guidance on determining the accounting acquirer in certain transactions involving VIEs. The update aims to improve consistency and comparability in financial reporting, especially when companies merge with a special-purpose acquisition company (“SPAC”). ASU 2025-03 requires entities to apply the same factors used for determining the accounting acquirer in other acquisition transactions. Essentially, it aims to make financial reporting more comparable and decision-useful for investors by ensuring that the accounting acquirer is appropriately identified in acquisitions of VIEs, particularly in SPAC transactions. ASU 2025-03 is effective for fiscal years beginning after December 15, 2026 including interim periods within those annual periods, with early adoption permitted. The Company is currently evaluating the impact this amended guidance may have on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40). The amendments in this update require that at each interim and annual reporting period an entity disclose:
The amendments in this update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact this amended guidance may have on its consolidated financial statements.
NOTE 2 – Earnings per Share
Earnings per share (“EPS”) is calculated by dividing net income attributable to common stockholders by the weighted-average number of shares of Common Stock outstanding during the period. Diluted EPS is calculated similarly but includes potential dilution from the exercise of stock options and stock awards, except when the effect would be anti-dilutive. No dividends were paid on our Common Stock in any of the periods presented in this report.
The table below sets forth the reconciliation between net income and the weighted average shares outstanding used for calculating basic and diluted EPS:
-9-
Earnings (numerator)
Shares (denominator)
Weighted average common shares outstanding (basic)
Dilutive effect of stock options and stock awards outstanding
219
Adjusted weighted average common shares outstanding (diluted)
Earnings (loss) per share attributable to common stockholders
Stock options and stock awards excluded from EPS calculation because the effect would be anti-dilutive
121
612
Note 3 – Fair Value Measurements
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.
We use valuation techniques that are consistent with the market approach, the income approach and/or the cost approach. The market approach uses prices and other relevant information generated by market transactions involving identical or comparable assets and liabilities. The income approach uses valuation techniques to convert future amounts, such as cash flows or earnings, to a single present amount on a discounted basis. The cost approach is based on the amount that currently would be required to replace the service capacity of an asset (replacement costs). Valuation techniques should be consistently applied. Inputs to valuation techniques refer to the assumptions that market participants would use in pricing the asset or liability. Inputs may be observable, meaning those that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from independent sources, or unobservable, meaning those that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. These two types of inputs create a three-tier fair value hierarchy that gives the highest priority to quoted prices in active markets for identical assets or liabilities and the lowest priority to unobservable inputs. The fair value hierarchy is as follows:
Level 1 Inputs - Unadjusted quoted prices in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.
Level 2 Inputs - Inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability (for example, interest rates, volatilities, prepayment speeds, loss severities, credit risks and default rates) or inputs that are derived principally from or corroborated by observable market data by correlation or other means.
Level 3 Inputs - Significant unobservable inputs that reflect an entity’s own assumptions that market participants would use in pricing the assets or liabilities.
As of March 31, 2026, we had short-term and long-term investments. Long-term investments are included within Equity investments on the consolidated balance sheet. Trading securities held at March 31, 2026, were purchased on the open market and unrealized gains and losses are included in Other income (expense). The trading securities are valued under the fair value hierarchy using Level 1 Inputs. Short-term investments consist of investments such as time deposits, which are highly liquid with maturity dates greater than three months at the date of purchase. Generally, we can access these short-term investments in a relatively short amount of time but in doing so we generally forfeit a portion of earned and future interest income. Long-term investments consist of certain equity securities acquired as part of the LSC acquisition. Deferred compensation investments consist primarily of life insurance policies, but may also include investments in the Company’s stock, mutual funds and cash. See Note 12 for additional information related to our deferred compensation program and Note 11 for additional information related to our derivative financial instruments. The short-term investments, long-term investments and deferred compensation investments are valued under the fair value hierarchy using Level 1 and Level 2 Inputs.
Financial assets and liabilities carried at fair value as of March 31, 2026, are classified in the following table:
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Description
Fair Market Value
Quoted Prices in Active Markets for Identical Assets (Level 1)
Significant Other Observable Inputs (Level 2)
SignificantUnobservableInputs (Level 3)
Total Changes in Fair Values Included in Current Period Earnings
Long-term investments
22,615
Collared forward asset
11,360
Collared forward liability
(294
Deferred compensation investments
19,663
1,518
18,145
(554
Financial assets and liabilities carried at fair value as of December 31, 2025, are classified in the following table:
20,574
(4,754
11,454
(2,558
19,959
1,196
18,763
2,244
Certain financial assets and financial liabilities are measured at fair value on a non-recurring basis; that is, the instruments are not measured at fair value on an ongoing basis, but are subject to fair value adjustments in certain circumstances (for example, when there is evidence of impairment). We believe our long-term debt under our revolving credit facility approximates fair value and is valued under the fair value hierarchy using Level 2 Inputs. Financial assets and financial liabilities measured at fair value on a non-recurring basis were not significant at March 31, 2026 and December 31, 2025.
NOTE 4 – Inventories
The table below sets forth inventories which are stated at the lower of cost or net realizable value:
March 31, 2026
December 31, 2025
Finished goods
168,083
171,369
Work-in-progress
91,658
91,143
Raw materials
233,020
209,034
NOTE 5 – Goodwill and Intangible Assets
The table below sets forth the changes in goodwill:
Balance at December 31, 2025
Foreign currency translation adjustment
(1,149
Balance at March 31, 2026
-11-
The table below sets forth the value of intangible assets, other than goodwill:
Intangible assets subject to amortization:
Gross carrying amount
270,997
Accumulated amortization
(230,488
(226,544
(8,420
(8,370
Total intangible assets subject to amortization
32,089
36,083
Intangible assets with indefinite lives:
10,303
(967
(931
Total intangible assets with indefinite lives
9,336
9,372
Total intangible assets, net
The table below sets forth amortization expense related to intangible assets subject to amortization:
Amortization expense
Three Months Ended March 31,
NOTE 6 – Income Tax Provision
The table below sets forth information related to our income tax expense:
Domestic pre-tax income (loss)
(957
14,623
Foreign pre-tax (loss) income
21,058
(17,390
Effective tax rate
19.9
%
-0.7
For the three months ended March 31, 2026, the effective tax rate differs from the 21% U.S. statutory income tax rate primarily due to the impact of research and development tax incentives, partially offset by taxes on foreign income and nondeductible compensation.
For the three months ended March 31, 2025, the effective tax rate differed from the 21% U.S. statutory income tax rate primarily due to taxes on foreign income and nondeductible compensation, partially offset by the impact of research and development tax incentives.
The increase in effective tax rate for the three months ended March 31, 2026, when compared to the three months ended March 31, 2025, is primarily due to the change in pre-tax earnings during the comparable periods, including the geographical mix of pre-tax income and loss across tax jurisdictions.
NOTE 7 – Share-Based Compensation
The table below sets forth information related to our share-based compensation expense:
562
554
5,847
4,616
1,170
1,216
Total share-based compensation expense
Share Grants. Share grants consist of restricted stock awards, restricted stock units (“RSUs”) and performance stock units (“PSUs”). Restricted stock awards and RSUs generally vest in equal annual installments over a four-year period and are measured based
-12-
on the fair market value of the underlying stock on the date of grant. Compensation expense is recognized on a straight-line basis over the requisite four-year service period. All new grants are awarded under the Company’s 2022 Equity Incentive Plan.
PSUs are measured based on the fair market value of the underlying stock on the date of grant, and compensation expense is recognized over the three-year performance period, with adjustments made to the expense to recognize the probable payout percentage.
As of March 31, 2026, total unrecognized share-based compensation expense related to share grants was approximately $57.3 million, before income taxes, and is expected to be recognized over a weighted average period of approximately 2.4 years.
NOTE 8 – Enterprise-Wide Segment Information and Net Sales
Segment Reporting. For financial reporting purposes, we operate in a single segment, standard semiconductor products, through our various manufacturing and distribution facilities. One segment reflects how our chief operating decision maker (“CODM”), which is our chief executive officer, allocates resources, and measures results. Although our CODM regularly uses gross profit for key operating decisions about allocating resources and assessing performance, we have concluded that consolidated net income (loss) is also used and is the measure of profit or loss required to be disclosed under the provisions of ASC 280 for our single operating segment. Accordingly, we considered whether there were any significant expense categories to disclose and concluded that the consolidated financial statements and accompanying notes thereto include the relevant categories regularly provided to our CODM. The CODM's assessment of performance is predominantly performed during the Company’s annual budgeting and quarterly forecasting process where segment resourcing decisions, such as employee and capital, are made. The measure of segment assets is reported in our consolidated balance sheets as “Total assets.” Our primary operations include operations in Asia, the Americas, and Europe.
The table below sets forth the number of customers and the amount of sales to that customer, where that customer accounted for 10% or greater of our net sales during the applicable periods:
For the Three MonthsEnded March 31,
Customer 1
50,839
39,035
Customer 2
44,475
33,601
Each of the customers that accounted for 10% or more of our net sales are broad-based distributors serving thousands of customers. At March 31, 2026 and December 31, 2025, one customer that accounted for 10% or more of the Company’s net sales accounted for approximately 15.1% and 16.3%, respectively, of the Company’s outstanding accounts receivable.
Disaggregation of Net Sales. We disaggregate net sales with customers into direct sales to end customers and distribution sales to distributors (“Distributors”) and by geographic area. Direct sales customers consist of those customers using our product in their manufacturing process, and Distributors are those customers who resell our products to third parties. We deliver our products to customers around the world for use in the industrial, automotive, computing, consumer, and communications markets. Further, most of our contracts are fixed-price arrangements, and are short term in nature, ranging from days to several months. The tables below set forth net sales based on the location of the subsidiary producing the net sale:
As of and for the
Three Months Ended March 31, 2026
Asia
Americas
Europe
Consolidated
Total sales
436,730
292,920
69,246
798,896
Intercompany elimination
(194,000
(167,692
(31,737
(393,429
242,730
125,228
37,509
492,929
69,189
90,084
1,660,649
567,419
269,660
Three Months Ended March 31, 2025
352,691
261,945
58,251
672,887
(159,164
(148,357
(33,253
(340,774
193,527
113,588
24,998
488,423
74,780
102,654
665,857
1,662,760
460,343
233,238
2,356,341
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The tables below set forth net sales for the Company disaggregated into geographic locations based on shipment destination and by type (direct sales or distributor sales):
Three months ended March 31,
Net Sales by Region
313,944
258,292
56,922
44,574
34,601
29,247
Total net sales
Net Sales by Type
Direct sales
150,516
121,833
Distributor sales
254,951
210,280
The table below sets forth the location to where products were shipped, representing 10% or more of net sales in at least one of the periods shown below:.
Location
For the three months ended March 31,
China
176,994
153,448
Singapore
36,348
30,169
Taiwan
42,824
24,231
NOTE 9 – Debt
Borrowings outstanding as of March 31, 2026 and December 31, 2025 are set forth in the table below:
Interest Rate
Current Amount Maturity
Short-term debt
$30,047
$30,264
Various indices plus margin
Various during 2026
Long-term debt
Notes payable to Bank of Taiwan
1,405
1,479
2-yr deposit rate floating plus 0.1148%
June 2033
4,678
4,770
2-yr deposit rate floating plus 0.082%
October 2027
Notes payable to CTBC Bank
3,119
3,180
TAIBOR 3M plus 0.5%
March 2028
April 2027
10,988
11,384
May 2028
Notes payable to E Sun Bank
79
95
1-M deposit rate floating plus 0.08%
July 2027
853
918
July 2030
84
99
1 M time deposit rate + 1.4%
Notes payable to Taishin Bank
195
258
2.82%
January 2027
429
January 2028
Notes payable to Chang Hwa Bank
31
32
2.22%
November 2030
47
48
December 2030
312
223
January 2031
Total long-term debt
25,339
25,666
Less: Current portion of long-term debt
(1,635)
(1,442)
Total long-term debt, net of current portion
$23,704
$24,224
Our Asia subsidiaries maintain credit facilities with several financial institutions through our foreign entities worldwide totaling $146.4 million. Other than two Taiwanese credit facilities that are collateralized by assets, our foreign credit lines are unsecured, uncommitted and contain no restrictive covenants. These credit facilities bear interest at the Taipei Interbank Offered Rate (or similar indices) plus a specified margin. Interest payments are due monthly on outstanding amounts under the credit lines. The unused and available credit under the various facilities as of March 31, 2026, was approximately $115.9 million, net of $30.0 million advanced under our foreign credit lines and $0.4 million credit used for import and export guarantee.
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The Company maintains a long-term credit facility (“Credit Agreement”). The Credit Agreement consists of a Revolving Credit Facility in the amount of $225.0 million, including a swing line sublimit equal to the lesser of $50.0 million and the Revolving Credit Facility, a letter of credit sublimit equal to the lesser of $100.0 million and the Revolving Credit Facility, and an alternative currency sublimit equal to the lesser of $40.0 million and the Revolving Credit Facility. The Company has the option to increase the Credit Facility and/or incur Incremental Term Loans in an aggregate principal amount of up to $350.0 million. There was no outstanding balance at March 31, 2026.
NOTE 10 – Commitments and Contingencies
Purchase Commitments. We have entered into non-cancelable purchase contracts for capital expenditures, primarily for manufacturing equipment, for approximately $66.9 million at March 31, 2026. As of March 31, 2026, we also had a commitment to purchase approximately $47.9 million of wafers to be used in our manufacturing process. These wafer purchases are scheduled to occur through 2031.
Contingencies. From time to time, we are involved in various legal proceedings that arise in the normal course of business. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any pending legal proceeding will not have any material adverse effect on our consolidated financial position, cash flows, or operating results. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, which could impact our business and operating results for the period in which the ruling occurs and future periods. Based on available information available, we evaluate the likelihood of potential outcomes of all pending disputes. We record an appropriate liability when the amount of any liability associated with a pending dispute is deemed probable and reasonably estimable. In addition, we do not accrue estimated legal fees and other directly related costs as they are expensed as incurred. The Company is not currently a party to any pending litigation that we consider material.
NOTE 11 – Derivative Financial Instruments
We use derivative instruments to manage risks related to foreign currencies, interest rates, and the net investment risk in our foreign subsidiaries. Our objectives for holding derivatives include reducing, eliminating, and efficiently managing the economic impact of these exposures as effectively as possible. Our derivative programs include strategies that both qualify and do not qualify for hedge accounting treatment.
Hedges of Foreign Currency Risk. We are exposed to fluctuations in various foreign currencies against our different functional currencies. We use foreign currency forward agreements to manage this exposure. As of March 31, 2026 and December 31, 2025, we had $334.7 million and $345.2 million, respectively, of outstanding foreign currency forward agreements that are intended to preserve the economic value of foreign currency denominated monetary assets and liabilities; these instruments are not designated for hedge accounting treatment in accordance with Accounting Standards Codification (“ASC”) No. 815.
Hedges of Interest Rate and Net Investment Risk. The Company’s objectives in using interest rate derivatives are to add stability to interest expense and to manage its exposure to interest rate movements. To accomplish these objectives, the Company primarily uses interest rate swaps, including interest rate collars, as part of its interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount. The Company makes use of cross-currency swaps and foreign-currency forward contracts to decrease the foreign exchange risk inherent in the Company’s investment in some of its foreign subsidiaries.
The table below sets forth the fair value, which are Level 2 instruments in the fair-value hierarchy, of the Company’s derivative financial instruments as well as their classification on our condensed consolidated balance sheets as of March 31, 2026 and December 31, 2025:
Fair Value
Other Current or Non-Current Assets
Other Current Liabilities and Non-Current Liabilities
Collared forwards
294
2,558
The table below sets forth the effect of the Company’s derivative financial instruments on the Consolidated Statements of income for the three months ended March 31, 2026 and 2025:
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Derivative Instruments
Amount of Gain or (Loss) Recognized in OCI on Derivative
Location of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion Excluded from
Amount of Gain or (Loss) Recognized in Income on Derivative (Ineffective Portion and Amount Excluded from Effectiveness Testing)
Designated as
Effectiveness
Hedging Instruments
Testing)
(843
7,132
3,418
4,257
NOTE 12 – Employee Benefit Plans
We maintain a Non-Qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) for executive officers, key employees, and members of the Board of Directors. The Deferred Compensation Plan allows eligible participants to defer the receipt of eligible compensation, including equity awards, until designated future dates. We offset our obligations under the Deferred Compensation Plan primarily by investing in the actual underlying investments. At March 31, 2026 and December 31, 2025, these investments totaled approximately $19.7 million and $20.0 million, respectively.
NOTE 13 – Related Parties
We conduct business with the following related parties: Keylink International (B.V.I.) Inc. and its subsidiaries and affiliates (“Keylink”), Nuvoton Technology Corporation (“Nuvoton”), Jiyuan Crystal Photoelectric Frequency Technology Ltd. (“JCP”), Atlas Magnetics, Co (“Atlas”), and ATX Semiconductor SDN (“ATX”).
Keylink is a 5% joint venture partner in our Shanghai assembly and test facilities. We sell products to, and purchase inventory from, companies owned by Keylink. In addition, our subsidiaries in China lease their manufacturing facilities in Shanghai from, and subcontract a portion of our manufacturing process (metal plating and environmental services) to, Keylink. We also pay a consulting fee to Keylink.
Warren Chen, a member of the Company’s board of directors, serves as a member of the Nuvoton board of directors. We purchase wafers from Nuvoton for use in our production process. We have an agreement to purchase approximately $1.4 million of wafers from Nuvoton that ends in the second quarter of 2026. We consider our relationship with Nuvoton to be mutually beneficial, and plan to continue our strategic alliance with Nuvoton.
JCP is a frequency control product manufacturing company from which we purchase material and in which we have made an equity investment that we account for using the equity method of accounting.
Atlas is an early stage privately held fabless wafer design company in which the Company holds a majority interest. The Company determined that Atlas is a variable interest entity (“VIE”), and the Company does not have the power to direct the activities that most significantly impact Atlas. The Company has therefore determined that the Company is not the primary beneficiary. Consequently, we do not consolidate the assets and liabilities of Atlas in the Company’s financial statements. For additional information related to Atlas see Note 14 - Equity Investments - Unconsolidated VIE, below.
In June 2025, the Company entered into a Joint Venture Agreement to acquire a 43% interest and joint control of ATX, a Malaysian private limited liability company, with the purpose of building synergies related to testing and packaging. ATX is a related party for the Company.
The table below sets forth the revenues and expenses with our related parties:
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Keylink:
128
Purchases
137
Plating, rental, and consulting expense
3,618
3,221
Nuvoton:
16
24
1,585
1,065
JCP:
76
Atlas:
2,281
3,043
ATX:
94
The table below sets forth accounts receivable from, and accounts payable to, related parties:
Accounts receivable
26,865
25,415
29,614
27,837
13
9
1,153
1,131
464
721
12
NOTE 14 - Equity Investments
The Company maintains equity investments in companies which are accounted for under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair values. As of March 31, 2026, and December 31, 2025 the Company had $97.7 million and $97.4 million, respectively, of investments accounted for under the measurement alternative. During the three months ended March 31, 2026 the Company recorded $2.5 million of non-cash mark-to-market adjustments related to the value of a previously made equity investments. During the three months ended March 31, 2025, the Company recorded a $5.8 million non-cash impairment charge related to the decrease in value of a previously made equity investment.
Unconsolidated VIE
During July 2021, the Company acquired an interest in Atlas, an early stage privately held fabless wafer design company located in the western United States. The Company’s initial investment in July 2021 was $10.0 million of preferred stock and a $5.0 million convertible promissory note. In April 2023, the Company acquired an additional interest in Atlas by purchasing $13.9 million of preferred stock and the Company’s previously held convertible note converted to $5.2 million of preferred stock. In June 2025, the Company acquired an additional interest in Atlas by purchasing $12.3 million of preferred stock. In connection with the additional investment in Atlas in June 2025, the Company recorded an upward mark-to-market adjustment of $33.3 million to adjust the value of the investment. The primary purpose for providing the additional investments in Atlas was to provide for continued access to developing technology with potential future benefit to the Company. At March 31, 2026, the Company continues to own more than 50% of Atlas. The Company determined that Atlas is a VIE and a related party. While the Company does own more than 50% of Atlas, according to the voting agreement governing the transaction, the Company does not have the power to control the board of directors or direct the activities that most significantly impact Atlas, including:
• The hiring and firing of officers (i.e., CEO, CFO, etc.) – The hiring and firing of personnel responsible for making the key daily decisions and implementing the strategic operating direction will determine the success the Company has in their initiatives, thereby affecting the economic performance;
• Determining the business plan and budget, including incurring additional indebtedness or issuing additional equity interests – As Atlas is thinly capitalized, the decisions around when and how to obtain cash will influence whether Atlas can continue operating; and
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• Determining the strategic operating direction of Atlas – The decisions made around the significant operating direction of Atlas will significantly impact the overall performance of the Company by determining where and how Atlas limited capital is spent without having significant revenues to keep the Company operating.
As the Company is not the primary beneficiary of Atlas, the Company did not consolidate the assets and liabilities of Atlas in our financial statements and instead accounts for the investment under the measurement alternative described in ASC 321-10-35-2 for equity securities that lack readily determinable fair value. As such, the Company’s investment is measured at cost less impairment, and adjusted to fair value if there are any observable price changes for identical or similar investment of the same issuer.
Atlas is funded through debt and equity. The Company's maximum exposure to loss is limited to its investment in Atlas and notes receivable and accrued interest owed to the Company from Atlas. The following is a summary of the Company’s holdings in Atlas, a VIE, in which we are not the primary beneficiary:
VIE total assets
36,856
39,620
VIE total liabilities
10,887
10,659
Diodes' equity in VIE
90,035
Diodes' note receivable from VIE
9,000
Diodes' interest receivable from VIE
740
628
Diodes' maximum exposure to loss
99,775
99,663
ATX Semiconductor SDN
In June 2025, the Company entered into a joint venture agreement with Global Advanced Packaging Test Limited to acquire a 43% interest in and joint control of ATX, a Malaysian private limited liability company, with the purpose of building synergies related to testing and packaging. The ATX joint venture meets the accounting definition of a joint venture where neither party has unilateral control of the entity and both parties have joint control over the decision-making process in the entity. As such, the Company uses the equity method to account for its share of the investment in ATX. The carrying value of the equity investment is $24.2 million as of March 31, 2026. The Company recorded and will continue to record equity method earnings of the joint venture on a 3-month lag.
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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Except for the historical information contained herein, the matters addressed in this Item 2 constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as identified under the heading “Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995” herein. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed in the subsection “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our most recent Annual Report on Form 10-K, and similar discussions elsewhere in this Quarterly Report on Form 10-Q and in other reports we file with the SEC from time to time, that could cause actual results to differ materially from those anticipated by our management. The Private Securities Litigation Reform Act of 1995 (the “PSLRA”) provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the PSLRA. We undertake no obligation to publicly release the results of any revisions to our forward-looking statements that may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unexpected events. Unless the context otherwise requires, the words “Diodes,” the “Company,” “we,” “us,” and “our” refer to Diodes Incorporated and its subsidiaries. Dollar amounts and share amounts are presented in thousands, except per share amounts, unless otherwise noted.
This management’s discussion should be read in conjunction with the management’s discussion included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (“Form 10-K”), previously filed with Securities and Exchange Commission (“SEC”) on February 10, 2026.
Overview
The Company’s diverse product portfolio covers diodes; rectifiers; transistors; MOSFETs; SiC diodes and MOSFETs; protection devices; logic; voltage translators; amplifiers and comparators; sensors; and power management devices such as AC-DC converters, digital isolators and isolated gate drivers, DC-DC switching, photocoupler, linear voltage regulators, voltage references, LED drivers, power switches, and voltage supervisors. We also have timing and connectivity solutions including clock ICs, crystal oscillators, PCIe packet switches, multi-protocol switches, interface products, and signal integrity solutions for high-speed signals.
Summary for the three months ended March 31, 2026
As of March 31, 2026, our cash, cash equivalents, and short-term investments were $404.3 million, and we had access to unused borrowing capacity of $225.0 million under the revolving portion of our U.S. Credit Agreement. We believe our liquidity and our borrowing capacity will allow us to cover our cash needs for working capital, capital expenditures, and acquisitions for at least the next 12 months.
For the three months ended March 31, 2026, net sales grew 22.1% year-over-year and an above-seasonal 3.5% sequentially, highlighting the solid demand recovery and momentum the Company is seeing across our key focus area of automotive, industrial and AI-server related applications. The first quarter of 2026 is the fifth consecutive quarter of double-digit year-over-year growth and the highest percentage increase since the fourth quarter of 2021. Revenue in Europe led the growth as the Company continued to benefit from increased opportunities and orders from customers in the automotive and communications markets. Demand also continued to improve across broad industrial applications, which contributed to our revenue growth in the quarter.
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For the three months ended March 31, 2026, gross margin improved 70 basis points sequentially mainly due to the higher revenue contribution from the automotive and industrial markets, which totaled 44% of product revenue, combined with improving utilization.
The Company continues to focus on its previously released 3-year interim financial targets, which include reaching $2 billion in annual revenue and $700 million in gross profit. Content expansion, design win momentum and new product introductions will continue to be the cornerstones of our growth initiatives, combined with increased manufacturing and cost efficiencies to further drive margin expansion.
Results of operations for the three months ended March 31, 2026 and 2025
The table below sets forth the condensed consolidated statement of operations line items as a percentage of net sales:
For the Three Months Ended March 31,
100
(68
(27
1
2
(1
(2
The following table and discussion explains in greater detail our consolidated operating results and financial condition for the three months ended March 31, 2026, compared to the three months ended March 31, 2025. This discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form 10-Q.
Increase/(Decrease)
% Change
73,354
22.1
49,256
21.7
24,098
23.0
5,629
5.4
(368
(6.3
%)
215
46.0
3,194
(1745.4
6,482
(160.8
4,568
(78.5
(526
(85.3
3,980
N/A
Net sales increased approximately $73.4 million, or 22.1%, for the three months ended March 31, 2026, compared to the same period last year, driven by stronger demand across all end markets. During the three months ended March 31, 2026, weighted-average sales price decreased 6.9% and volume increased 31.1%, when compared to the same period in 2025. The decrease in weighted-average sales price was primarily due to product mix.
The table below sets forth our product revenue as a percentage of total product revenue by end-user market for the three months ended March 31, 2026 and 2025:
Industrial
24%
23%
Automotive
20%
19%
Computing
26%
27%
Consumer
17%
Communications
13%
14%
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For the three months ended March 31, 2026, gross profit increased approximately 23.0% when compared to the same period last year primarily due to higher net sales. Gross profit margin for the three months ended March 31, 2026 and 2025 was 31.8% and 31.5%, respectively.
Operating expenses for the three months ended March 31, 2026, increased $5.6 million when compared to the three months ended March 31, 2025. Operating expenses as a percentage of net sales were 26.9% and 31.1% for the three months ended March 31, 2026 and 2025, respectively. SG&A increased approximately $5.6 million as compared to the same period last year reflecting an increase in salaries and wages of $3.1 million and an increase in freight and duty expense of $1.2 million. The remaining increase in SG&A was made up of normal business expense fluctuations. SG&A, as a percentage of net sales, was 15.9% and 17.7% for the three months ended three months ended March 31, 2026 and 2025 respectively. For the three months ended March 31, 2026, research and development expenses (“R&D”) increased approximately $2.0 million when compared to the three months ended March 31, 2025, due to increased R&D spending in wages and benefits of $1.6 million and increased depreciation and amortization expense of $0.8 million. R&D, as a percentage of net sales, was 10.0% and 11.6% for the three months ended March 31, 2026 and 2025, respectively.
Interest income and interest expense were both relatively flat for the three months ended March 31, 2026, compared to the same period last year. Unrealized gain on investments increased $2.4 million from fair-value adjustments to a previously made equity investments. During the three months ended March 31, 2026, the Company recognized $1.2 million impairment on a previously made equity investment.
We recognized an income tax expense of approximately $4.0 million and $20 thousand for the three months ended March 31, 2026 and 2025, respectively. The increase in income tax expense reflects the increase in pretax earnings.
Financial Condition
Liquidity and Capital Resources
Our primary source of liquidity is cash flow from operations. Additional sources of liquidity are cash and cash equivalents, short-term investments, and our credit facilities. Our cash and cash equivalents and restricted cash increased from $372.3 million at December 31, 2025 to $399.2 million at March 31, 2026. This increase in cash, cash equivalents, and restricted cash reflects normal operations of the Company. As of March 31, 2026, we had short-term investments totaling $10.2 million. These investments are highly liquid with maturity dates greater than three months at the date of purchase. We generally can access these investments in a relatively short time frame but in doing so we generally forfeit all earned and future interest income.
At March 31, 2026 and December 31, 2025, our working capital was $891.3 million and $878.6 million, respectively. We expect cash generated by our operations together with existing cash, cash equivalents, short-term investments, and available borrowing under credit facilities to be sufficient to cover our cash needs for working capital, capital expenditures, and acquisitions for at least the next 12 months.
Our undistributed foreign earnings continue to be indefinitely reinvested in foreign operations, with limited exceptions related to earnings of certain European and Asian subsidiaries. As of March 31, 2026, our foreign subsidiaries held approximately $239.0 million of cash, cash equivalents and investments of which approximately $94.2 million would be subject to a potential non-U.S. withholding tax if distributed outside the country in which the cash is currently held. The $94.2 million is held in Asia and Europe.
Our Asia subsidiaries maintain short-term credit facilities with several financial institutions through our foreign entities worldwide totaling $146.4 million. Other than two Taiwanese credit facilities that are collateralized by assets, our foreign credit lines are unsecured, uncommitted, and contain no restrictive covenants. These credit facilities bear interest at the Taipei Interbank Offering Rate (or similar indices) plus a specified margin. Interest payments are due monthly on outstanding amounts under the credit lines. The unused and available credit under the various facilities as of March 31, 2026, was approximately $115.9 million, net of $30.0 million advanced under our foreign credit lines and $0.4 million of credit used for import and export guarantee.
The Company maintains a long-term credit facility (“Credit Agreement”). The Credit Agreement consists of a Revolving Credit Facility in the amount of $225.0 million, including a swing line sublimit equal to the lesser of $50.0 million and the Revolving Credit Facility, a letter of credit sublimit equal to the lesser of $100.0 million and the Revolving Credit Facility, and an alternative currency sublimit equal to the lesser of $40.0 million and the Revolving Credit Facility. The Company has the option to increase the Revolving Credit Facility and/or incur Incremental Term Loans in an aggregate principal amount of up to $350.0 million. The Credit Agreement bears interest at Term SOFR or similar other indices plus a specified margin and matures in May 2028. There was no outstanding balance under the Credit Agreement at March 31, 2026.
Because some of our outstanding debt is subject to variable interest rates, higher interest rates will potentially increase our overall debt service cost. If interest rates rise globally, our cost of capital may increase in the future.
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Discussion of Cash Flows
The table below sets forth a summary of the condensed consolidated statements of cash flows:
Operating Activities
Net cash flows from operating activities for the three months ended March 31, 2026 was $64.3 million. The following recurring operating items gave rise to the calculation of net cash flows from operating activities for the three months ended March 31, 2026: Net income of $16.1 million, depreciation and amortization of intangible assets of $35.2 million, a net increase of $6.3 million of changes in working capital accounts, from ongoing operations, and share-based compensation of $7.6 million. These increases in cash flow from operations were partially offset by interest income of $3.4 million recognized related to the Company’s investment hedging.
Net cash flows from operating activities for the three months ended March 31, 2025 was $56.7 million. The following recurring operating items gave rise to the calculation of net cash flows from operating activities for the three months ended March 31, 2025: Depreciation and amortization of intangible assets of $35.9 million, a net increase of $12.1 million of changes in working capital accounts, a $4.0 million non-cash loss on investments related to mark- to-market adjustments to adjust the value of the investment, and share-based compensation of $6.4 million. These increases were partially offset by a net loss of $2.8 million. During the three months ended March 31, 2025, the Company recorded a $5.8 million non-cash impairment charge related to the decrease in value of a previously made equity investment, the result of which is an increase to operating cash flow.
Investing Activities
Net cash and cash equivalents from investing activities was $(36.7) million for the three months ended March 31, 2026. Net cash and cash equivalents from investing activities for the three months ended March 31, 2026 was primarily due to purchases of property, plant, and equipment of $31.9 million, or 7.9% of net sales. We expect capital expenditures for the twelve months ended December 31, 2026 to be within our target model of 5% to 9% of net sales. The Company also paid approximately $3.2 million, net, due to the expiration of hedge instruments.
Net cash and cash equivalents from investing activities was ($28.5) million for the three months ended March 31, 2025. Net cash and cash equivalents from investing activities for the three months ended March 31, 2025 was primarily due to purchases of property, plant, and equipment of $15.9 million, or 4.8% of net sales, the expiration of a hedge instrument of $6.9 million, and the acquisition of the minority interest in a joint venture in Taiwan for approximately $4.1 million, bringing the Company’s ownership to 100%.
Financing Activities
Net cash and cash equivalents from financing activities was $(1.1) million for the three months ended March 31, 2026. Net cash from financing activities in the three months ended March 31, 2026 consisted of taxes paid on net share settlements of $1.5 million partially offset by a $0.5 million of net increases in our debt.
Net cash and cash equivalents from financing activities was ($1.3) million for the three months ended March 31, 2025. Net cash provided by financing activities in the three months ended March 31, 2025 consisted primarily of $0.2 million of net increases in our debt and taxes paid on net share settlements of $1.5 million.
Use of Derivative Instruments and Hedging
We use, or may use, interest rate swaps, foreign exchange forward contracts, and cross currency swaps to provide a level of protection against interest rate risks and foreign exchange exposure.
Hedges of Interest Rate Risk
Our objectives in using interest rate derivatives are to add stability to interest expense and to manage exposure to interest rate movements. To accomplish these objectives, we primarily use interest rate swaps, including interest rate collars, as part of our interest rate risk management strategy. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for us making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.
Hedges of Foreign Currency Risk
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We are exposed to fluctuations in various foreign currencies against our different functional currencies. We use foreign currency forward agreements to manage this exposure and to preserve the economic value of foreign currency denominated monetary assets and liabilities. These instruments are not designated for hedge accounting treatment in accordance with ASC No. 815. The fair value of our foreign exchange hedges approximates zero.
Hedges of Net Investment Risk
We make use of cross-currency swaps and foreign-currency forward contracts to decrease the foreign exchange risk inherent in our investment in some of our foreign subsidiaries.
Off-Balance Sheet Arrangements
We do not have any transactions, arrangements, or other relationships with unconsolidated entities that will affect our liquidity or capital resources. We have no special purpose entities that provide off-balance sheet financing, liquidity, or market or credit risk support, nor do we engage in leasing, swap agreements, or outsourcing of research and development services that could expose us to liability that is not reflected on the face of our financial statements.
Contractual Obligations
There have been no material changes in our Contractual Obligations as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 10, 2026.
Critical Accounting Estimates
Our critical accounting estimates are described in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the notes to our consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 10, 2026. Any new accounting estimates or updates to existing accounting estimates as a result of new accounting pronouncements have been discussed in the notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q in Note 1 – Summary of Operations and Significant Accounting Policies. The application of our critical accounting estimates may require management to make judgments and estimates about the amounts reflected in the condensed consolidated financial statements. Management uses historical experience and all available information to make these estimates and judgments, and different amounts could be reported using different assumptions and estimates.
See Note 1 - Summary of Operations and Significant Accounting Policies, of the Notes to Condensed Consolidated Financial Statements, for detailed information regarding the status of recently issued accounting pronouncements, if any.
Cautionary Statement for Purposes of the “Safe Harbor” Provision of the Private Securities Litigation Reform Act of 1995
Except for the historical information contained herein, the matters addressed in this Quarterly Report on Form 10-Q constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934. We generally identify forward-looking statements by the use of terminology such as “may,” “will,” “could,” “should,” “potential,” “continue,” “expect,” “intend,” “plan,” “estimate,” “anticipate,” “believe,” or similar phrases or the negatives of such terms. Such forward-looking statements are subject to a variety of risks and uncertainties, including those discussed in the subsection “Risk Factors” set forth in Part II, Item 1A of this Quarterly Report on Form 10-Q and Part I, Item 1A of our most recent Annual Report on Form 10-K, and similar discussions elsewhere in this Quarterly Report on Form 10-Q, and in other reports we file with the SEC from time to time, that could cause actual results to differ materially from those anticipated by our management. The PSLRA provides certain “safe harbor” provisions for forward-looking statements. All forward-looking statements made in this Quarterly Report on Form 10-Q are made pursuant to the PSLRA.
All forward-looking statements contained in this Quarterly Report on Form 10-Q are subject to, in addition to the other matters described in this Quarterly Report on Form 10-Q, a variety of significant risks and uncertainties. The following discussion highlights some of these risks and uncertainties. Further, from time to time, information provided by us or statements made by our employees may contain forward-looking information. There can be no assurance that actual results or business conditions will not differ materially from those set forth or suggested in such forward-looking statements as a result of various factors, including those discussed below.
For more detailed discussion of these factors, see the “Risk Factors” discussion in Part I. Item 1A of our most recent Annual Report on Form 10-K as filed with the SEC and in Part II, Item 1A of this Quarterly Report The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this Quarterly Report, and we undertake no obligation to update the forward-looking statements to reflect subsequent events or circumstances.
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Significant Risks and Uncertainties That may affect Forward-Looking Statements
RISKS RELATED TO OUR BUSINESS
The impact of tariffs assessed or contemplated to be assessed by various governments could have a material adverse effect on our business, financial condition, and results of operations.
The impact of pandemics may have a material adverse effect on our business, financial condition, and results of operations.
During times of difficult market conditions, our fixed costs combined with lower net sales and lower profit margins may have a negative impact on our business, operating results, and financial condition.
Downturns in the highly cyclical semiconductor industry or changes in end-market demand could adversely affect our operating results and financial condition.
The semiconductor business is highly competitive, and increased competition may harm our business, operating results, and financial condition.
Delays in initiation of production at facilities due to implementing new production techniques or resolving problems associated with technical equipment malfunctions could adversely affect our manufacturing efficiencies, operating results, and financial condition.
We are and will continue to be under continuous pressure from our customers and competitors to reduce the price of our products, which could adversely affect our growth and profit margins.
Our customers may require our products to undergo a lengthy and expensive qualification process without any assurance of product sales and may audit our operations from time to time. A failure to qualify a product or a negative audit finding could adversely affect our net sales, operating results, and financial condition.
Our customer orders are subject to cancellation or modification usually with no penalty. High volumes of order cancellation or reduction in quantities ordered could adversely affect our net sales, operating results, and financial condition.
Production at our manufacturing facilities could be disrupted for a variety of reasons, including natural disasters and other extraordinary events, which could prevent us from producing enough of our products to maintain our sales and satisfy our customers’ demands and could adversely affect our operating results and financial condition.
New technologies could result in the development of new products by our competitors and a decrease in demand for our products, and we may not be able to develop new products to satisfy changes in demand, which would adversely affect our net sales, market share, operating results, and financial condition.
We may be subject to claims of infringement of third-party intellectual property rights or demands that we license third-party technology, which could result in significant expense, reduction in our intellectual property rights and a negative impact on our business, operating results, and financial condition.
We depend on third-party suppliers for timely deliveries of raw materials, manufacturing services, product and process development, parts, and equipment, as well as finished products from other manufacturers, and our reputation with customers, operating results, and financial condition could be adversely affected if we are unable to obtain adequate supplies in a timely manner.
A significant part of our growth strategy involves acquiring companies and businesses. We may be unable to identify suitable acquisition candidates or consummate desired acquisitions and, if we do make any acquisitions, we may be unable to successfully integrate any acquired companies with our operations, which could adversely affect our business, operating results, and financial condition.
We are subject to many environmental laws and regulations that could result in significant expenses and could adversely affect our business, operating results, and financial condition.
We may incur additional costs and face emerging risks associated with environmental, social and governance (“ESG”) factors impacting our operations.
Our products, or products we purchase from third parties for resale, may be found to be defective and, as a result, warranty claims and product liability claims may be asserted against us and we may not have recourse against our suppliers, which may harm our business, reputation with our customers, operating results, and financial condition.
We may fail to attract or retain the qualified technical, sales, marketing, finance, and management/executive personnel required to operate our business successfully, which could adversely affect our business, operating results, and financial condition.
We may not be able to achieve future growth, and any such growth may place a strain on our management and on our systems and resources, which could adversely affect our business, operating results, and financial condition.
Obsolete inventories as a result of changes in demand for our products and change in life cycles of our products could adversely affect our business, operating results, and financial condition.
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If our direct sales customers or our distributors’ customers do not design our products into their applications, our net sales may be adversely affected.
We are subject to interest rate risk that could have an adverse effect on our cost of working capital and interest expenses, which could adversely affect our business, operating results, and financial condition.
Our hedging strategies may not be successful in mitigating our risks associated with interest rates or foreign exchange exposure or our counterparties might not perform as agreed.
We may have a significant amount of debt with various financial institutions worldwide. Any indebtedness could adversely affect our business, operating results, financial condition, and our ability to meet payment obligations under such debt.
Restrictions in our credit facilities may limit our business and financial activities, including our ability to obtain additional capital in the future.
Our business benefits from certain Chinese government incentives. Expiration of, or changes to, these incentives could adversely affect our operating results and financial condition.
We operate a global business through numerous foreign subsidiaries, and there is a risk that tax authorities will challenge our transfer pricing methodologies or legal entity structures, which could adversely affect our operating results and financial condition.
Certain of our employees in the U.K. participate in a company-sponsored defined benefit plan which subjects the Company to risks associated with the estimates and assumptions used in calculating expense and funding requirements recorded in the Company’s consolidated financial statements. Inaccuracies or changes in these estimates could require material changes in the expense and funding required.
Compliance with government regulations and customer demands regarding the use of “conflict minerals” may result in increased costs and may have a negative impact on our business, operating results, and financial condition.
If we fail to maintain an effective system of internal controls or discover material weaknesses in our internal control over financial reporting, we may not be able to report our financial results accurately or detect fraud, which could harm our business and the trading price of our Common Stock.
RISKS RELATED TO OUR INTERNATIONAL OPERATIONS
Our international operations subject us to risks that could adversely affect our operations.
A slowdown in the Chinese economy could limit the growth in demand for electronic devices containing our products, which would have a material adverse effect on our business, operating results, and prospects.
Economic regulation in China could materially and adversely affect our business, operating results, and prospects.
We could be adversely affected by violations of the United States’ Foreign Corrupt Practices Act, the U.K.’s Bribery Act 2010, China’s anti-corruption campaign and similar worldwide anti-bribery laws.
We are subject to foreign currency risk as a result of our international operations.
China is experiencing rapid social, political and economic change, which has increased labor costs and other related costs that could make doing business in China less advantageous than in prior years. Increased labor costs in China could adversely affect our business, operating results, and financial condition.
We may not continue to receive preferential tax treatment in Asia, thereby increasing our income tax expense and reducing our net income.
The distribution of any earnings of certain foreign subsidiaries may be subject to foreign income taxes, thus reducing our net income.
We could be adversely affected by the compromise or theft of our technology, know-how, data, or intellectual property or a requirement that we yield rights in technology, know-how, data stored in foreign jurisdictions, or intellectual property that we use in such foreign jurisdictions.
RISKS RELATED TO OUR COMMON STOCK
Variations in our quarterly operating results may cause our stock price to be volatile.
We may enter into future acquisitions and take certain actions in connection with such acquisitions that could adversely affect the price of our Common Stock.
Anti-takeover effects of certain provisions of Delaware law and our Certificate of Incorporation and Bylaws, may hinder a take-over attempt.
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GENERAL RISK FACTORS
The continued hostilities between Ukraine and Russia could negatively impact our business.
The success of our business depends on the strength of the global economy and the stability of the financial markets, and any weaknesses in these areas may have a material adverse effect on our net sales, operating results, and financial condition.
We may be adversely affected by any disruption in our information technology systems, which could adversely affect our cash flows, operating results, and financial condition.
Terrorist attacks, or threats or occurrences of other terrorist activities, whether in the U.S. or internationally, may affect the markets in which our Common Stock trades, the markets in which we operate and our operating results and financial condition.
System security risks, data protection breaches, cyber-attacks and other related cybersecurity issues could disrupt our internal operations, and any such disruption could reduce our expected net sales, increase our expenses, damage our reputation, and adversely affect our stock price.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
There have been no material changes to our market risks as disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, filed with the SEC on February 10, 2026.
Item 4. Controls and Procedures.
Our Chief Executive Officer, Gary Yu, and Chief Financial Officer, Brett R. Whitmire, with the participation of our management, carried out an evaluation, as of March 31, 2026, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)). Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer believe that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures are effective at the reasonable assurance level to ensure that information required to be included in this Quarterly Report is:
Disclosure controls and procedures, no matter how well designed and implemented, can provide only reasonable assurance of achieving an entity’s disclosure objectives. The likelihood of achieving such objectives is affected by limitations inherent in disclosure controls and procedures. These include the fact that human judgment in decision-making can be faulty and that breakdowns in internal control can occur because of human failures such as simple errors, mistakes, or intentional circumvention of the established processes.
Changes in Internal Controls over Financial Reporting
There was no change in our internal control over financial reporting, known to our Chief Executive Officer or Chief Financial Officer, that occurred in the three months ended March 31, 2026, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
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PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is not a party to any pending litigation that we consider material.
From time to time, we are involved in various legal proceedings that arise in the normal course of business. While we intend to defend any lawsuit vigorously, we presently believe that the ultimate outcome of any pending legal proceeding will not have any material adverse effect on our financial position, cash flows, or operating results. However, litigation is subject to inherent uncertainties, and unfavorable rulings could occur. An unfavorable ruling could include monetary damages, which could impact our business and operating results for the period in which the ruling occurs or future periods.
Item 1A. Risk Factors.
There have been no material changes to our risk factors from those disclosed in the Risk Factors section of our Annual Report on Form 10-K for the year ended December 31, 2025, filed with the Securities and Exchange Commission on February 10, 2026.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
None.
Item 3. Defaults Upon Senior Securities.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
Insider Trading Arrangements
On February 27, 2026, Francis Tang, the Company’s Chief Technology Officer, entered into a trading plan intended to satisfy the affirmative defense of Rule 10b5-1(c) under the Securities Exchange Act of 1934. The plan provides for the sale of up to 11,882 shares of the Company’s common stock, subject to the terms of the plan, during the period from February 27, 2026 through February 26, 2027. Mr. Tang’s plan will expire on February 26, 2027, subject to early termination in accordance with the terms of the plan.
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Item 6. Exhibits.
Number
Form
Date of First Filing
ExhibitNumber
FiledHerewith
3.1
Certificate of Incorporation, as amended
10-K
February 20, 2018
3.2
Amended By-laws of the Company as of January 6, 2016
8-K
January 11, 2016
4.1
Form of Certificate for Common Stock, par value $0.66 2/3 per share
S-3
August 25, 2005
31.1
Certification Pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
X
31.2
Certification Pursuant to Rule 13a-14(a) /15d-14(a) of the Securities Exchange Act of 1934, adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*
Certification Pursuant to 18 U.S.C. 1350 adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*
101.INS
Inline XBRL Instance Document- the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH
Inline XBRL Taxonomy Extension Schema
104
Cover Page Interactive Data File, formatted in Inline XBRL
*A certification furnished pursuant to Item 601(b)(32) of the Regulation S-K will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference.
PLEASE NOTE: It is inappropriate for investors to assume the accuracy of any covenants, representations or warranties that may be contained in agreements or other documents filed as exhibits to this Quarterly Report on Form 10-Q. In certain instances the disclosure schedules to such agreements or documents contain information that modifies, qualifies and creates exceptions to the representations, warranties and covenants. Moreover, some of the representations and warranties may not be complete or accurate as of a particular date because they are subject to a contractual standard of materiality that is different from those generally applicable to stockholders and/or were used for the purpose of allocating risk among the parties rather than establishing certain matters as facts. Accordingly, you should not rely on the representations and warranties as characterizations of the actual state of facts at the time they were made or otherwise.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report to be signed on its behalf by the undersigned thereunto duly authorized.
(Registrant)
May 7, 2026
By: /s/ Gary Yu
Date
GARY YU
President and Chief Executive Officer
(Principal Executive Officer)
By: /s/ Brett R. Whitmire
BRETT R. WHITMIRE
Chief Financial Officer
(Principal Financial Officer)
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