Magnachip Semiconductor — Third Quarter 2026 Earnings Summary

Financial Performance:

• Consolidated revenue from continuing operations was $44.0 million, within the guidance range of $41.5 million to $45.5 million, representing a 4.3% year-over-year decrease from $45.9 million in Q3 2025 and a 1.6% sequential decrease from $44.7 million in Q2 2026.
• Consolidated gross profit margin was 14.0%, below the guidance range of 17.0% to 19.0%, primarily due to unfavorable foreign exchange movements; this compares to 18.6% in Q3 2025 and 19.3% in Q2 2026.
• Power Analog Solutions segment revenue was $39.6 million (down 4.6% YoY, down 2.3% QoQ) with a gross margin of 10.7% (down 5.3 percentage points YoY).
• Power IC segment revenue was $4.3 million (down 1.3% YoY, up 5.1% QoQ) with a gross margin of 45.0% (up 1.8 percentage points YoY).
• Operating loss was $12.9 million, a 11.6% year-over-year deterioration compared to $11.5 million in Q3 2025.
• Loss from continuing operations was $13.3 million, a 25.2% year-over-year increase compared to $10.6 million in Q3 2025.
• Basic and diluted loss per common share was $0.36, a 24.1% year-over-year increase compared to $0.29 in Q3 2025.
• Adjusted operating loss was $8.6 million, a 15.8% year-over-year increase compared to $7.4 million in Q3 2025.
• Adjusted EBITDA was $(3.5) million, an 11.8% improvement year-over-year compared to $(4.0) million in Q3 2025.
• Adjusted loss was $10.7 million, compared to a loss of $0.4 million in Q3 2025.
• Cash and cash equivalents were $86.9 million at quarter-end, down from $103.8 million at December 31, 2025.
• Total liabilities were $98.4 million, down from $103.3 million at December 31, 2025.
• Total stockholders' equity was $245.4 million, down from $248.3 million at December 31, 2025.

Guidance and Future Outlook:

• Q4 2026 consolidated revenue is expected to be between $41.0 million and $45.0 million, reflecting typical seasonal softness; the midpoint represents a 2.2% sequential decrease and a 6.0% year-over-year increase compared to Q3 2026 and Q4 2025, respectively.
• Q4 2026 consolidated gross profit margin is expected to be between 10% and 12%, compared to 14.0% in Q3 2026 and 9.3% in Q4 2025.
• The sequential decline in Q4 gross margin is attributed to lower utilization resulting from a power shutdown in the fab due to a substation upgrade and appreciation of the Korean Won.
• Management remains focused on managing costs and maintaining financial flexibility to support strategic transformation despite headwinds on legacy products and foreign exchange volatility.

Business Segments and Product Lines:

• Launched 15 new sixth-generation E6 Super-Junction MOSFETs targeting TVs, notebook adapters, PC power supplies, and other consumer and industrial power applications.
• Continued execution of a new-generation power semiconductor roadmap to expand the product portfolio, strengthen competitiveness, increase profitability, and address new market opportunities.
• Power IC segment showed sequential revenue growth of 5.1% and improved gross margin by 4.1 percentage points compared to Q2 2026.

Market and Competitive Landscape:

• Management stated the objective is to move beyond competing primarily on price to delivering innovative power semiconductor solutions that address increasingly complex customer requirements.
• The company aims to build a foundation for stronger competitive positioning and sustainable growth through the transformation.

Risks and Challenges:

• Near-term financial performance faces headwinds including unfavorable foreign exchange movements, lower fab utilization due to a power shutdown from a substation upgrade, and appreciation of the Korean Won.
• Legacy products face headwinds impacting revenue and margins.
• Forward-looking statements involve risks including macroeconomic conditions, trade policies, geopolitical conditions, manufacturing capacity constraints, supply chain disruptions, changes in customer demand, competitive pricing, and foreign exchange volatility.

Management Commentary and Tone:

• CEO Chae Lee expressed encouragement regarding progress in transforming Magnachip, citing accelerated new-generation product development, a clear roadmap for differentiated solutions, and a strengthened strategic partnership with Navitas Semiconductor.
• CEO Chae Lee acknowledged the transformation will take time but believes the company is building a foundation for stronger competitive positioning, sustainable growth, and improved profitability.
• CFO Shinyoung Park noted revenue was within guidance but gross margin was below expectations due to foreign exchange movements, while affirming the company is well-positioned to continue investing selectively in technologies driving long-term competitiveness.

Other Key Points:

• Announced a $5 million strategic equity investment by Navitas Semiconductor, further strengthening the partnership to develop differentiated next-generation power semiconductor solutions.
• Recorded $1.9 million in other charges for the quarter, consisting of $0.6 million in tax-related charges and $1.3 million in costs associated with the electrical substation upgrade at the Gumi fabrication facility.
• Nine-month other charges included a $1.1 million customer goodwill payment related to a certain product and $0.9 million of one-time employee incentives.
• Proceeds from the issuance of common stock were $4.9 million in the nine months ended September 30, 2026.
• Net cash used in operating activities was $18.2 million for the three months ended September 30, 2026.
• Net cash provided by investing activities was $4.2 million for the three months ended September 30, 2026, driven by proceeds from the settlement of hedge collateral.
• Net cash provided by financing activities was $4.7 million for the three months ended September 30, 2026, driven by proceeds from the issuance of common stock.