Diodes Q3 2026 Revenue Hits Record, Q4 Growth Expected

Diodes Incorporated reported record third-quarter revenue as automotive, industrial and AI data-center demand supported broad growth, while non-GAAP gross margin expanded sharply. The semiconductor company also expects further sequential revenue growth in the fourth quarter despite what it described as typical seasonal patterns.

Revenue for the quarter ended September 30 rose 35.8% year over year and 19.5% sequentially to $532.6 million, marking Diodes’ seventh consecutive quarter of double-digit annual growth. Non-GAAP gross profit reached $192.9 million, the highest quarterly level since 2023, compared with $120.5 million a year earlier and $147.6 million in the second quarter.

Non-GAAP gross margin increased to 36.2% from 30.7% in the prior-year quarter and 33.1% in the preceding quarter. Diodes said future margin expansion would be supported by a larger contribution from higher-margin automotive, industrial and data-center markets, new products, and improved utilization across its manufacturing facilities.

GAAP net income was $43.7 million, or $0.95 per diluted share, up from $14.3 million, or $0.31 per diluted share, a year earlier. Non-GAAP adjusted net income increased to $54.5 million from $17.2 million, while non-GAAP diluted earnings per share rose 219% to $1.18 from $0.37.

The non-GAAP calculation excluded acquisition-related intangible-asset and inventory amortization, an unrealized investment loss, acquisition costs and a gain on the disposal of a subsidiary. Both GAAP and non-GAAP results included approximately $7.4 million after tax in non-cash share-based compensation expense.

Automotive, industrial and computing sales drive growth

Automotive revenue reached a quarterly record and accounted for 22% of total revenue, rising 60% from a year earlier. Industrial revenue, representing 24% of sales, increased 50% year over year and 26% sequentially.

Computing generated 27% of quarterly revenue and grew 33% year over year, driven by AI data-center demand. Diodes also reported record computing revenue and record sales from its Pericom connectivity and timing product line. Consumer products accounted for 17% of revenue, while communications represented 10%.

By sales channel, distributors generated 67% of revenue and direct customers accounted for 33%. Asia-Pacific contributed 79% of revenue, followed by Europe at 11% and the Americas at 10%.

Diodes completed its acquisition of ElevATE Semiconductor during the period. The company expects the acquired business to contribute approximately $50 million in revenue during its first 12 months.

Cash generation and balance sheet

Cash flow from operations increased to $97.2 million from $79.1 million a year earlier and $68.5 million in the second quarter, equivalent to 18.2% of revenue. Non-GAAP EBITDA was $89.7 million, or 16.8% of revenue, compared with $46.6 million in the year-earlier period.

At September 30, Diodes held $578 million in cash, restricted cash and short-term investments, up from $382 million at the end of 2025. Total debt was $405 million, including a $365 million convertible bond carrying a 0% coupon. Inventory stood at $535 million, while total equity was $2.02 billion.

Fourth-quarter outlook

For the fourth quarter of 2026, Diodes expects revenue of approximately $550 million, plus or minus 3%. At the midpoint, that would represent growth of 40.4% year over year and 3.2% sequentially, a result the company said would be significantly better than typical seasonality.

Management forecasts a non-GAAP gross margin of 37%, plus or minus one percentage point, representing a 590-basis-point increase from the fourth quarter of 2025. Non-GAAP adjusted earnings are expected to be $1.35 per share, plus or minus $0.10, or approximately 300% above the prior-year period.

Diodes continues to target $2 billion in revenue, at least $700 million in gross profit, a gross margin above 35% and non-GAAP earnings per share of more than $4 by 2028. Its strategic priorities include expanding system-level solutions, increasing business with key accounts, focusing on higher-margin automotive, industrial and data-center applications, and investing in semiconductor processes, products and advanced packaging.

The outlook remains subject to semiconductor demand and product-mix changes, manufacturing costs and utilization, acquisition integration, currency movements, global economic conditions, trade restrictions and tariffs, and cybersecurity risks. Diodes also cautioned that it may not achieve the expected growth in automotive, industrial and other markets or realize the anticipated benefits of acquisitions.