Semiconductor manufacturer Vishay Intertechnology (NYSE: VSH) fell short of the market’s revenue expectations in Q1 CY2025, with sales falling 4.2% year on year to $715.2 million. On the other hand, next quarter’s outlook exceeded expectations with revenue guided to $760 million at the midpoint, or 0.8% above analysts’ estimates. Its non-GAAP loss of $0.03 per share was in line with analysts’ consensus estimates.

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StockStory’s Take

Vishay Intertechnology’s first quarter was characterized by steady demand in key end markets and ongoing inventory normalization. CEO Joel Smejkal explained that while automotive revenues softened due to new OEM contract pricing and holiday-related factors in Asia, industrial demand rebounded in Europe and smart grid infrastructure projects drove new orders. The company also noted a sequential improvement in point-of-sale activity at distributors and a positive book-to-bill ratio, which Smejkal attributed to expanded SKU offerings and improved supply chain positioning. Management acknowledged that average selling prices declined due to annual negotiations, but maintained that broad-based demand signals are stabilizing.

Looking ahead, Vishay Intertechnology’s management expects second quarter growth to be driven by ongoing momentum in AI server and smart grid infrastructure markets, alongside incremental gains in distributor and industrial channels. Smejkal highlighted, “We see the demand for Vishay products more in line with end market consumption than at any time in the past two years of inventory digestion.” CFO Dave McConnell detailed that tariff-related revenue will be offset by minimal gross margin impact due to established pass-through processes. The company remains focused on capacity expansion, particularly in high-growth areas like silicon carbide and automotive-grade products, while remaining attentive to evolving geopolitical and supply chain dynamics.

Key Insights from Management’s Remarks

Management cited improved order intake in industrial, smart grid, and AI segments, while addressing the ongoing impacts of tariffs and pricing negotiations.

• Industrial and Smart Grid Momentum: Vishay saw stronger industrial demand, especially in Europe, with new wins in smart grid projects and the company’s first U.S. high-voltage DC power transmission program. These long-term infrastructure projects are expected to provide stable demand regardless of short-term economic fluctuations.
• AI Segment Growth: Shipments for AI server and power management components more than doubled from the previous quarter, with design activity expanding to edge servers, optical modules, and graphics cards. Management stressed that relationships with contract manufacturers in Asia are helping Vishay gain share in this fast-evolving segment.
• Automotive and Aerospace Trends: Automotive revenues declined due to lower pricing in new OEM contracts and the Chinese New Year holiday, yet underlying electronic content growth in hybrid and EV platforms remains a tailwind. Aerospace and defense orders softened sequentially as distributors managed inventory, but design activity continues in next-generation military and satellite systems.
• Tariff Impact Limited: New tariffs primarily affected a small portion of sales, with less than 4% of consolidated sales exposed to China-origin products sold into the U.S. The company’s global manufacturing footprint allows flexible sourcing, and tariff surcharges are being passed through to customers with minimal impact on gross profit.
• Distribution Channel Strategy: Vishay continued to add SKUs for distribution partners, supporting improved point-of-sale growth and inventory reductions in Europe and the Americas. The company is leveraging its expanded catalog to re-engage inactive customers and position itself for future share gains.

Drivers of Future Performance

Vishay’s outlook is anchored in expected demand from AI, industrial infrastructure, and ongoing capacity expansion, but tempered by tariff pass-throughs and cost pressures.

• AI and Infrastructure Demand: The company anticipates continued strength in AI server components and smart grid infrastructure projects, which management believes will support sequential revenue growth and improved backlog visibility into the second half of the year.
• Capacity Expansion Initiatives: Vishay is increasing investment in capacity, especially for silicon carbide products and automotive-grade components, aiming to support customer growth and win new design slots. The Newport facility and other global sites are expected to ramp utilization, though management cautions that gross margin neutrality at Newport is not expected until the first half of next year.
• Tariffs and Cost Management: Despite higher tariffs on China-origin passives and semiconductors, management expects limited direct impact due to flexible sourcing and established pass-through mechanisms. However, input cost inflation and annual OEM pricing resets remain margin headwinds, with some cost reductions only partially realized in the near term.

Catalysts in Upcoming Quarters

In upcoming quarters, the StockStory team will be watching (1) the ramp-up and utilization progress at Vishay’s Newport facility and its impact on margins, (2) sustained order visibility in AI and smart grid segments, and (3) the effectiveness of ongoing SKU expansion and distribution engagement. Additionally, we will track how the company manages input cost pressures and tariff-related sourcing, as well as progress on silicon carbide product launches.

Vishay Intertechnology currently trades at a forward EV-to-EBITDA ratio of 7.7×. In the wake of earnings, is it a buy or sell? See for yourself in our full research report (it’s free).

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