Qnity Electronics (NYSE:Q) raised its full-year 2026 outlook after reporting third-quarter sales growth of 22%, as demand for advanced semiconductor materials and AI-related products supported gains across both of its business segments.
The company reported net sales of $1.6 billion, up 9% from the second quarter, and adjusted earnings per share of $1.46, up 55% from a year earlier. Adjusted operating EBITDA rose 36% to $503 million, while adjusted gross margin improved to 47.8% from approximately 46% a year earlier.
CEO Jon Kemp said the results reflected demand for materials used in both smaller chips and increasingly complex stacked architectures. He described the quarter as Qnity’s 10th consecutive quarter of profitable organic growth.
AI Demand Lifts Both Segments
Semiconductor Technologies posted third-quarter sales of $797 million, up 15% year over year, with organic sales growth of 16%. Adjusted operating EBITDA was $285 million. CFO Ken Rizvi said the segment’s advanced nodes portfolio grew 25% and accounted for approximately 44% of semiconductor-related revenue, compared with 42% in the first half of the year.
Interconnect Solutions sales increased 30% to $759 million, while organic sales grew 29%. The segment generated $236 million in adjusted operating EBITDA. Rizvi said thermal management, advanced packaging and AI printed circuit boards maintained strong momentum, with seasonal consumer electronics production also contributing.
Kemp said those three faster-growing platforms represented about 30% of Interconnect Solutions and grew more than 50% in the third quarter. Thermal management was the largest of the three, followed by advanced packaging and AI printed circuit boards. The rest of the segment grew at a mid-teens rate, he said.
Despite broader challenges in consumer electronics, Kemp said Qnity’s exposure was concentrated in premium devices, where demand had been more resilient. Rising content in those products made consumer electronics a positive contributor to growth for the year, he said.
Company Raises 2026 Outlook
Qnity increased its full-year revenue outlook by $200 million and its adjusted earnings-per-share outlook by 50 cents at their respective midpoints. Its updated guidance calls for:
- Net sales of $5.77 billion to $5.83 billion.
- Adjusted operating EBITDA of $1.785 billion to $1.805 billion.
- Adjusted earnings per share of $4.95 to $5.05.
- Adjusted free cash flow of $800 million to $900 million.
At the guidance midpoint, Qnity expects approximately 26% year-over-year sales growth in the fourth quarter and 22% growth for the full year. The outlook incorporates normal seasonality and potential customer inventory management at year-end, Rizvi said.
Rizvi did not provide first-quarter guidance. He said the company historically has seen a modest, low-single-digit sequential sales increase from the fourth quarter to the first quarter.
For 2027, Rizvi said Qnity currently expects wafer-start growth to be in a similar high-single-digit to low-double-digit range to its revised 2026 industry assumption, although that expectation could change. The company plans to provide more detail on its 2027 outlook on its next earnings call.
Longer-Term Growth Tied to Customer Wins
Kemp said Qnity was on pace to exceed its previous year’s record for process-of-record wins, under which a customer qualifies a material for use in a manufacturing process. Such wins typically last five to 10 years and can generate recurring revenue as production increases, he said.
The company has secured an increasing number of wins for 2-nanometer technology and HBM4 memory, which are entering production, according to Kemp. He said the advanced-node wins contributing to this year’s growth were largely secured in 2023 and 2024.
Kemp also pointed to planned customer capacity additions. Qnity is tracking more than 15 advanced fabs and a handful of mature-node fabs targeting production within the next year. After equipment installation, process qualification can take 12 to 18 months, he said, with materials demand building as customers ramp production.
Asked whether Qnity could sustain its outperformance of underlying markets, Kemp said that would depend in part on customers successfully commercializing advanced technologies and bringing capacity expansions online as expected.
Margins and Capital Spending
Rizvi said Qnity aims to move its gross margin toward 50% over time through a combination of advanced product mix, factory execution and capturing the value of its technology in customer engagements. He did not provide a timetable.
The company ended the quarter with $1.1 billion in cash and cash equivalents and approximately $4 billion in total debt. Net leverage was approximately 1.7 times, below the company’s historical objective of keeping it under three times, Rizvi said. Adjusted free cash flow was $320 million for the quarter and $607 million for the first nine months.
Capital expenditures totaled $290 million year to date. In response to an analyst’s question, Rizvi said the company’s full-year spending target remained $450 million to $470 million, although timing could move some spending into the first quarter of 2027. Kemp said Qnity had accelerated selected capacity projects and felt positioned to support expected 2027 volumes and growth beyond that year.
About Qnity Electronics (NYSE:Q)
Qnity Electronics develops materials and technologies used in semiconductor manufacturing and electronic interconnect applications. Its products support processes such as chip fabrication and advanced packaging, as well as the production and assembly of circuit boards.
The company serves customers across the global electronics supply chain, including semiconductor manufacturers and makers of electronic components. Its portfolio includes materials designed to help enable reliable, high-performance devices and connections.
Qnity became an independent company through the separation of DuPont’s electronics business.
