Financial Data and Key Metrics Changes - Net sales for Q2 2026 were $214 million, with non-GAAP earnings per share at $0.13, gross margin at 49.6%, and operating margin at 13.9% [11][12] - Total sales increased by 5% sequentially and 14% year over year, with automotive sales up 8% sequentially and 12% year over year [11][12] - Non-GAAP EPS increased by 44% sequentially and 63% year over year, indicating significant operating leverage [13] Business Line Data and Key Metrics Changes - Automotive sensor business grew due to increased adoption in XEV powertrain systems, with E-Mobility sales up 21% year over year [5][11] - Data Center sales established a new quarterly record, driven by server power architecture upgrades for AI workloads [6][11] - Industrial and other sales declined by 1% sequentially but grew 23% year over year, with strong performance in data center offsetting declines in consumer and broad-based industrial [11] Market Data and Key Metrics Changes - Sales by geography: 29% in China, 24% in the rest of Asia, 17% in Japan, 17% in the Americas, and 13% in Europe, with growth in all regions except Europe [12] - China led automotive design win activity, particularly in ADAS and XEV applications, with inventory levels now lean [9][10] Company Strategy and Development Direction - The company is focused on relentless innovation, particularly in E-Mobility and Data Center markets, with a strong emphasis on design wins and new product introductions [5][8] - The introduction of a 10 MHz TMR current sensor is expected to enhance competitive advantage and accelerate sales growth [9] - The company is navigating geopolitical challenges while maintaining strong design win activity in China [9][10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about positive momentum across the business, particularly in automotive and data center markets [5][10] - The outlook for Q3 2026 anticipates sales in the range of $215 to $225 million, reflecting a 24% year-over-year increase [14] - Management noted that while there are pockets of inventory in Europe and North America, overall demand remains strong [27] Other Important Information - The company made a voluntary debt repayment of $25 million, reducing total debt to $285 million and net debt to $168 million [13] - The effective tax rate for the quarter was 6%, driven by tax planning strategies [13] Q&A Session Summary Question: Insights on automotive business performance - Automotive sales were up 8% quarter over quarter and 12% year over year, with E-Mobility up 21% year over year, driven by design wins in powertrain-agnostic applications [18][19] Question: Understanding AI server revenue potential - The company sees significant growth potential in AI servers, with current sensors and fan drivers being increasingly adopted in power supplies [21][23] Question: Regional demand environment and inventory levels - No direct impact from the Nextperia situation was observed, with growth noted in the Americas and pockets of weakness in Europe [26][27] Question: Seasonal growth expectations for Q3 - The company expects above seasonal growth in December, driven by strength in automotive and data center markets [28][29] Question: Clarification on gross margin performance - Gross margin upside was driven by higher revenue and operational efficiencies, despite some headwinds from commodity costs [31][32] Question: Current sensing technology readiness - The current sensing technology is maturing, with significant growth potential in both EVs and data centers [76][78] Question: Pricing environment outlook - The pricing environment is expected to be more stable, with some larger players reducing aggressive pricing strategies [79][80]