---
title: "Semtech Dumps Cellular Business to Double Down on Data Centers"
type: "News"
locale: "en"
url: "https://longbridge.com/en/news/297055289.md"
description: "Semtech reported strong Q2 results with revenue up 33% to $341.9M and raised Q3 guidance, driven by a 91% surge in data center sales due to AI demand. The company is divesting its cellular business to focus on higher-margin data center and LoRa segments. Adjusted EPS beat estimates at 71 cents, and the stock rose following the announcement."
datetime: "2026-08-26T13:25:11.000Z"
locales:
  - [zh-CN](https://longbridge.com/zh-CN/news/297055289.md)
  - [en](https://longbridge.com/en/news/297055289.md)
  - [zh-HK](https://longbridge.com/zh-HK/news/297055289.md)
generator: "portal-rs"
---

# Semtech Dumps Cellular Business to Double Down on Data Centers

**Semtech Corporation** (NASDAQ:SMTC) stock rose Wednesday after the semiconductor company reported strong second-quarter results and issued third-quarter guidance above estimates.

## Earnings Beat Estimates

Semtech reported adjusted earnings of 71 cents per share, beating the 57-cent estimate. Sales rose 33% year over year to $341.9 million, topping the $328.61 million consensus. Adjusted earnings increased 73% from a year earlier.

The company’s adjusted gross margin expanded 150 basis points sequentially to 54.5%. Adjusted EBITDA increased to $91.1 million from $56.5 million a year earlier. The adjusted EBITDA margin improved to 26.6% from 21.9%.

Operating cash flow rose 55% to $69 million, while free cash flow increased 48% to $61 million. Semtech ended the quarter with $204 million in cash and $503 million in debt.

CEO **Hong Hou** said stronger bookings and record backlog provide greater visibility into the next fiscal year.

## Data Center And LoRa Sales Surge

Infrastructure sales jumped 69% to $124 million, led by record data center revenue. Data center sales surged 91% to $100 million on strong demand for 800G products.

Industrial sales rose 25% to $179 million. LoRa-enabled sales climbed 58% to a record $58 million.

IoT Systems and Connectivity revenue increased 11% both sequentially and year over year to $98 million.

Semtech is divesting its cellular module business to focus on higher-margin data center and LoRa opportunities. The transaction is expected to close in the fourth quarter and remain neutral to adjusted earnings.

 **Read Also: Top Wall Street Forecasters Revamp Semtech Expectations Ahead Of Q2 Earnings** 

## Outlook Tops Wall Street Forecasts

Semtech expects third-quarter adjusted earnings of $1.02 to $1.08 per share, well above the 61-cent estimate. It projects sales of $405 million to $415 million, compared with the $324.46 million consensus.

The company forecasts an adjusted operating margin of 31%. It expects adjusted EBITDA of $134 million, plus or minus $4 million, and an adjusted EBITDA margin of 32.8%.

Semtech expects data center revenue to rise 45% sequentially and about 160% year over year. It also expects LoRa revenue to reach another record, increasing about 15% sequentially and 65% from a year earlier.

The company expects its Fiber Edge market share to exceed 50% by the end of fiscal 2027. It also plans to begin generating revenue from high-power continuous-wave laser transceivers during the first half of fiscal 2028.

**SMTC Price Action:** Semtech shares were up 1.55% at $129.50 during premarket trading on Wednesday, according to Benzinga Pro data.

*Photo via Shutterstock*

### Related Stocks

- [SMTC.US](https://longbridge.com/en/quote/SMTC.US.md)

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> **Disclaimer: This article is for reference only and does not constitute any investment advice.**