---
type: "Topics"
locale: "en"
url: "https://longbridge.com/en/topics/100000000869561.md"
description: "Just some of my notes from $Semtech(SMTC.US) Q2 earnings:TLDR: Like $Applied Optoelectronics(AAOI.US), it's all about Semtech expanding capacity - CEO said the capacity they've secured "may not be enough" for FY28...1. Q2 upside is from 1.6T qualifying early- Pretty shocking (in a good way) how compressed the qualification timelines have become. - Hyperscalers and everyone upstream are pulling timelines forward so quickly rn.- We saw with $Lumentum(LITE.US), $Coherent Corp.(COHR.US), $Applied Optoelectronics(AAOI.US) especially that demand is just bulldozing any qualification barriers. Now seeing the same with Semtech.2. FiberEdge is quite underappreciated- I agree w/ mgmt that people are "overindexing on CopperEdge" - the better business is probably TIA/driver.- 800G TIA share has gone from ~18% two years ago to well over 50%, and they expect >50% share at 1.6T by January.- Impressive...- Industry 800G units: they entered the year on a ~50M forecast and are now hearing 80-90M vs. ~20M two years ago. - Impressive again...3. Content per transceiver - goes from high single digits to $80-90 at 3.2T.- Quite funny - one analyst assumed that "high double digit" content meant teens. CEO corrected him with $80-90 lol. That's ~10x!- Photonics fab capacity goes 3-4x by year-end (they picked up a fully facilitated fab next to the existing one).- I don't think the market has modelled any of this. Even at half the claimed content, DC revenue stops scaling w/ transceiver units + starts scaling w/ units times content. - And every merchant InP line being tripled is another pointer that InP demand is way ahead of supply.- Which is the same signal $Applied Optoelectronics(AAOI.US) sent by clearing its HQ building for InP wafer expansion.4. More capacity needed (obviously)- Secured capacity "may not be enough" especially 2H FY28.- Semtech are negotiating prepayments + joint capex with front/back-end partners, and qualifying additional OSATs to spread geopolitical risk.- Pricing: no erosion expected near term and none in the booked backlog. Cost increases are being passed through. Just what you wanna see :)5. Gross margins are pretty insane- 54.5% in Q2 -> 58.3% guided -> 63.9% excl. the cellular module business being divested (closes Q4).- CFO framed ~64% as the post-close starting point. - I actually think 64% is the margin floor, not the target. Pretty sure they know they can do more lol. No reason to send out such a high target to the market otherwise.CEO also said that "we have the financial capability" to fund the FY28 capacity push":Looks like that's the case based on quick napkin maths:- FCF was $61M in Q2- Q3 EBITDA guided to $134M - I'd say roughly $300M+ annualized FCF exiting the yr- Add $204M cash + $62M coming from Compal for the cellular module unit closing in Q4So would be surprised to see any more dilution on top of what they already did a year ago. Overall though - pretty good earnings."
datetime: "2026-08-25T22:26:42.000Z"
locales:
  - [en](https://longbridge.com/en/topics/100000000869561.md)
  - [zh-CN](https://longbridge.com/zh-CN/topics/100000000869561.md)
  - [zh-HK](https://longbridge.com/zh-HK/topics/100000000869561.md)
author: "[Paradi Lab](https://longbridge.com/en/profiles/27651407.md)"
generator: "portal-rs"
---

# Just some of my notes from $Semtech(SMTC.US) Q2 ea…


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

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