Semiconductor manufacturer Magnachip Semiconductor (NYSE: MX) met Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 35.6% year on year to $40.57 million. The company expects next quarter’s revenue to be around $46 million, coming in 1.1% above analysts’ estimates. Its non-GAAP loss of $0.08 per share was 75% above analysts’ consensus estimates.
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Magnachip (MX) Q4 CY2025 Highlights:
- Revenue: $40.57 million vs analyst estimates of $40.5 million (35.6% year-on-year decline, in line)
- Adjusted EPS: -$0.08 vs analyst estimates of -$0.32 (75% beat)
- Adjusted EBITDA: -$8.86 million (-21.8% margin, 236% year-on-year decline)
- Revenue Guidance for Q1 CY2026 is $46 million at the midpoint, above analyst estimates of $45.5 million
- Operating Margin: -30.7%, down from -14.4% in the same quarter last year
- Free Cash Flow was -$4.82 million, down from $4.43 million in the same quarter last year
- Inventory Days Outstanding: 84, down from 91 in the previous quarter
- Market Capitalization: $97.87 million
Camillo Martino, Magnachip’s CEO said, “Magnachip has a strong foundation in power semiconductors, built on decades of engineering expertise, trusted customer relationships, and a reputation for quality and reliability. Over the past year, we have taken deliberate actions to simplify the business, significantly reduce our cost structure, and sharpen our focus on power, while increasing investment in new-generation products where we can compete and win.”
Company Overview
With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE: MX) is a provider of analog and mixed-signal semiconductors.
Revenue Growth
Examining a company’s long-term performance can provide clues about its quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Magnachip struggled to consistently generate demand over the last five years as its sales dropped at a 18.8% annual rate. This wasn’t a great result and suggests it’s a low quality business. Semiconductors are a cyclical industry, and long-term investors should be prepared for periods of high growth followed by periods of revenue contractions.
We at StockStory place the most emphasis on long-term growth, but within semiconductors, a half-decade historical view may miss new demand cycles or industry trends like AI. Magnachip’s annualized revenue declines of 11.8% over the last two years suggest its demand continued shrinking. 
This quarter, Magnachip reported a rather uninspiring 35.6% year-on-year revenue decline to $40.57 million of revenue, in line with Wall Street’s estimates. Despite meeting estimates, the drop in sales could mean that the current downcycle is deepening. Company management is currently guiding for a 2.9% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to decline by 3.6% over the next 12 months. While this projection is better than its two-year trend, it’s hard to get excited about a company that is struggling with demand.
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Product Demand & Outstanding Inventory
Days Inventory Outstanding (DIO) is an important metric for chipmakers, as it reflects a business’ capital intensity and the cyclical nature of semiconductor supply and demand. In a tight supply environment, inventories tend to be stable, allowing chipmakers to exert pricing power. Steadily increasing DIO can be a warning sign that demand is weak, and if inventories continue to rise, the company may have to downsize production.
This quarter, Magnachip’s DIO came in at 84, which is 16 days above its five-year average. These numbers suggest that despite the recent decrease, the company’s inventory levels are higher than what we’ve seen in the past.
Key Takeaways from Magnachip’s Q4 Results
It was good to see Magnachip beat analysts’ EPS expectations this quarter. We were also glad its inventory levels shrunk. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 9.9% to $2.95 immediately following the results.
Sure, Magnachip had a solid quarter, but if we look at the bigger picture, is this stock a buy? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).
