Semtech (NASDAQ:SMTC) executives highlighted record fiscal 2026 results, accelerating data center momentum, and an expanded optical portfolio following the company’s acquisition of HieFo Corporation during the company’s fourth-quarter and fiscal-year 2026 earnings call.
Record fiscal year and eighth straight quarter of growth
President and CEO Hong Hou said Semtech finished fiscal 2026 with “significant momentum,” delivering record net sales of $1.05 billion. Fourth-quarter net sales were $274.4 million, up 3% sequentially and up 9% year-over-year. Hou said annual revenue increased 15%, driven by continued strength in the company’s data center and LoRa portfolios.
CFO Mark Lin said Q4 marked the company’s eighth consecutive quarter of net sales growth. Adjusted gross margin was 51.6%, while total semiconductor products gross margin was 61.7%, supported by favorable mix from LoRa and data center products. Adjusted operating income was $50.0 million and adjusted operating margin was 18.2%.
HieFo acquisition aimed at deeper optical transceiver content
Hou described the recently announced acquisition of HieFo Corporation, a California-based maker of Indium Phosphide (InP) optoelectronic devices such as gain chips and continuous-wave (CW) laser chips, as a “strategic building block” for Semtech’s data center roadmap. He said integrating HieFo’s InP laser technology with Semtech’s transimpedance amplifiers (TIAs) and laser drivers could increase Semtech’s content opportunity from “high single-digit dollars” in an 800G module to about $80 in a 3.2T module.
Management said integration is underway, with the deal expected to be accretive to non-GAAP diluted EPS within the first year. Hou also said Semtech has developed an investment plan for HieFo’s Alhambra, California facility to expand domestic capacity and accelerate product development.
In the Q&A, Hou told TD Cowen’s Sean O’Loughlin that HieFo’s initial product in production is a gain chip used in tunable lasers for longer-reach applications (including metro and data center interconnect). He said demand is increasing and currently “capacity limited,” and indicated that in fiscal 2027 the gain-chip business could contribute “roughly about a high-teens level of revenue.” Hou added that Semtech plans to expand capacity and will provide more guidance on CW laser revenue once equipment lead times and capacity plans are clearer.
Asked by Susquehanna’s Christopher Rolland about manufacturing and go-to-market strategy, Hou said the acquired fab is “vertically integrated,” including epitaxial wafer growth, wafer processing, and internal test, while using the ecosystem for backend packaging to increase capacity. On commercialization, he emphasized co-development of electronic and optoelectronic components, saying Semtech can now “mix and match” and provide chipsets with reference designs to accelerate customer time to market and increase stickiness—particularly as the industry progresses toward 400G per lane and 3.2T modules.
Data center: ACC, 1.6T ramps, LPO momentum, and multi-year outlook
Semtech’s infrastructure net sales were $86.3 million in Q4, up 11% sequentially and up 25% year-over-year, with strong support from data center demand. Data center net sales were a record $63 million (up 12% sequentially and up 26% year-over-year), and fiscal-year data center revenue was a record $223 million, up 58% year-over-year.
Hou said the company began shipping into linear pluggable optics (LPO) transceivers in Q4, consistent with prior guidance. He also said demand for 800G solutions remains “strong and broad-based,” while Semtech is engaged across a wide range of 1.6T transceiver programs with expected volume ramps as hyperscalers roll out new platforms. He added that Semtech expects to bring 1.6T LPO drivers and TIAs to market this year and is participating in industry efforts such as near-package optics (NPO) and other MSAs aimed at low-power, high-density architectures.
On copper interconnect, Hou said active copper cable (ACC) continues gaining traction due to link margin and power savings versus DSP-based solutions. He also described customer evaluations of Semtech’s CopperEdge linear equalizers for onboard integration, including an “active backplane” use case to be demonstrated by cable partners at OFC.
Looking ahead, Hou said Semtech expects to start shipping CopperEdge for a 1.6T ACC hyperscaler deployment “this quarter,” with demand accelerating throughout the year, and expects FiberEdge design wins for 1.6T transceivers with a “significant ramp” in the second half. He later told B. Riley’s Craig Ellis that Semtech expects data center year-over-year revenue growth to exceed 50% in the coming fiscal year, driven by ACC shipments to a hyperscaler, 1.6T FiberEdge ramps in the second half, and potential contribution from onboard linear equalizers. In response to Benchmark’s Cody Acree, Hou added that LPO is included within FiberEdge and is expected to continue ramping.
LoRa growth drivers and industrial/IoT updates
Industrial net sales were $151 million in Q4, up 3% sequentially and year-over-year. Full-year industrial revenue was $584 million, up 13%. LoRa-enabled net sales were $39.6 million in Q4 (up 7% year-over-year) and $156 million for the year (up 34%).
Hou said LoRa demand is expanding across verticals including smart utilities, smart buildings, smart cities, and asset management. He outlined themes from CES including edge AI integration, multi-protocol connectivity, global network expansion, and convergence of industrial and consumer IoT. The company said it signed an agreement with a technology partner to support software development for “LoRa Plus” multi-protocol adoption, starting with Z-Wave and with Zigbee, Thread, and Matter to follow, with beta units expected to be available to deployment partners in Q2.
Hou also cited Amazon and Ring’s announcement of a new line of LoRa-powered sensors operating on Amazon Sidewalk, with Ring planning to launch in the U.S. in March followed by expansion to other regions. He said the LoRa ecosystem spans over 125 million LoRaWAN connected devices across 70 countries.
Management said it sees LoRa’s long-term growth rate at approximately 20% and quarterly sales ranging from $35 million to $45 million, noting in Q&A that quarter-to-quarter results can be “bumpy” due to project-based deployments.
Q1 fiscal 2027 outlook, cash flow, and portfolio actions
For the first quarter of fiscal 2027, Lin guided to net sales of $283 million ± $5 million. The company expects infrastructure revenue to rise sequentially with projected sequential data center growth of 12%, including initial CopperEdge production shipments supporting a hyperscaler near the end of the quarter. High-end consumer revenue is expected to increase about 9% sequentially, supported by seasonality, TVS share gains, and contributions from the Force Sensing portfolio. Industrial revenue is expected to be roughly flat, with LoRa increases offset by decreases in IoT systems and connectivity.
Semtech guided to adjusted gross margin of 52.8% ± 50 bps, while semiconductor products gross margin is expected to be 60.4% ± 50 bps, reflecting initial ramp costs from HieFo. Adjusted operating expenses are expected at $96.9 million ± $1 million as the company increases R&D investment, and adjusted diluted EPS is expected to be $0.45 ± $0.03.
Lin also highlighted Q4 operating cash flow of $61.5 million and free cash flow of $59.1 million, saying each exceeded the amounts reported for all of fiscal 2025. Semtech ended the quarter with $195.2 million in cash and $503 million of debt, with an adjusted net leverage ratio of 1.3. He said Semtech’s capital structure changes moved the company to a net interest income position in Q4.
On portfolio optimization, Hou said Semtech continues to make progress on the divestiture of its cellular module business. In Q&A, Lin said interested parties are now spending on external consultants and legal costs, which he characterized as a sign of “skin in the game” toward a potential conclusion.
About Semtech (NASDAQ:SMTC)
Semtech Corporation is a leading supplier of high-performance analog and mixed-signal semiconductors and advanced algorithms. The company’s products address a broad range of applications in the Internet of Things (IoT), data center and telecom, industrial, home automation, automotive, and aerospace markets. Semtech’s portfolio includes power management, signal integrity, protection devices, wireless and sensing technologies that enable smarter, more connected systems worldwide.
A core offering from Semtech is its LoRa® technology, a low-power, long-range wireless communication platform that has become a de facto standard for global IoT deployments.
