Q2 2026 eMemory Technology Inc Earnings Call Transcript
Key Points
- Revenue grew 17.1% year-over-year in Q2 2026, with operating margin expanding to 60.7%.
- PUF-based security IP licensing surged 133.5% year-over-year, and royalty revenue skyrocketed over 1,600% year-over-year.
- Expansion into AI data center SSDs and CXL switches for memory expansion, with security IP now targeting multiple critical chips per AI server.
- Advanced node projects (e.g., 3nm) account for over 50% of licensing revenue, with several customers already in mass production, promising higher royalties.
- Logic Flash (1T NeoFlash) technology is advancing across embedded and stand-alone applications, with potential to replace legacy flash and open a massive market.
- Caliptra-driven security standards, supported by tech giants, are increasing demand for hardware root of trust, benefiting eMemory's NeoPUF and NeoFuse IPs.
- New applications in power ICs for AI data centers (e.g., 400V/800V HVDC) are driving demand for OTP and MTP IPs, with customers already in mass production.
- Strong licensing momentum in Q2, up 35.1% year-over-year, driven by demand across leading-edge and legacy process nodes.
- PUF-based HSM Edge Server and Post-Quantum Security platforms are progressing, with early opportunities in automotive OTA and PKI.
- Adoption in LEO satellite applications highlights the reliability and security of OTP in extreme environments, expanding market reach.
- Royalty revenue decreased 6.4% sequentially in Q2 2026, due to low mature-node foundry utilization and seasonal inventory adjustments.
- Net income decreased 2.8% sequentially in Q2 2026, despite strong year-over-year growth.
- NeoBit licensing revenue declined 22.4% year-over-year in Q2 2026, indicating weakness in this product line.
- PUF-based security IP licensing revenue decreased 13.8% sequentially in Q2 2026, showing quarter-to-quarter volatility.
- The company was removed from the MSCI Index, raising concerns about potential foreign sell-off and stock price volatility.
- Royalty growth is expected to accelerate only in the second half of 2026, with near-term pressure from foundry capacity utilization.
- Logic Flash mass production is still in early stages, with customer ramp-up not expected until next year, delaying revenue contribution.
- High foreign ownership (67-68%) makes the stock susceptible to passive fund rebalancing and market sentiment.
- Operating expenses increased 10.2% year-over-year, reflecting higher investment in R&D and business development.
- The transition to security subsystems and advanced nodes may increase integration complexity for customers, potentially slowing adoption.
Good afternoon, and welcome to eMemory's second-quarter 2026 webcast investor conference. Joining us today is our Chairman, Dr. Charles Hsu; Head of IR, Ms. Li-Jeng Chen; Director of the Finance Department, Mr. Joseph Hsia; and Head of Digital Marketing, Dr. Felix Hsu. The format of today's event will be as follows: First, eMemory's Chairman, Dr. Charles Hsu, will give an opening remark.
Afterwards, our Financial Officer, Mr. Joseph Hsia, will present a review of our financial results. Following that, Dr. Charles Hsu will share our business outlook. Next, Dr. Felix Hsu will give a talk titled, securing the next generation of AI infrastructure, the hardware anchor for Caliptra Root-of-Trust to secure Chiplets and Compute Express Link or CXL.
Then we will conclude today's conference with the Q&A section where our management team will answer your questions. (Operator Instructions) As a reminder, this conference is being recorded, and a webcast replay will be available after the conference is finished.
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