Q2 Preview: Sequential Improvement, Though No Inflection Just Yet

Research evidence excerpt

Q2 Preview: Sequential Improvement, Though No Inflection Just Yet

memory have largely normalized.

In contrast, recovery across power, industrial and automotive applications remains gradual

and largely isolated, with elevated inventories continuing to weigh on parts of the 200mm

market. Some AI-related power management applications are recovering, but the overall

recovery in industrial, consumer and automotive remains weak. Industry commentary since

Q1 has remained constructive, pointing to sustained strength in AI-related applications,

growing customer discussions around future volume requirements and improving visibility for

advanced-node demand, supporting our expectation of sequential volume growth in Q2.

Recovery Intact but Margin Upside Limited - We expect Q2 profitability to improve

sequentially, although earnings remain constrained by elevated depreciation, ongoing

underutilization in parts of the legacy footprint and continued pricing pressure in mature-

node wafers. The pricing environment appears to be stabilizing in 300mm, with spot-market

conditions becoming more constructive and customer sentiment improving as utilization rates

recover. However, the recovery remains uneven, and we do not yet see evidence of a broad-

based pricing inflection across the industry. As a result, margin progression is likely to remain

gradual, with volume recovery rather than pricing acting as the primary earnings driver near

term. While the direction of travel remains positive, we believe a more meaningful improvement

in profitability will require further normalization of 200mm demand and continued tightening

in leading-edge wafer supply-demand dynamics.

Figure 1 - JEFe vs Consenssus

4Q24 1Q25 2Q25 3Q25 4Q25 1Q26 2Q26e 2Q26 JEFe vs

Cons. Cons.