DIODES INC /DEL/

Diodes Incorporated delivers high-quality semiconductor products to the world's leading companies in the automotive, industrial, computing, consumer electronics, and communications markets. The company leverages an expanded product portfolio of analog and power solutions combined with a flexible hybrid manufacturing model. The semiconductor industry is highly cyclical and periodically experiences significant economic downturns characterized by diminished product demand, production overcapacity, and excess inventory. Competition in the discrete, logic, analog, and mixed-signal semiconductor components market is intense, with numerous manufacturers and distributors serving the space.

The semiconductor industry in which Diodes operates is highly competitive, with competition based on price, product performance, product availability, quality, reliability, technological innovation, and customer service. Some of the company's larger competitors include Infineon Technologies A.G., Epson, Kyocera, Nexperia, NXP Semiconductors N.V., ON Semiconductor Corporation, Renesas Electronics Corporation, Texas Instruments, and Vishay Intertechnology, Inc., many of which have greater financial, marketing, distribution, brand name recognition, research and development, manufacturing, and other resources. Diodes believes its product focus, packaging expertise, and flexibility and quick adaptability to customer needs afford it competitive advantages. The company serves over 50,000 customers worldwide.

Diodes generates revenue through the design, manufacture, and sale of standard semiconductor products, operating in a single reportable segment. The company sells product primarily through its operations in Asia, the Americas, and Europe. The majority of customers are served through a distribution network, while some are direct customers who purchase directly from the company. For the twelve months ended December 31, 2025, 2024, and 2023, direct sales and EMS customers together accounted for 35%, 37%, and 32%, respectively, of net sales. Distributor sales were $959.705 million ¹ in 2025, $831.275 million ² in 2024, and $1.131293 billion ³ in 2023, while direct sales were $522.368 million ⁴ in 2025, $479.845 million ⁵ in 2024, and $530.446 million ⁶ in 2023.

The company's product line includes over 28,000 products, and it shipped approximately 45 billion units ⁷ in 2025, 39 billion units ⁸ in 2024, and 42 billion units ⁹ in 2023. Discrete semiconductor products include MOSFETs, SiC MOSFETs, protection devices, diodes (Schottky, small signal switching, Zener, SiC), rectifiers (bridges, super barrier, Schottky, fast/ultra-fast), and bipolar transistors. Analog products include power management devices such as AC-DC and DC-DC converters, digital isolators and isolated gate drivers, USB power switches, low dropout and linear voltage regulators, standard linear devices, LED lighting drivers, audio amplifiers, and sensor products including Hall-effect sensors and motor drivers. Mixed-signal products include high speed mux/demux, digital switches, interface, redrivers, universal level shifters/voltage translators, clock ICs, and packet switches. Standard logic products include low-voltage CMOS and advanced high-speed CMOS devices, ultra-low power CMOS logic, and analog switches. The company also offers multichip products and co-packaged discrete, analog, and mixed-signal silicon in miniature packages, silicon and silicon epitaxial wafers, frequency control products (FCP), and contact image sensors (CIS).

For the twelve months ended December 31, 2025, end-market revenue composition was 23% ¹⁰ industrial, 19% ¹¹ automotive, 27% ¹² computing, 18% ¹³ consumer, and 13% ¹⁴ communications. In 2024, the composition was 23% ¹⁵ industrial, 19% ¹⁶ automotive, 25% ¹⁷ computing, 19% ¹⁸ consumer, and 14% ¹⁹ communications. In 2023, the composition was 27% ²⁰ industrial, 19% ²¹ automotive, 23% ²² computing, 18% ²³ consumer, and 13% ²⁴ communications. Net sales by region for 2025 were Asia $1.156823 billion ²⁵, Europe $185.223 million ²⁶, and Americas $140.027 million ²⁷. For 2024, net sales by region were Asia $1.020256 billion ²⁸, Europe $188.402 million ²⁹, and Americas $102.462 million ³⁰. For 2023, net sales by region were Asia $1.181519 billion ³¹, Europe $287.549 million ³², and Americas $192.671 million ³³.

In October 2024, Diodes completed its acquisition of Fortemedia, Inc., a global company focusing on developing high quality solutions and semiconductor products that provide advanced voice processing technologies, to expand its product portfolio and enhance its footprint in advanced voice processing technologies primarily targeted at the automotive and computer markets. In June 2025, the company entered into a joint venture agreement with Global Advanced Packaging Test Limited to acquire a 43% ³⁴ interest in and joint control of ATX Semiconductor SDN, a Malaysian private limited liability company, with the purpose of building synergies related to testing and packaging. In June 2022, the company completed the acquisition of onsemi's wafer fabrication facility and operations located in South Portland, Maine (SPFAB) to provide additional 200mm wafer fabrication capacity for analog products. In 2020, Diodes acquired Lite-On Semiconductor (LSC) and its subsidiaries, broadening its discrete product offerings. In 2019, the company acquired from Texas Instruments a 200mm wafer fabrication facility and operations located in Greenock, Scotland (GFAB). Total cash capital expenditures were approximately $78.4 million ³⁵ in 2025 and $73.0 million ³⁶ in 2024.

In 2025, the company's net sales increased 13.0% ³⁷ compared to 2024, which is the highest level of annual growth since 2021. The fourth quarter of 2025 represented the fourth consecutive quarter of double-digit growth year-over-year. From 2021 to 2025, annual net sales ranged from $1.8 billion to $1.5 billion. The increase in units shipped in 2025 was driven by the improvement in overall demand in the semiconductor industry. The company has continued to see demand improvements across all target markets and geographies, with the most significant growth for the full year driven by strength in the computing market for AI server-related applications as well as increases in automotive and industrial end markets.

The company has stated a goal of reaching $1.0 billion ³⁸ in gross profit based upon $2.5 billion ³⁹ in net sales and a gross margin of 40% ⁴⁰. As part of achieving this goal, the company has set 3-year interim financial targets, which include achieving $2.0 billion ⁴¹ in annual net sales with approximately $700 million ⁴² in gross profit, or 35% plus ⁴³, in gross margin.

The company intends to continue to rapidly introduce innovative analog and discrete power solutions semiconductor products across all its markets with continued emphasis in AI applications for the computer market, the industrial market, and the automotive market. Diodes will also continue to focus on high-volume, high-growth applications with short design cycles such as IoT, wearables, home automation, smart infrastructure, portables like smartphones, tablets, notebooks, and edge AI devices, and other consumer electronics and computing devices. During 2025 and 2024, the company continued to achieve many significant new design wins with its direct sales customers. The company believes that continued introduction of new and well-defined product solutions is critically important in maintaining and extending its market share in the highly competitive semiconductor marketplace.

The company plans to expand its available market opportunities by continuing to expand its product portfolio through developing derivative and enhanced performance devices that target adjacent markets and end-equipment. Diodes intends to cultivate new and emerging customers within its targeted markets, further increasing its already broad customer base. As the company expands its extensive range of high power efficiency and small form factor packages, it plans to introduce new and existing product functions in these new packages to allow even greater market coverage. The company also intends to continue to strengthen and deepen customer relationships through close collaboration to design products that meet specific needs, and to further reduce design cycle time to quickly provide customers with innovative products.

A key element of the company's success is its overall low-cost manufacturing base and hybrid manufacturing model. Diodes will continue to refine its proprietary manufacturing processes and technology to achieve additional cost efficiencies. The company has continued to make capital expenditures to enhance its existing manufacturing capabilities. The hybrid manufacturing model allows revenue to be supported with both internally and externally sourced manufacturing, providing more flexibility to support customer growth while continuing to enhance cost competitiveness.

The company's manufacturing operations are a core element of its success, and the manufacturing base is designed to allow the company to respond quickly to changes in demand trends in the end-markets it serves. Assembly and test facilities are structured to enable rapid and efficient addition of capacity and adjustment of product mix to meet shifts in customer demand and overall market trends. The manufacturing facilities provide access to a workforce at a relatively low overall cost base while enabling the company to better serve its leading customers, many of which are located in Asia. As of December 31, 2025, Diodes had 7,989 ⁴⁴ employees, with 6,753 ⁴⁵ in Asia, 790 ⁴⁶ in Europe, and 446 ⁴⁷ in the Americas.

Total cash capital expenditures were approximately $78.4 million ⁴⁸ in 2025 and $73.0 million ⁴⁹ in 2024. The company continues to make capital expenditures to enhance its existing manufacturing capabilities. As part of its growth strategy, the company may acquire technologies, product lines, or companies to enhance its product portfolio and accelerate new product offerings. The company has no material agreements with any of its suppliers that impose minimum or continuing supply obligations.

The company is subject to risks associated with tariffs assessed or contemplated by various governments, which could have a material adverse effect on its business, financial condition, and results of operations. Tariffs may disrupt the supply chain, increase production costs, and reduce competitiveness in the global market. The company is also subject to risks associated with the highly cyclical nature of the semiconductor industry, which periodically experiences significant economic downturns characterized by diminished product demand, production overcapacity, and excess inventory. The company operates in a few narrow markets of the semiconductor market, and cyclical fluctuations may affect these segments to a greater extent than they affect the broader semiconductor market.

The company faces continuous pressure from customers and competitors to reduce the price of its products, which could adversely affect growth and profit margins. All customer orders are subject to cancellation or modification, usually with no penalty to the customer. The company and the semiconductor industry as a whole are experiencing a trend towards shorter customer-requested lead times. The company's international operations subject it to risks including a slowdown in the Chinese economy, economic regulation in China, increased labor costs in China, and foreign currency risk. The company is also subject to risks related to the imposition of tariffs and other trade barriers by government authorities on imported goods.

The semiconductor industry is highly cyclical, and Diodes operates in a few narrow markets, making it susceptible to greater fluctuations in operating results than broad-line competitors. The company faces continuous pressure from customers and competitors to reduce product prices, which could adversely affect growth and profit margins. All customer orders are subject to cancellation or modification, usually with no penalty, and the industry is experiencing a trend towards shorter customer-requested lead times. The imposition of tariffs and other trade barriers could disrupt the supply chain, increase production costs, and reduce competitiveness. As of December 31, 2025, the company had $25.7 million ⁵⁰ in long-term debt outstanding and short-term foreign credit facilities with borrowing capacities of approximately $150.3 million ⁵¹ with an unused amount of $119.6 million ⁵²; a rise in interest rates by 1.0% on long-term debt would increase or decrease annual interest expense by approximately $0.6 million ⁵³. The company's international operations, particularly in China, expose it to risks including economic slowdown, increased labor costs, and foreign currency fluctuations.

Management's message emphasizes that 2025 net sales increased 13.0% ⁵⁴ compared to 2024, representing the highest level of annual growth since 2021, with the fourth quarter of 2025 marking the fourth consecutive quarter of double-digit growth year-over-year. Management highlights the success of design win initiatives and content expansion over the past year, with demand improvements across all target markets and geographies, most significantly driven by strength in the computing market for AI server-related applications and increases in automotive and industrial end markets. The company continues to work towards its previously stated goal of $1.0 billion ⁵⁵ in gross profit based upon $2.5 billion ⁵⁶ in net sales and a gross margin of 40% ⁵⁷, with 3-year interim financial targets including achieving $2.0 billion ⁵⁸ in annual net sales with approximately $700 million ⁵⁹ in gross profit, or 35% plus ⁶⁰, in gross margin. Management's strategic priorities include offering total systems solutions to drive growth, increasing focus on high margin market segments (automotive and industrial) and analog and power discrete product lines, investing in technology leadership in target products, fab processes, and advanced packaging, and pursuing selective strategic acquisitions of technologies, product lines, or companies to enhance the product portfolio and accelerate new product offerings.