Qnity Electronics delivered another quarter of strong semiconductor-related growth during the second quarter of 2026 as rising demand for advanced packaging, complex printed circuit boards, and thermal-management solutions accelerated its Interconnect Solutions business.
Interconnect Solutions adjusted operating EBITDA increased 44% to $197 million from approximately $137 million.
Segment sales surged 30% to $685 million, driven by a 28% increase in volume and a 2% favorable currency contribution.
The volume increase shows that the segment’s growth came primarily from greater customer demand rather than higher prices.
Interconnect Solutions provides materials and technologies used to manage signal integrity, power, and heat across complex electronic systems.
Its products support advanced semiconductor packaging, artificial intelligence-related printed circuit boards, high-performance computing systems, and other increasingly dense electronic architectures.
The segment’s adjusted operating EBITDA margin expanded to approximately 28.8% from 26%, representing an improvement of about 270 basis points.
Adjusted operating EBITDA therefore increased substantially faster than segment sales as stronger volume, favorable product mix, and operating productivity supported margin expansion.
Interconnect Solutions is also moving closer to Qnity’s larger Semiconductor Technologies business in terms of revenue.
Semiconductor Technologies generated $744 million in quarterly sales, only $59 million more than Interconnect Solutions.
The difference between the two segments was approximately $118 million during the prior-year quarter, indicating that Interconnect Solutions is becoming a larger part of Qnity’s overall business.
Semiconductor Technologies supplies materials used across multiple stages of chip manufacturing, including technologies supporting advanced nodes, high-bandwidth memory, and advanced packaging.
The segment’s adjusted operating EBITDA margin remained higher than Interconnect Solutions at approximately 34%, although it declined from roughly 35.1% during the prior-year quarter.
Qnity’s consolidated net sales increased 22% to approximately $1.43 billion.
Organic sales also increased 22%, accelerating from 17% organic growth during the first quarter.
Total company volume increased 23%, while local pricing and product mix reduced growth by approximately one percentage point.
The combination indicates that rising production activity and customer utilization were responsible for nearly all of Qnity’s underlying sales increase.
Qnity’s growth is benefiting from the semiconductor industry’s transition from relying primarily on smaller individual transistors toward stacking chips and integrating more components into complex packages.
These designs can require additional processing steps, materials, interconnections, and thermal-management technologies.
Management refers to this transition as the move from “shrink” to “stack.”
The trend creates a multiplier effect because more complicated chip architectures can increase Qnity’s materials opportunity even when the number of devices produced does not rise at the same rate.
Asia Pacific remained Qnity’s largest geographic market.
Regional sales reached approximately $1.14 billion, representing about 80% of consolidated revenue, and increased 24% from the prior-year quarter.
Americas sales increased 16%, while Europe, the Middle East, and Africa generated growth of 11%.
The geographic concentration reflects the location of many of the world’s largest semiconductor fabrication, packaging, printed circuit board, and electronics-manufacturing operations.
Companywide adjusted operating EBITDA increased 24% to $431 million.
The resulting adjusted operating EBITDA margin was approximately 30.2%.
Adjusted earnings increased to $250 million, while adjusted diluted EPS rose 53% to $1.19.
GAAP performance was substantially weaker than the adjusted figures.
Net income declined 31% to $136 million, while diluted GAAP EPS fell 34% to $0.59.
The difference between GAAP and adjusted earnings included interest expense, transformation and integration charges, indirect legacy costs, and other items associated with Qnity’s transition into an independent company.
Qnity completed its separation from DuPont in 2025, establishing a publicly traded technology company focused on materials and solutions across the semiconductor value chain.
Interest expense totaled approximately $61 million during the quarter.
Qnity also recorded about $42 million of transformation and integration charges and $42 million of indirect legacy costs.
Those items contributed to adjusted EPS of $1.19 being approximately twice the company’s $0.59 in reported EPS.
Operating cash flow reached $241 million, while adjusted free cash flow totaled $259 million.
Adjusted free cash flow exceeded reported operating cash flow because Qnity added back approximately $108 million of transformation expenses, legacy costs, and a separation-related foreign tax payment before subtracting $90 million of capital expenditures.
First-half operating cash flow declined to $376 million from $480 million despite substantial revenue growth.
Accounts receivable consumed $152 million of cash, compared with $28 million during the prior-year period, while inventory used $77 million compared with $41 million.
The increase in working-capital requirements reflects the cash needed to support Qnity’s higher sales and production activity.
Qnity raised its full-year financial guidance for the second time during 2026.
The midpoint of revenue guidance increased by approximately $300 million to $5.6 billion.
Adjusted operating EBITDA guidance increased by $120 million at the midpoint to approximately $1.7 billion.
The midpoint of adjusted EPS guidance increased by $0.53 to $4.50, while adjusted free cash flow guidance rose by $100 million to a midpoint of $650 million.
Following the first quarter, Qnity had forecast revenue of $5.225 billion to $5.375 billion, adjusted operating EBITDA of $1.535 billion to $1.625 billion, adjusted EPS of $3.80 to $4.14, and adjusted free cash flow of $500 million to $600 million.
The second guidance increase reflects faster-than-expected demand across both business segments, particularly Interconnect Solutions.
Qnity’s results show that the company is benefiting not only from expanding semiconductor production but also from increasing materials intensity within each advanced computing system.
Interconnect Solutions’ 44% EBITDA increase, 30% sales growth, and expanding margin demonstrate how advanced packaging and system complexity are becoming increasingly important growth drivers alongside traditional chip manufacturing.
KEY QUOTE:
“We delivered our ninth consecutive quarter of profitable growth.”
Jon Kemp, Chief Executive Officer Of Qnity Electronics
