Qnity Electronics (NYSE:Q) reported second-quarter results that exceeded its expectations, driven by demand tied to artificial intelligence, high-performance computing, advanced connectivity and semiconductor manufacturing. The company raised its full-year outlook after posting 22% year-over-year organic sales growth and 53% growth in adjusted earnings per share.
Chief Executive Officer Jon Kemp said the semiconductor industry is moving beyond traditional transistor scaling toward more complex chip architectures and advanced packaging, a shift he described as a transition from “shrink to stack.” He said the trend is increasing demand for materials used across semiconductor fabrication, packaging, interconnects and thermal management.
Second-Quarter Results
Qnity recorded net sales of $1.4 billion in the second quarter, up 22% from a year earlier and 9% sequentially. Adjusted operating EBITDA rose 24% to $431 million, while adjusted operating EBITDA margin was 30.2%. Adjusted EPS increased 53% to $1.19, and adjusted free cash flow totaled $259 million.
- Semiconductor Technologies sales were $744 million, up about 3% sequentially, with 17% organic growth from the prior year.
- Interconnect Solutions sales were $685 million, rising more than 30% year over year and 16% sequentially, with 28% organic growth.
- Capital expenditures were $90 million during the quarter as the company continued capacity expansion and transformation investments.
- Qnity ended the quarter with about $960 million in cash and short-term investments, $4 billion in total debt and net debt leverage of about 2 times.
Kemp said Semiconductor Technologies was supported by demand for advanced logic and high-bandwidth memory, or HBM, applications. The segment’s advanced-nodes portfolio grew more than 20% during the quarter. He cited industry fab-utilization levels in the mid-80% range for advanced logic, low-80% range for mainstream logic, high-80% range for DRAM and low-80% range for NAND.
Interconnect Solutions benefited from advanced packaging and interconnect products, AI-focused printed circuit boards and thermal-management products. Collectively, those platforms grew more than 50% year over year, according to Kemp.
Technology and Capacity Investments
During the quarter, Qnity introduced its Optivision Max polishing pad, a chemical mechanical planarization product intended for critical semiconductor processing steps. Kemp said the product has already seen adoption in leading-edge nodes and advanced-packaging applications, including AI- and HBM-related architectures.
The company also secured multiple product-of-record wins at 16 and 14 angstroms during the first half of the year, Kemp said. In addition, it is pursuing new business in pulse plating for advanced AI circuit boards and expanded its thermal portfolio to include liquid thermal interface materials, phase-change materials, thermal pads and gap fillers.
Since 2022, Qnity has deployed about $600 million in growth investments, primarily to expand capacity and support customer technology roadmaps under its local-for-local manufacturing and technical-support model. Kemp said the company has facilities in major geographic centers and is using modular expansions to respond to customer ramps.
Interim Chief Financial Officer Mike Goss said the company has begun seeing benefits from a multiyear transformation plan. In its Kalrez business, Qnity is pursuing productivity, capacity-release and automation projects to address strong demand from wafer-fab equipment customers. The company is also consolidating warehouses, an effort it expects to produce about 10% logistics-cost savings over time, and plans to migrate about two-thirds of its sites to its own IT systems by year-end.
Outlook Raised Amid Strong Demand
For the third quarter, Qnity expects low-single-digit sequential sales growth overall. Semiconductor Technologies is expected to grow at a low-single-digit sequential rate, with adjusted EBITDA margins in the mid-30% range. Interconnect Solutions is expected to post mid-single-digit sequential growth and adjusted EBITDA margins in the high-20% range.
Goss said third-quarter demand should be supported by AI applications, high-performance computing, advanced connectivity and a seasonal consumer-electronics peak. However, he noted that third-quarter 2025 sales included approximately $40 million accelerated ahead of pre-spin IT system go-lives, creating a more difficult year-over-year comparison.
The company said it continues to monitor supply-chain conditions, including memory and other materials, as well as customer-ramp timing and developments in the Middle East. Goss said roughly half of a previously identified $20 million in logistics and energy-related costs occurred in the first half, with the remainder expected in the second half. He said pricing actions and Qnity’s local operating model are expected to offset those pressures.
Qnity raised its full-year guidance to:
- Net sales of $5.55 billion to $5.65 billion;
- Adjusted operating EBITDA of $1.675 billion to $1.725 billion;
- Adjusted EPS of $4.40 to $4.60; and
- Adjusted free cash flow of $600 million to $700 million.
At the midpoint of the updated outlook, Qnity expects 18% sales growth, more than 20% adjusted EBITDA growth and 35% adjusted EPS growth for 2026.
Portfolio Mix and Leadership Updates
Kemp said logic remains roughly 80% of the Semiconductor Technologies portfolio, while memory accounts for about 20%, with HBM and DRAM growing faster. Data-center exposure has increased with AI demand, while automotive, aerospace and defense, telecommunications infrastructure and other industrial markets have shown steady growth. Consumer electronics has continued to grow, though at a slower pace, he said.
Qnity also named Kate Dei Cas as president of its Semiconductor Technologies segment. Kemp said Dei Cas brings more than 25 years of semiconductor-industry experience. The company is in the final stages of its search for a permanent chief financial officer, he added.
About Qnity Electronics (NYSE:Q)
Qnity Electronics, Inc is an electronics materials company focused on supplying products used in semiconductor manufacturing and advanced electronic systems. The company was formed from DuPont’s former Electronics business and operates as an independent publicly traded company.
Its portfolio includes materials and solutions used throughout the semiconductor production process, including wafer fabrication, advanced packaging, and related interconnect applications. Qnity’s technologies are designed to support the performance, reliability, and miniaturization of electronic devices and components.
The company serves semiconductor manufacturers, advanced packaging providers, and other electronics customers through operations and commercial relationships spanning major technology markets worldwide.
