Allegro MicroSystems (NASDAQ:ALGM) executives said demand is strengthening across the company’s automotive, industrial and data center markets, while customer inventory levels remain lean after a prolonged correction.
Speaking at the 54th Annual TD Cowen TMT Conference, Chief Financial Officer Derek D’Antilio described Allegro as a Manchester, New Hampshire-based semiconductor company with a long history in power and sensing. He said about 60% of the company’s business is magnetic sensing, where Allegro has roughly 23% to 24% global market share, and about 40% is power management. Automotive represents about 70% of revenue, with the remaining 30% tied to industrial markets, including data centers and robotics.
Automotive Demand and Inventory
He said Allegro recorded a record bookings quarter in March and continues to see “real strength” across its business. On inventory, D’Antilio said automotive tier-one suppliers built inventory in 2022 and 2023, supported by OEM funding in some regions and historically low interest rates. Since then, he said customers have worked down inventory, in some cases below pre-pandemic levels.
“I don’t see a massive restocking happening within auto,” D’Antilio said, citing working capital considerations for tier-one suppliers and distributors. He added that some customers are still placing orders inside Allegro’s lead times, which he described as roughly 20 to 22 weeks.
China Auto Remains Competitive
D’Antilio said China accounts for about 30% of Allegro’s ship-to revenue, with about half of that ultimately re-exported outside China. He said roughly 90% of Allegro’s China business is automotive, largely tied to ADAS and EV applications.
While acknowledging that China remains highly competitive, D’Antilio said Allegro competes on specifications rather than price, including safety and reliability requirements for applications such as electromechanical steering and braking. Jalene Hoover, vice president of investor relations and corporate communications, added that China-focused auto design wins in xEV and ADAS have led the company’s recent design-win activity.
D’Antilio also said Allegro is qualifying a wafer fab in China and recently began shipping from a turnkey OSAT in China. The company remains fabless, with major wafer supply from the United States and Taiwan, he said.
Data Center Becomes a Larger Revenue Contributor
Allegro executives highlighted data center as a growing opportunity. D’Antilio said the company historically sold mainly DC fan motor drivers into data centers through distribution. That business peaked around 10% of revenue several years ago, then declined as inventory was digested.
Entering fiscal 2026, data center represented about 2% of Allegro’s total business, D’Antilio said. Exiting the year, it was 14% of revenue and had quadrupled during the fiscal year. He said motor drivers remain important, but current sensors are becoming a faster-growing component of the opportunity.
Current sensors represented 18% of data center revenue in the most recent quarter, up from zero at the start of the year, according to D’Antilio. He said Allegro’s sensors are used to manage current going into power racks and protect downstream components such as GPUs and CPUs.
Hoover said Allegro’s current data center content opportunity is about $150 and could grow to $425, driven by adoption of 48-volt and 800-volt technology, current sensors and gate drivers. D’Antilio said isolated gate drivers are still in sampling but represent potentially larger sockets over time.
Robotics Viewed as Longer-Term Opportunity
Hoover said automation and robotics revenue remains nascent, at a low single-digit percentage of sales, but doubled in fiscal 2026. Current applications include household robotics, cobots and factory automation.
She said Allegro sees content opportunities rising from about $5 in a home robot to $55 in a cobot and about $150 in a humanoid robot. Hoover pointed to Allegro’s position sensors, current sensors, drivers and TMR sensors as relevant technologies, particularly for small, high-precision applications such as robotic hands.
D’Antilio said humanoid robotics is currently a very small revenue contributor, and he suggested the opportunity may become meaningful around 2030 or 2031. He said Allegro needs to secure design wins and customer engagements now to participate in that potential market.
Margins, Pricing and Capacity
D’Antilio said Allegro’s non-GAAP gross margins peaked at 56% for a year, with two quarters at 58%, during the prior supply and pricing cycle. Margins later troughed around 46% and exited the recent fiscal year at 50%, with guidance for the first quarter at 50% to 51%.
He said the company’s model is to return gross margins to above 55%, supported by higher volume, better variable contribution margin, a gold-to-copper wire conversion, die shrinks, improved mix from data center current sensors and isolated gate drivers, and higher factory utilization.
On pricing, D’Antilio said Allegro is increasing prices selectively, not across the board. He said the company is using pricing actions and surcharges tied to input costs such as gold and fuel, while balancing those moves against long-standing automotive customer relationships and market share considerations.
D’Antilio said Allegro believes it has enough capacity for current and foreseeable demand. He said bringing up fabs in China helps for automotive and robotics, while the company also uses fabs in Taiwan, the United States and other regions.
About Allegro MicroSystems (NASDAQ:ALGM)
Allegro MicroSystems, Inc (NASDAQ: ALGM) is a leading designer and manufacturer of high-performance power and sensing integrated circuits. The company focuses on semiconductor solutions that enable precise motion control, energy-efficient power management and robust sensing in a wide range of applications. Allegro’s product portfolio includes Hall-effect magnetic sensors, current and position sensing ICs, motor driver and controller devices, and power management components.
Allegro MicroSystems serves major automotive, industrial and consumer markets worldwide.
