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DATE

Wednesday, March 4, 2026 at 5 p.m. ET

CALL PARTICIPANTS

  • Chairman of the Board — Camillo Martino
  • Chief Financial Officer — Shin Young Park
  • Investor Relations — Mike Bishop

TAKEAWAYS

  • Revenue -- $40.6 million, down 17% year over year and down 11.7% sequentially from $45.9 million in Q3 2025, landing at the midpoint of guidance.
  • Gross Margin -- 9.3%, within the 8%-10% guidance range, negatively impacted by a one-time $2.7 million sales incentive that reduced margin by 560 basis points.
  • Power Analog Solutions Revenue -- $36.8 million, decreased 15.3% year over year and 11.4% sequentially, driven by pricing pressure on legacy products, especially in China.
  • Power IC Revenue -- $3.8 million, declined 30.4% year over year and 14.5% sequentially, mainly due to earlier customer order pull-ins.
  • Adjusted Operating Loss -- $11.9 million, versus a $3.5 million loss in Q4 2024 and a $7.4 million loss in Q3 2025, attributed to lower gross profit and higher R&D expenses.
  • Adjusted EBITDA -- Negative $8.9 million, compared with $0.3 million in Q4 2024 and negative $4.0 million in Q3 2025.
  • SG&A -- $8.6 million, down from $9.8 million in Q4 2024 and up from $8.3 million in Q3 2025; annualized SG&A savings of more than $2 million expected from cost reduction efforts beginning in Q4.
  • R&D Expense -- $7.6 million, up year over year, supporting the launch of 55 new-generation products in 2025, of which 44% debuted in Q4.
  • Non-GAAP Diluted Loss per Share -- $0.08 loss, compared to earnings of $0.15 per share in Q4 2024 and a $0.01 loss in Q3 2025.
  • Cash Position -- $103.8 million at quarter-end, down from $138.6 million the previous year, impacted by $30 million net CapEx, $4 million in severance and package costs, $33.6 million in share repurchases, and operating losses.
  • Long-term Borrowings -- $44.6 million, including a $16.7 million equipment loan.
  • 2026 Outlook -- Q1 2026 revenue guidance of $44 million–$48 million, representing 13.4% sequential growth and 2.9% year-over-year growth at the midpoint, with gross margin expected at 14%-16%.
  • Business Restructuring -- Display business exited; organization resized and focus shifted exclusively to power business with workforce reductions and operational realignment.
  • Product Development Strategy -- 2025 saw the launch of 55 new-generation products, a significant increase from 4 in 2024, with more than 40 new products planned for 2026 and a stated objective to drive margin improvement over time.
  • Market Focus -- Priority end markets identified: automotive, industrial motor control, solar and energy, server/data infrastructure, and, in future, robotics.
  • Share Repurchase -- $33.6 million spent on share repurchases in 2025.
  • Board Appointment -- Cristiano Amoroso of Bireme Capital joined the board, with the board describing the company as "significantly undervalued relative to its long-term value creation potential."
  • Silicon Carbide Effort -- Silicon carbide development underway, described as a multi-year plan with potential for both in-house and foundry-based manufacturing, targeting key customer requirements.

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RISKS

  • Shin Young Park said Q4 gross margin deterioration was due to "an unfavorable product mix driven mainly by ASP erosion, particularly in China, and filling our fab with lower-margin products and a lower utilization rate."
  • Management stated, "We believe that great products and great customer partnerships will turn the company around. At the same time, and as we discussed previously, new-generation products can take time to qualify, to ramp, and to contribute meaningfully towards revenue. In 2026, we still expect legacy products to represent the vast majority of revenue, and pricing pressure affecting these products will continue. We expect new-generation products to comprise approximately 10% of our total revenue in 2026, up from 2% for the full year 2025. So 2026 will remain a challenging period, especially for gross margin, as we transition the portfolio and scale new-generation products."
  • The company acknowledged that "2026 will remain a challenging period, especially for gross margin, as we transition the portfolio and scale new-generation products."
  • Cash position fell from $138.6 million to $103.8 million due to operating losses, significant CapEx, workforce severance, and $33.6 million of share repurchases.

SUMMARY

Magnachip Semiconductor (MX 1.43%) reported quarterly results that reflect ongoing challenges in legacy markets and a transition toward new technology and markets. Large investments in R&D have enabled an accelerated new-generation product launch cadence, but these products currently represent a minor portion of total revenue. Strategic restructuring included a full exit from the display business and a refocused cost structure. Management provided guidance for sequential revenue and margin growth for the next quarter, supported by structural SG&A reductions and continued R&D investments.

  • Management forecasted "more than 40 new-generation products in 2026" to further expand the addressable market and capture better economics in targeted segments.
  • Shin Young Park expects "annual OpEx savings of more than $2,000,000 beginning in Q4 2025" from restructuring actions, as described by Shin Young Park.
  • Camillo Martino highlighted a focus on deepening relationships with key Korean customers, not as an exit from China, but as a strategy to drive share with strategically important local partners.
  • The board stated it "will responsibly and carefully evaluate any actionable opportunities that can accelerate and de-risk shareholder value creation."
  • Development of silicon carbide products represents a multi-year initiative, with current progress in team building and discussions under NDA with marquee customers.
  • Guidance excludes impact from the Q4 one-time sales incentive, with Shin Young Park confirming, "That did not include the one-time incentive that we executed in Q4 2025."

INDUSTRY GLOSSARY

  • ASP (Average Selling Price): The average revenue earned per unit of product sold, a key profitability driver in semiconductor markets.
  • Silicon Carbide (SiC): A compound semiconductor material that enables higher efficiency, performance, and temperature tolerance than conventional silicon-based semiconductors, especially in power applications.
  • MOSFET (Metal Oxide Semiconductor Field-Effect Transistor): A type of transistor widely used for switching and amplifying electronic signals in semiconductor applications.
  • SAM (Serviceable Available Market): The portion of the total available market (TAM) that is targeted by a company's products and within its operational reach.
  • TAM (Total Addressable Market): The total revenue opportunity available if a company achieved 100% market share in a particular market segment.

Full Conference Call Transcript

Camillo will discuss the company's recent operating performance and business overview, and Shin Young will review the results for the quarter and provide guidance for 2026. There will be a Q&A session following the prepared remarks. During the course of this conference call, we may make forward-looking statements about Magnachip Semiconductor Corporation's business outlook and expectations. Our forward-looking statements and all other statements that are not historical facts reflect our beliefs and predictions as of today and, therefore, are subject to risks and uncertainties as described in the Safe Harbor statement found in SEC filings. Such statements are based upon information available to the company as of the date hereof and are subject to change for future developments.

Except as otherwise required by law, the company does not undertake any obligation to update these statements. During the call, we will also discuss non-GAAP financial measures. These non-GAAP measures are not prepared in accordance with generally accepted accounting principles but are intended as supplemental measures of Magnachip Semiconductor Corporation's operating performance that may be useful to investors. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures can be found in our fourth quarter earnings release in the Investor Relations section of our website. I will now turn the call over to Camillo Martino.

Camillo Martino: Thank you, and good afternoon, everyone. I would like to open with a comment I made last quarter. Specifically, Magnachip Semiconductor Corporation has a strong foundation, a strong history in power, a reputation for reliability and quality, and relationships with customers who care about performance and execution. Looking back at 2025, we have implemented many changes to lay the foundation to improve the financial and go-to-market fundamentals, which we believe will result in a positive and consistent recovery over time. We are investing responsibly in areas where we see great potential while staying disciplined and realistic about what it takes to turn a power semiconductor business around.

I would like to look back on Q4 and 2025, highlighting what we have completed, and we will provide more detail on our go-forward operating strategy. First, a quick review of the quarter. For Q4, revenue was $40,600,000 and gross margin was 9.3%. For the full year, revenue was $178,900,000 and gross margins were 17.6%. Consistent with our comments from our last earnings call, our results continue to reflect three realities. Pricing pressure on legacy products remains intense, especially in China. Factory loading and utilization was a headwind, although we saw utilization slightly above in Q4 what we had said during last quarter's earnings call. We need highly competitive products to win. This is a very important reality.

When we do have competitive products, we can absolutely win. That is the core point behind our product strategy. Shin Young will walk through the financial details and guidance later. Moving to the more important changes that we have made during 2025. Over the past year and especially over the past several months, we have taken three meaningful actions. Firstly, we significantly reduced our cost structure. We exited the display business, and we resized the organization accordingly. We also executed workforce action and cost reduction programs to reduce OpEx and to focus the company exclusively on the power business. Secondly, we reorganized and focused our sales and marketing teams on specific market segments and customers.

This is important because winning in power semis is not a one-size-fits-all. It is segment by segment and customer by customer. Thirdly, we increased our investments in R&D to significantly improve our mid- to longer-term product competitiveness. In 2025, we launched 55 new-generation products, versus a total of four for the entire 2024. This is a massive acceleration by our engineering team and reflects targeted investment for longer-term growth. These new-generation products are designed to improve our competitiveness and improve our product margin structure over time. So those three definitive changes have already been made.

With respect to our go-forward operating strategy, I would now like to highlight six foundational pillars that we believe are fundamental to the successful recovery and longer-term profitable growth in our power business. Number one, focused market segments. We are investing in the priority end markets where we believe we can earn better margins and build durable customer positions. The markets are the following: automotive, industrial motor control, solar and energy-related applications, and server/data infrastructure. And, in the future, we expect to be delivering advanced power solutions to the robotics market as well. We are not going to chase every end market.

We are going to concentrate on segments where our technology roadmap and proximity to significant and strategically important customers can translate into sustainable share and better economics. Number two, our product competitiveness. At the heart of our turnaround strategy is product competitiveness. This is a comment that we have made many times previously. We are continuing to accelerate our product development activities. Our plan is to deliver more than 40 new-generation products in 2026. This is in addition to the 55 new-generation products launched in 2025. This compares to a total of only four new-generation products launched in 2024 and none at all in 2023.

Again, this is the result of a targeted investment with a specific aim to increase revenue, utilization, and product margins over time. These products are designed to be meaningfully better, not incremental. Number three is our power IC business. As we expand our focus on certain market segments, we will begin to develop key systems expertise that will align power ICs and gate driver ICs with our future power product program, and it will augment Magnachip Semiconductor Corporation's revenue generation potential. Number four, modules. We are also expanding how we go to market with customers through a module strategy.

A module allows us to combine multiple dies, sometimes our own, sometimes third party, into a packaged solution that should increase our product content per application. Our aim is to increase sales efficiency and drive higher revenue at better target margins in markets where customers want integration and where the economics support it. Number five, technology roadmap. To continue to support and offer greater value to our key customers, we are actively evaluating offering silicon carbide product solutions. Our entry into the silicon carbide market will be thoughtful and deliberately targeting markets where we can have longer-term revenue visibility and in which return on invested capital and payback are demonstrably attractive.

We believe our reputation and geographical location enable us to access such attractive market segments. Finally, number six, strategic partnerships. Our position as a trusted power semiconductor company in Korea places us in a strong position to establish mutually beneficial relationships with key customers and technology partners who value our local access, security of supply, expertise, and reputation. Building stronger and deeper customer relationships in our focused microsegments is critical, and we believe having multiple anchored customers that adopt a broad range of our products will be highly beneficial and a testament to our value proposition.

Likewise, partnerships with technology leaders who recognize our value as a trusted partner in a strategically important market will accelerate our product roadmaps while expanding our market reach in a capital-efficient manner. We believe developing these close relationships with anchor customers and technology partners will provide a foundation for significant value creation over time. We believe the strategic customer relationships we are developing, the focused market segments we are pursuing, and the advanced technology we are developing, including silicon carbide, will significantly expand Magnachip Semiconductor Corporation's TAM and SAM. Selling modules and higher value-added power ICs will further expand our TAM to approximately double over the next five years.

Even more importantly, our SAM is expected to nearly triple over the next five years. We are building a more balanced and resilient business, one where customer relationships support investment decisions and value creation over a multiyear horizon. Now let me address some recent board-level activities. We recently announced that Cristiano Amoroso, Chief Investment Officer of Bireme Capital, has joined the board as a director. His firm became a significant shareholder of Magnachip Semiconductor Corporation because it believes in Magnachip Semiconductor Corporation's ability to create significant long-term value for its customers, shareholders, and employees.

The board also believes the company is significantly undervalued relative to its long-term value creation potential, and believes that focused execution and the strategic realignments we are implementing—product competitiveness, market focus, technology roadmap, and customer/technology partnerships—can turn the company to grow and create significant long-term shareholder value. In line with its fiduciary responsibilities, the board will responsibly and carefully evaluate any actionable opportunities that can accelerate and de-risk shareholder value creation and compare it with all other options available to the company. Looking forward, allow me to set the expectations clear. This turnaround will take time. We believe that great products and great customer partnerships will turn Magnachip Semiconductor Corporation around.

At the same time, and as we discussed previously, new-generation products can take time to qualify, to ramp, and to contribute meaningfully towards revenue. In 2026, we still expect legacy products to represent the vast majority of revenue, and pricing pressure affecting these products will continue. We expect new-generation products to comprise approximately 10% of our total revenue in 2026, up from 2% for the full year 2025. So 2026 will remain a challenging period, especially for gross margin, as we transition the portfolio and scale new-generation products. We believe we are taking the right corrective actions to improve our competitive position and create a path to meaningful value creation.

We will continue to be transparent, prioritize cash discipline, and execute the product roadmap with urgency. With that, I will turn over the call to Shin Young to walk you through the quarterly financial results and the outlook.

Shin Young Park: Thank you, Camillo, and welcome, everyone, on the call. Let us start with key financial metrics for Q4 and full year 2025. Q4 consolidated revenue from continuing operations, which includes power analog solutions and power IC, was $40,600,000, approximately at the midpoint of our guidance range of $38,500,000 to $42,500,000. This was down 17% year over year and down 11.7% sequentially on an apples-to-apples basis. This compares with the equivalent revenue of $48,900,000 in Q4 2024 and $45,900,000 in Q3 2025. For the full year 2025, total consolidated revenue from continuing operations was $178,900,000, compared with $185,800,000 in 2024, representing a 3.7% year-over-year decline. This result was consistent with our prior guidance, which anticipated an approximately 3.8% year-over-year decrease.

Revenue from power analog solutions in Q4 was $36,800,000, down 15.3% year over year and down 11.4% sequentially, primarily due to competitive pricing pressure on our older-generation products, which was especially intense in China. A $2,700,000 one-time sales incentive was recognized as a reduction in revenue in Q4 2025 as part of our efforts to reduce elevated inventory levels in the channel, primarily in China. For the full year 2025, revenue from power analog solutions was $160,500,000, compared with $166,800,000 in 2024. This 3.8% year-over-year decline was primarily due to intensified pricing pressure on our older-generation products, partially offset by revenue growth in low-voltage MOSFET attributable to market share gain. Revenue from power IC in Q4 was $3,800,000.

This was down 30.4% year over year and down 14.5% sequentially. The sequential decline was due mainly to customer order pull-ins in Q3 from Q4. Revenue from power IC for the full year 2025 was $18,400,000, down 3.4% year over year compared with $19,000,000 in 2024. In Q4, consolidated gross profit margin from continuing operations was 9.3%, within the guidance range of 8% to 10%, compared with 23.2% in Q4 2024 and 18.6% in Q3 2025 on an apples-to-apples basis. The previously mentioned one-time sales incentive had a 560 basis point negative impact on gross profit margin.

The year-over-year and sequential decline was primarily due to an unfavorable product mix driven mainly by ASP erosion, particularly in China, and filling our fab with lower-margin products and a lower utilization rate. For the full year 2025, consolidated gross profit margin from continuing operations was 17.6%, within our annual guidance range of 17% to 18%, compared with 21.5% in 2024. The year-over-year change was primarily driven by continued pricing pressure, lower-margin products loaded in our fab, and a lower fab utilization rate. The company's display business has been classified as a discontinued operation in 2025. Accordingly, all of the following figures reflect results from continuing operations, and prior periods have been recast on a comparable basis.

Q4 SG&A was $8,600,000 compared with equivalent SG&A of $9,800,000 in Q4 2024 and $8,300,000 in Q3 2025. We expect to see annual OpEx savings of more than $2,000,000 beginning in Q4 2025 from our cost reduction effort, including the execution of the voluntary resignation program, primarily for shared function employees, in Q3. Stock-based compensation charges, including SG&A, were $400,000 in Q4, as compared with $1,600,000 in Q4 2024 and negative $28,000 in Q3 2025. Both in Q3 and Q4, we recorded adjustments to stock-based compensation expense related to the separation of certain executives and associated full forfeiture of their equity grants. For the full year 2025, SG&A was $35,100,000 compared with $38,100,000 in 2024.

Stock-based compensation charges, including SG&A, were $1,900,000 in 2025 and $4,800,000 in 2024. Q4 R&D was $7,600,000 compared with equivalent R&D of $6,600,000 in Q4 2024 and $7,800,000 in Q3 2025. R&D in Q4 increased year over year due to the acceleration of new product development. We introduced 55 new-generation products in 2025, of which 44% were introduced in Q4. This compares to four in all of 2024. For the full year 2025, R&D was $27,300,000, compared to $25,000,000 in the prior year. Before I go into the details of our non-GAAP results, please note that our GAAP financial results are available in our Form 8-K filing with our fourth quarter earnings release.

Our non-GAAP results are as follows: Q4 adjusted operating loss was $11,900,000, compared with an equivalent adjusted operating loss of $3,500,000 in Q4 2024 and adjusted operating loss of $7,400,000 in Q3 2025. Q4 adjusted EBITDA was negative $8,900,000, compared with an equivalent adjusted EBITDA of $300,000 in Q4 2024 and negative $4,000,000 in Q3 2025. For the full year 2025, adjusted operating loss was $28,500,000, compared with an equivalent adjusted loss of $19,100,000 in 2024. Adjusted EBITDA in 2025 was negative $15,600,000, compared with an equivalent adjusted EBITDA of negative $4,200,000 in 2024. Adjusted operating loss and adjusted EBITDA deteriorated year over year primarily due to lower gross profit and higher R&D expenses as explained above.

Our Q4 non-GAAP diluted loss per share was $0.08, compared with equivalent non-GAAP diluted earnings per share of $0.15 in Q4 2024 and non-GAAP diluted loss per share of $0.01 in Q3 2025. Our weighted average non-GAAP diluted shares outstanding for the quarter were 36,000,000, 37,700,000 in Q4 2024, and 35,900,000 shares in Q3 2025. For the full year 2025, non-GAAP diluted loss per share was $0.22, compared with $0.22 in 2024. Weighted average non-GAAP diluted shares outstanding for 2025 were 30,200,000 shares, compared with 37,800,000 in 2024. Moving to the balance sheet. Previously, we had expected our cash at the end of 2025 to be in the mid-$90,000,000 range.

However, we ended Q4 with cash of $103,800,000, and this compared with $138,600,000 at the end of Q4 2024. The main cash outflow during 2025 included $30,000,000 in net cash CapEx, $4,000,000 related to package costs and to severance associated with the voluntary resignation program executed in Q3, and $33,600,000 spent on share repurchases, primarily in 2025. The remaining gap was primarily attributable to net cash loss from operations. At the end of Q4, our long-term borrowings totaled $44,600,000, which included $16,700,000 of the equipment loan. Including maintenance CapEx, our total CapEx for the full year 2025 was $30,000,000. However, the net cash impact was $13,000,000 due to partial funding through the equipment loan.

Now moving to our first quarter 2026 guidance. While actual results may vary, for Q1 2026, Magnachip Semiconductor Corporation currently expects consolidated revenue from continuing operations, which includes power analog solutions and power IC businesses, to be in the range of $44,000,000 to $48,000,000, up 13.4% sequentially and up 2.9% year over year at the midpoint. This compares with $40,600,000 in Q4 2025 and $44,700,000 in Q1 2025. Consolidated gross profit margin from continuing operations is expected to be in the range of 14% to 16%, up from 9.3% in Q4 2025 but down from 20.9% in Q1 2025.

Finally, I would like to add that on a reported basis, and excluding stock-based compensation and one-time charges, total operating expenses, SG&A and R&D together, decreased by 35% in 2025 compared with 2024. Also, as a result of our cost reduction efforts, we expect more than $2,000,000 of annualized SG&A savings that start in 2025. On the other hand, to support the go-forward operating strategy Camillo discussed earlier, we plan to increase our investment in R&D in 2026. Thank you. And now I will turn the call over to Camillo for his final remarks.

Camillo Martino: Thank you, Shin Young. We are committed to executing on the six foundational pillars we emphasized earlier. We have implemented a new go-forward strategy and many of the necessary changes to position Magnachip Semiconductor Corporation for future success and value creation. I want to thank our employees for their continued hard work and dedication and our investors and partners for their patience and support as we return the company to growth. I will turn the call to the operator to open the call for questions. Operator?

Operator: Certainly. We will now open for questions. Our first question for today comes from Suji Desilva from ROTH Capital. Your question, please.

Suji Desilva: Camillo. Hi, Shin Young. First, a question on the gross margin guidance. I know there was a gross margin inventory reserve hit in Q4. Are you assuming a similar impact, or are you assuming an impact, Shin Young, in Q1, or is that 14% to 16% range a pure range without expected interim reserves?

Shin Young Park: That did not include the one-time incentive that we executed in Q4 2025. So had we excluded Q4's one-time impact, Q4 margin would be, like, 15%. We are expecting Q1 2026 to be in a similar range, and that is mainly driven by the utilization and also the pricing pressure. So that is actually impacting our gross margin at this time. Our revenue, still the vast majority of that is older-generation product. We are still feeling the pricing pressure, especially in China.

Suji Desilva: Understood. Okay. That helps. And then on the operating expense savings from the restructuring, it will flow through, you said, I think you said SG&A, right? The $2,000,000 run rate, and that would be we would see that benefit toward 2026, or when would that step down? What is the linearity of that step down?

Shin Young Park: Well, that is going to be on a continuing basis. It started in Q4 2025. I just quantified the annualized impact as, like, $2,000,000 plus, and we are going to see the full impact in 2026. And I am hoping that is going to minimize the investment that we are going to do in R&D to support the go-forward strategy operating spend. I believe the strategy.

Suji Desilva: Okay. And then a question for yourself or maybe Camillo. The geographic exposure, as you bring these new products to market and the new focused segments, does that move your business out of China where it is competitive price-wise, or does it stay in China in less price-competitive markets? What is the shift there as you go to new products and new markets versus the competitive China market you are in now?

Camillo Martino: Look, it is very clear that we have some very, very important, strategically important, and very large customers right here in Korea. And so I think it is important that we do an excellent job in servicing their needs for the next many, many years. It is—they are here. They are in our backyard. Let us deliver the value that we can realize together. It is not a strategy of moving away necessarily from any one country. It is more about focusing more on Korea because we are right here. And, clearly, you know, at the same time, we are a global company.

We have sales offices in every major country around the world, and so we are going to continue to service them as well. But, frankly, I would expect to have a higher percentage of our revenue coming from Korea because they are very close to us, and we want to really service them extremely well.

Suji Desilva: Okay. That is very helpful, Camillo. And then last question. On the silicon carbide effort, can you tell us where you are in that? Is that a development effort? Do you have the technologies in-house that you need? Do you have to invest or partner to get there? And what products or end markets might you target with silicon carbide?

Camillo Martino: I do not want to disclose what products we are developing. I would say that we are in development. We are in development, absolutely. We are building the team as well as we are speaking. And to some of our key customers, we are sharing some of that information with them under NDA. At the same time, I would say that this is a long-term plan. This is not a 12-month plan. Clearly, silicon carbide is going to take many years, first to develop and then, potentially, we are going to look for ways to potentially manufacture it, either in-house or maybe, in the short term, we may go to an outside foundry in the short term.

So we are looking at everything there. But very clearly, as I stated in my prepared remarks, silicon carbide is a very, very important part of our future roadmap. If you look at the market segments that we are pursuing, if you look at the key customers that we are deepening our relationships with, silicon carbide is very, very important for them.

Suji Desilva: Okay. Appreciate the color, Camillo. Thanks, Camillo. Thanks,

Camillo Martino: Alright. Thank you. Thank you.

Operator: This does conclude the question-and-answer session of today's program. I would like to hand the program back to Mike Bishop for any further remarks.

Mike Bishop: Thank you, everyone, for participating on today's call. We appreciate your support of Magnachip Semiconductor Corporation. Operator?

Operator: Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.