Report Interpretation

Overview

This report reviews the second-quarter 2026 results of global analog semiconductor companies. Its core conclusion is that the industry recovery has spread from AI data centers to industrial and automotive markets, but share-price reactions were primarily driven by fourth-quarter margin guidance falling short of elevated expectations. Morgan Stanley believes the margin issues reflect the pace of recovery, product mix, and capacity utilization rather than a reversal in demand.

Core views

The first key theme is that the analog semiconductor cyclical recovery is broadening. During the second-quarter earnings season, indicators including industrial and automotive demand, channel inventories, pricing, and backlogs generally improved. STM raised its fourth-quarter industrial growth guidance from approximately 30% year over year to approximately 40%. Texas Instruments, ON Semiconductor, and NXP all cited improving automotive momentum: Texas Instruments' automotive revenue grew at a mid-teens rate year over year, while NXP's automotive revenue increased 17%. Morgan Stanley expects the analog, MCU, and discrete device markets to grow 8% and 6% in 2026 and 2027, respectively, while its defined core company basket is expected to grow 22% and 15%, indicating that selected companies could significantly outperform the overall market. The second key theme is that this round of growth appears demand-driven rather than the result of short-term restocking. STM's distributor inventory is below its normal target, the last portion of Allegro's excess channel inventory has been cleared, and NXP's Western Tier 1 automotive customers are still placing small orders as needed. Channel inventories at Texas Instruments and Monolithic Power are also lean. Although company inventories remain elevated relative to historical levels, momentum has stabilized. Covered companies generally reported pricing that was at least close to flat, while ON Semiconductor, Infineon, and STM have raised prices on selected products. Book-to-bill ratios are above 1, backlogs extend into 2026, and customers are even placing orders through 2027–2028 to secure power-device supply. The report therefore concludes that the destocking cycle is largely over and restocking may gradually begin, while industrial and automotive end-market activity could carry the recovery into 2027. The third key theme is that the market's high margin hurdle overshadowed improving demand. STM expects third-quarter gross margin of approximately 37%, up more than 200 basis points sequentially, but management no longer commits to achieving gross margin above 40% once quarterly sales exceed US$4 billion. Technology-transfer costs create a drag of approximately 50–60 basis points, while China-related underloading costs create a drag of approximately 70 basis points. The report expects STM's gross margin to improve by 200 basis points year over year from 2025 to 2026 and expand by another 290 basis points in 2027. Although Infineon's fourth-quarter segment margin guidance of approximately 23% was above the report's prior estimate of approximately 22%, it was below some investors' expectations of 24%–25%, as product mix and foreign exchange offset contributions from AI volume growth and the cyclical recovery. Morgan Stanley believes Infineon's segment margin can still reach 25% in fiscal 2027 as utilization, pricing, and product mix improve. By comparison, Renesas was a notable margin performer this season, supported by AI data center demand, rising utilization, and improving industrial business. The fourth key theme is that AI data centers remain a structural growth engine, with opportunities spanning rack power delivery, power devices, digital power, and optical interconnects. Texas Instruments' second-quarter AI data center revenue doubled year over year, and the company raised its related sales guidance for both fiscal 2026 and 2027 by approximately 10%. Greater data center exposure and improving factory loading also lifted expected group gross margin by 2–3 percentage points. ON Semiconductor expects 2026 AI data center sales to more than double from a base exceeding US$250 million in 2025 and expects related SiC revenue to grow approximately 60%. Its estimate of the 2030 AI data center serviceable market increased from approximately US$12 billion to approximately US$50 billion, while the high-voltage device content per rack is expected to increase approximately tenfold. The 800V DC architecture is expected to begin ramping in late 2027 to early 2028. The report emphasizes that even if semiconductor content per kilowatt changes little, total content per rack will still increase. Infineon raised its fiscal 2026 AI data center revenue guidance from €1.5 billion to €1.6 billion and indicated significant upside to its fiscal 2027 target of €2.5 billion. Its customer reservation agreements have reached a total value in the high-single-digit billions of US dollars, with terms of 3–4 years, supporting supply and order visibility. STM raised its data center guidance for the third time this year, expecting revenue to exceed US$1 billion in 2026 and to be well above US$2 billion in 2027. Current optical revenue mainly comes from MCUs, but as adoption of 800Gbps and 1.6Tbps pluggable optical modules accelerates, more of the incremental contribution in 2027 is expected to come from PICs and EICs. The Crolles fab is scheduled to ramp over the next 12–18 months to meet related demand. Following ADI's US$1.5 billion acquisition of Empower in July, it expects the deal to add several percentage points to data center growth in fiscal 2027, while the larger integrated voltage regulator opportunity begins after 2028. The company estimates the analog chip opportunity per gigawatt of data center infrastructure at approximately US$1 billion–US$1.5 billion. The fifth key theme is that profit conversion from the recovery differs significantly across analog subsectors and companies. Texas Instruments' industrial revenue grew approximately 30% year over year, automotive revenue grew at a mid-teens rate, and data center revenue doubled. Customers have not yet materially built inventory, but the report maintains an Underweight rating because of valuation, capital expenditures, and free-cash-flow pressure. Allegro's data center revenue reached a record 17% of total revenue, and its fiscal 2027 data center guidance calls for more than a doubling year over year; automotive growth also exceeded its model target of more than 10%. ADI's book-to-bill ratio was above 1 across data center, industrial, and consumer markets, while both data center power and optical businesses grew more than 100% year over year. Management also raised its long-term growth framework for the next several years from mid-single digits to nearly double digits. Microchip's data center revenue grew approximately 98% year over year in the quarter ended June and is expected to reach approximately US$1 billion in calendar 2026, up approximately 69% year over year; the number of PCIe Gen6 switch design projects increased to 12. NXP expects 2026 data center revenue to exceed US$500 million, versus approximately US$200 million in 2025. Its Kinara physical AI pipeline increased from more than US$1 billion in the prior quarter to more than US$1.5 billion across more than 200 distinct customers, although the majority of revenue conversion will occur after 2027. The sixth key theme is that China and other Asian markets are also recovering, but with greater structural divergence. Greater China's MCU market is benefiting from tight mature-node capacity and rising foundry costs, and chip price increases are expected to continue in the second half of 2026. Data center demand is strong, industrial demand is stable, and consumer demand is weak. Chinese analog chip demand has broadened from consumer markets to industrial, energy, and AI networking applications. Inventories and lead times remain at 8–10 weeks, but the report has not yet seen industry-wide price increases. Yangjie Technology is supported by automotive, AI, energy storage, and industrial demand, with stronger momentum than some power semiconductor peers. StarPower and Silan Microelectronics, however, missed earnings expectations because of input costs, depreciation, and delayed price pass-through. The discussion of United Nova Technology-U expects 2026 SiC device revenue of approximately RMB3 billion, up approximately 100% year over year, with approximately 70%–80% coming from volume growth. It plans to increase monthly eight-inch SiC capacity from approximately 7,000 wafers to 15,000 wafers by the end of 2026, which the report believes will benefit SiC substrate supplier SICC. By contrast, the data center GaN inflection point may not arrive until 2028 at the earliest, which is unfavorable for near-term data center expectations for Innoscience, although the report still expects its 2026 revenue to grow 65%, mainly driven by industrial applications. The seventh key theme is that stock selection emphasizes a combination of structural growth and cyclical leverage. In Europe, the report maintains Overweight ratings on Infineon and STM, with target prices of €81 and €65, respectively. Both are valued using sum-of-the-parts approaches to distinguish growth differences among data center, low-Earth-orbit satellite, and cyclical businesses. The multiples for STM's data center and low-Earth-orbit satellite segments were lowered to 30 times, while the cyclical business is valued at 15 times, reflecting lower-than-expected margin leverage. In the US, the report prefers NXP, ADI, and Allegro, with target prices of US$338, US$458, and US$52, respectively. In Asia, it prefers Renesas, Yangjie Technology, and SICC, with target prices of ¥6,000, RMB136, and RMB127, respectively. The report rates Melexis, Microchip, Innoscience, SG Micro, and StarPower Equal-weight, and Texas Instruments, Navitas, Silergy, and Silan Microelectronics Underweight. Silergy was downgraded to Underweight because of rising foundry costs, weak consumer demand, and margins falling short of expectations, with a target price of NT$388. Finally, the report remains disciplined regarding long-term AI assumptions. Although power semiconductor and optical interconnect guidance for 2026–2027 has strengthened substantially, visibility beyond fiscal 2028 remains limited. Adoption of 800V racks and GaN in data centers is also expected later. Personal electronics remains a weak spot for STM in 2026. Management expects only low- to mid-single-digit year-over-year growth for the full year and a year-over-year decline in the second half. The report forecasts a 6%–7% decline in the third quarter but expects the business to bottom in the second half of 2026 and recover in early 2027.

Analysis framework

The report first aggregates second-quarter 2026 results and fourth-quarter guidance from global analog semiconductor companies, then examines channel inventories, pricing, book-to-bill ratios, backlogs, and automotive and industrial end-market demand to determine whether the recovery is being driven by genuine demand or restocking. It then compares near-term margin guidance with market expectations, separately analyzes power, optical interconnect, and 800V rack opportunities in AI data centers, and finally assesses growth, margins, valuation, and ratings company by company across Europe, North America, Greater China, and Japan.

Methodology notes

• Industry/Sector Analysis FrameworkSupply-demand framework

  Joint assessment of channel inventories, lead times, book-to-bill ratios, and backlogs

  The report assesses whether current growth stems from genuine demand recovery or short-term restocking by examining whether inventories have normalized, orders exceed shipments, lead times are extending, and order visibility reaches future years.

• Cycle and Business Conditions FrameworkInventory cycle (Kitchin)

  Assessment of the end of destocking and the start of restocking

  The report compares distributor and customer inventory levels and just-in-time ordering behavior. It concludes that destocking is largely complete but large-scale restocking has not yet occurred, making the quality of current growth relatively higher.

• Industry/Sector Analysis FrameworkVolume-price decomposition

  Decomposition of revenue growth into volume and price contributions

  The report decomposes power semiconductor and SiC growth into volume, price, and product-mix contributions. For example, it expects approximately 70%–80% of the increase in United Nova Technology-U's related SiC revenue to come from volume, with the remainder from higher average selling prices.

• Valuation MethodSOTP Valuation

  Sum-of-the-parts valuation of Infineon and STM

  The report separately values data center, low-Earth-orbit satellite, and cyclical businesses to reflect their differing growth and margin trajectories. STM's data center and low-Earth-orbit satellite segments are valued at 30 times, while its cyclical segment is valued at 15 times.

• Valuation MethodP/E and PEG Valuation

  Comparison of price-to-earnings ratios with historical levels and peers

  The report uses 2026 or 2027 price-to-earnings ratios to assess whether the valuations of Allegro, SG Micro, StarPower, Silergy, and other companies are consistent with their growth and margin outlooks.

• Valuation MethodPB valuation

  Valuation of SiC and power semiconductor companies using expected book value per share multiples

  The report uses expected 2026 price-to-book ratios to value SICC and Silan Microelectronics. For example, SICC is valued at 8.5 times expected book value per share, while Silan Microelectronics' 4.8 times valuation exceeds its three-year average of 3.3 times.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Infineon（IFX-DE）

  One of the preferred European analog and power semiconductor names, benefiting from automotive, industrial, and AI data center demand.

  Strengths

  Fiscal 2026 AI data center guidance increased to €1.6 billion, while 3–4-year customer reservation agreements enhance visibility.

  Weaknesses

  Fourth-quarter segment margin of approximately 23% is below some investors' expectations.

  Comparison

  The report believes the scale of its customer partnerships stands out among analog chip peers.

  Risks

  Product mix and foreign exchange may delay the margin recovery to 25%.

• STMicroelectronics（STMMI.IT/STMPA.PA）

  One of the preferred European names, driven by data center optical interconnects, low-Earth-orbit satellites, and cyclical recovery.

  Strengths

  2027 data center revenue guidance is well above US$2 billion, and Crolles capacity will ramp over the next 12–18 months.

  Weaknesses

  Fourth-quarter gross margin is unlikely to exceed 40%, and the share price fell approximately 18% on the earnings day.

  Comparison

  The report believes its data center and low-Earth-orbit satellite growth is not fully reflected in the share price.

  Risks

  Technology transfers, underloading costs, and pricing pressure in China's automotive market.

• Analog Devices（ADI-US）

  A preferred US analog chip name benefiting from the industrial recovery and growth in data center power and optics.

  Strengths

  Book-to-bill ratios are above 1 in all major markets, while data center power and optical revenue each grew more than 100% year over year.

  Weaknesses

  The larger integrated voltage regulator contribution from the Empower acquisition will not begin until after 2028.

  Comparison

  The report highlights its high-ASP products, margins, and free-cash-flow quality as superior to some peers.

  Risks

  Revenue conversion from long-term opportunities remains distant.

• NXP Semiconductors（NXPI-US）

  A preferred US name, with growth driven by rising automotive content, an MCU recovery, and data centers.

  Strengths

  Automotive revenue grew 17% year over year, while the Kinara physical AI pipeline exceeds US$1.5 billion.

  Weaknesses

  Revenue from physical AI projects will mainly convert after 2027.

  Comparison

  The report expects its automotive semiconductor business to outperform the industry in 2026.

  Risks

  Customers continue to order as needed, creating uncertainty over the timing of restocking.

• Allegro MicroSystems（ALGM-US）

  Benefits from automotive electrification, the industrial recovery, and incremental data center growth.

  Strengths

  Data centers account for 17% of revenue, with the related fiscal 2027 business expected to more than double.

  Weaknesses

  Some customers remain cautious in placing orders.

  Comparison

  The 35 times valuation is close to the company's average since 2022 and above that of some automotive semiconductor peers.

  Risks

  The pace of the cyclical recovery and the sustainability of the valuation premium.

• Renesas Electronics（text cites 6758.T, price table cites 6723-JP）

  A preferred Asian name, with AI data center demand spilling over into adjacent markets such as factory automation and semiconductor equipment.

  Strengths

  Digital power, memory interfaces, automotive R-Car Gen 4, and industrial demand are all improving, while utilization is rising.

  Weaknesses

  Selective price increases in July will not immediately lift gross margin.

  Comparison

  Its margin performance this season was better than that of most covered companies.

  Risks

  It is difficult to fully distinguish the contribution of cyclical recovery from AI spillover demand.

• Yangjie Technology（300373-CN）

  A preferred Asian power semiconductor name benefiting from automotive, AI, energy storage, and industrial demand.

  Strengths

  Expansion of overseas packaging and wafer capacity, stabilizing selling prices, and improving operating efficiency.

  Comparison

  The report believes its momentum and quality are superior to those of some domestic power semiconductor peers.

  Risks

  Power-device pricing and execution risks related to overseas capacity expansion.

• SICC（688234-CN）

  A SiC substrate supplier that can benefit from the expansion of eight-inch SiC device capacity.

  Strengths

  Technology leadership and rising global share; the report applies an 8.5 times expected 2026 book value per share valuation.

  Comparison

  The valuation is above the historical average of approximately 5.5 times, reflecting share gains and long-term structural drivers.

  Risks

  SiC substrate prices may decline again after 2027.

• ON Semiconductor（ON-US）

  A major beneficiary of AI data center, automotive SiC, and energy storage demand.

  Strengths

  2026 AI data center sales are expected to more than double, with customer orders extending into 2027–2028.

  Weaknesses

  Supply of some power products is constrained, requiring priority allocation to AI data center customers in the second quarter.

  Comparison

  Its estimate of the 2030 AI data center serviceable market increased from approximately US$12 billion to approximately US$50 billion.

  Risks

  Uncertainty around manufacturing capacity catching up with demand and the timing of the 800V architecture ramp.

• Texas Instruments（TXN-US）

  End-market recovery and AI data center growth are clear, but the report maintains an Underweight rating.

  Strengths

  Industrial revenue grew approximately 30% year over year, automotive grew at a mid-teens rate, and data center revenue doubled.

  Weaknesses

  Higher capital expenditures weigh on near-term earnings and free cash flow, while some markets face pricing and share pressure.

  Comparison

  The report believes the valuation is high, limiting near-term upside.

  Risks

  Expansion of internal manufacturing capacity may continue to pressure margins and free cash flow.

• Microchip Technology（MCHP-US）

  The inventory correction has ended, with data center and PCIe Gen6 design projects driving the recovery.

  Strengths

  Data center revenue grew approximately 98% year over year in the quarter ended June and is expected to reach approximately US$1 billion in 2026.

  Weaknesses

  Revenue growth remains the key variable for improving the balance sheet and earnings leverage.

  Comparison

  The number of PCIe Gen6 switch design projects increased to 12.

  Risks

  MCU competition, macroeconomic uncertainty, and rebuilding customer trust.

• Melexis（MELE-BE）

  Recovering with the industry cycle, but revenue and margin conversion lag peers.

  Strengths

  The second quarter exceeded expectations, while second-half guidance and the margin trajectory were raised.

  Weaknesses

  Second-half revenue is only approximately 8% above the first half, below peers' approximately 10%; EBIT margin is approximately 18%.

  Comparison

  Growth still lags peers despite starting from a weaker first-half base.

  Risks

  Competition in China may prevent gross margin from returning to its previous level above 43%.

• Innoscience（2577-HK）

  Offers long-term GaN growth opportunities, but the data center inflection point may be delayed.

  Strengths

  The report expects 2026 revenue to grow 65%, mainly driven by industrial applications.

  Weaknesses

  The data center GaN inflection point may not arrive until 2028 at the earliest, and the company may remain loss-making in the near term.

  Comparison

  Large power semiconductor manufacturers have greater advantages in supply assurance and automotive qualification.

  Risks

  Intense competition, industry overcapacity, and rising depreciation over the next five years.

• SG Micro（text cites 300671.SZ）

  The upgrade from 800G to 1.6T optical modules creates an opportunity for higher analog chip content.

  Strengths

  Networking and computing businesses are growing rapidly, optical module revenue is strong, and the product portfolio exceeds 6,800 SKUs.

  Weaknesses

  China's analog chip recovery remains uneven, and R&D investment is high.

  Comparison

  The approximately 65 times 2026 P/E is close to the historical average, which the report considers to offer limited appeal.

  Risks

  Valuation and R&D investment may offset the incremental contribution from the optical interconnect business.

• StarPower Semiconductor（603290-CN）

  Benefits from the IGBT cyclical recovery, but profit conversion is weak.

  Strengths

  IPMs and SiC MOS products can drive medium- to long-term revenue growth.

  Weaknesses

  Rising input costs, delayed price pass-through, and the depreciation burden pressure margins.

  Comparison

  The target price implies 45 times 2027 earnings, within the historical range of 27–100 times.

  Risks

  Weak electric vehicle sales and long automotive MCU development cycles.

• Navitas Semiconductor（NVTS-US）

  May benefit from 800V AI server racks, but the report maintains an Underweight rating.

  Strengths

  Expansion of the GaN market could increase the long-term serviceable market.

  Weaknesses

  Its ability to ensure supply at scale and obtain automotive qualification is weaker than that of large power semiconductor manufacturers.

  Comparison

  More established manufacturers such as STM, Infineon, and Renesas are entering GaN through acquisitions and partnerships.

  Risks

  Competition is intensifying and the data center opportunity is distant, so it should not yet be fully priced into expectations.

• Silergy（6415-TW）

  Supported by the cyclical recovery and rush orders from AI and memory customers, but downgraded to Underweight.

  Strengths

  Chinese industrial and automotive customers have begun restocking after a 12-month downturn.

  Weaknesses

  More than 80% of revenue still comes from eight-inch products, and costs can only be partially passed on to customers.

  Comparison

  The target price implies 23 times 2027 earnings, which the report considers fully valued.

  Risks

  Rising wafer costs and weak consumer demand will pressure margins in the second and third quarters of 2026.

• Silan Microelectronics（600460-CN）

  A beneficiary of domestic substitution in China's power semiconductor market, but the report maintains an Underweight rating.

  Strengths

  Industry pricing and demand trends are improving.

  Weaknesses

  Interest expense, depreciation, and earlier price increases have not yet translated into meaningful profit improvement; the 2026 operating margin is expected to be approximately 10%.

  Comparison

  Approximately 4.8 times expected 2026 book value per share, above the three-year average of approximately 3.3 times.

  Risks

  Operating leverage remains limited despite high utilization, while valuation is elevated.

Key data

• STM fourth-quarter industrial growth guidanceApproximately 40% year over yearPrevious guidance was approximately 30% year over year
• STM expected third-quarter gross marginApproximately 37%Up more than 200 basis points sequentially
• Cost drag on STM's gross marginTechnology transfer: 50–60 basis points; underloading costs: 70 basis pointsMakes it difficult for fourth-quarter gross margin to exceed 40%
• Infineon fourth-quarter segment margin guidanceApproximately 23%Below some buy-side expectations of 24%–25%
• Infineon AI data center revenueFiscal 2026: €1.6 billion; fiscal 2027 target: €2.5 billion2026 guidance was raised from €1.5 billion, with significant upside to the 2027 target
• Infineon customer reservation agreementsHigh-single-digit billions of US dollarsAgreement terms of 3–4 years
• STM data center revenue guidanceMore than US$1 billion in 2026; well above US$2 billion in 2027Third increase this year
• ON Semiconductor AI data center serviceable marketApproximately US$50 billion in 2030Previously approximately US$12 billion
• ON Semiconductor high-voltage device content per rackApproximately tenfold increaseRelated to the transition to an 800V DC architecture
• ADI data center analog chip opportunityApproximately US$1 billion–US$1.5 billion per gigawattManagement's estimate of analog chip content in data center infrastructure
• Allegro data center revenue share17%A record high, with related fiscal 2027 revenue expected to more than double year over year
• Microchip data center revenueApproximately 98% year-over-year growth in the quarter ended June; approximately US$1 billion in calendar 2026Full-year growth expected to be approximately 69% year over year
• NXP physical AI pipelineMore than US$1.5 billionUp from more than US$1 billion in the prior quarter, covering more than 200 distinct customers
• Overall market growth forecast8% in 2026; 6% in 2027Analog, MCU, and discrete device markets
• Core company basket growth forecast22% in 2026; 15% in 2027Expected to be significantly faster than the overall market
• Chinese analog chip inventories and lead times8–10 weeksThe demand recovery is broadening, but industry-wide price increases have not yet emerged
• United Nova Technology-U related SiC business guidanceApproximately RMB3 billion in 2026, up approximately 100% year over yearApproximately 70%–80% of growth comes from volume, with the remainder from higher average selling prices
• Eight-inch SiC monthly capacity planIncrease from approximately 7,000 wafers to 15,000 wafersScheduled for completion by the end of 2026

Impact & implications

The report believes the market's negative reaction to margin guidance missing elevated expectations does not fully reflect the recovery in industrial and automotive markets, improving channel inventories, and structural AI data center growth. Near-term earnings leverage remains affected by product mix, foreign exchange, underloading costs, wafer costs, and capital expenditures, so company performance will diverge significantly even within the same upcycle. The report favors companies with exposure to data center power or optical interconnects, stronger pricing power, and a clear path to improved capacity utilization.

Risks

• The pace of fourth-quarter margin recovery may continue to fall short of market expectations, particularly for STM and Infineon.
• Product mix, foreign exchange, technology transfers, and underloading costs may offset improvements in volume and utilization.
• Visibility into AI data center demand and power semiconductor content beyond fiscal 2028 is limited, and the report cautions against excessive extrapolation.
• 800V DC racks are not expected to begin ramping until late 2027 or early 2028, and the adoption timeline may change.
• The data center GaN inflection point may not arrive until 2028 at the earliest, while the industry may face prolonged competition and excess capacity.
• China's analog chip industry has not yet seen industry-wide price increases, consumer demand remains weak, and domestic competition may constrain gross margins.
• Wafer costs, capital expenditures, depreciation, and delayed price pass-through may prevent some companies from converting revenue growth into profits.
• STM's personal electronics business is expected to decline year over year in the second half of 2026, with third-quarter sales potentially falling 6%–7%.

What to watch

• Monitor updates on 800V rack deployment and the pace of power semiconductor adoption at the AI Infra Summit on September 15–17, 2026.
• Monitor further commentary on data center power architectures at the OCP Global Summit on October 12–15, 2026.
• Monitor updates on CPO, NPO, and optical technology timelines at the Silicon Photonics Global Summit and PIC Summit Europe on November 3–4, 2026.
• Monitor inventory, pricing, end-market demand, and data center disclosures at ON Semiconductor's Financial Analyst Day on September 16, 2026.
• Monitor whether Infineon's fiscal 2026 fourth-quarter results quantify the potential increase to its fiscal 2027 data center target of €2.5 billion.
• Monitor third-quarter results from STM, ON Semiconductor, NXP, Texas Instruments, Renesas, and others, including changes in margins, book-to-bill ratios, and channel restocking.
• Monitor whether selective price increases broaden to more products and customers in the second half of 2026.
• Monitor the capacity ramp at STM's Crolles fab over the next 12–18 months and the conversion into PIC and EIC revenue.