Vicor Doubles Long-Term Revenue Target to $2.5 Billion as Licensing Windfall and Second-Gen Power Chips Reshape the Story
Q2 2026 earnings call, July 21, 2026
Vicor Corporation used its second-quarter call to lay out a materially larger long-term opportunity than investors had previously modeled, telling analysts that the company now targets $2.5 billion in revenue at 70% gross margins and 40% operating income, up from the $1 billion and 65% gross margin framework it set back in 2023. The catalyst is a two-pronged bet on power module sales tied to AI data center build-outs and an intellectual property licensing practice that management believes is only beginning to be recognized by the industry.
A Second Fab Is Now Load-Bearing for the Bull Case
The most consequential disclosure was that the existing Andover fab cannot get Vicor anywhere near its new target. Asked directly whether the current facility could support $2.5 billion in revenue, CEO Patrizio Vinciarelli was unambiguous: "No. That definitely not. It's going to take a second fab to get there." Vicor is down-selecting between two candidate sites capable of supporting capacity 2x to 3x the current fab, though Vinciarelli cautioned the build-out will happen in phases rather than all at once, "so that without having to go to a third site, we can further increase capacity." A site decision is expected within weeks. Until the new facility comes online, management signaled it will remain selective about which customer engagements it takes on, given the first fab is approaching full utilization even after ongoing expansion.
Second-Generation VPD: Vicor Claims a Multi-Year Lead
Vicor disclosed concrete technical progress on its second-generation vertical power delivery technology, a category the company argues is becoming a gating requirement for AI hyperscalers and OEMs as compute density rises. Vinciarelli said the company has completed a baseline chipset at 3 amps per square millimeter of current density for its lead customer and is targeting a move past 4 amps per square millimeter by late this year or early next. He was pointed about the competitive landscape, arguing that generation-one voltage regulator solutions from rivals are "barely capable of delivering in the real world... slightly over 1 amp per square millimeter" once thermal derating and other real-world factors are accounted for, versus current gains above 40 and current density up to 5 amps per square millimeter for Vicor's own second-gen VPD. VP of Sales and Marketing Phil Davies added color from the APEC conference in San Antonio, where OEMs and hyperscalers were reportedly pushing chipmakers for roughly 3 amps per millimeter squared with sub-3 millimeter package heights, specs he said generation-one VPD products "come nowhere near." Davies expects engagement with a hyperscaler and multiple OEMs to progress through the remainder of 2026, with production ramps beginning in the back half of 2027.
Licensing Machine Adds a Second Growth Engine, With Messy Accounting
The quarter's revenue outperformance was driven substantially by a new license agreement structured as four quarterly payments of $5 million in year one and $10 million quarterly in year two, a $60 million deal in total. GAAP accounting recognized $15 million of that in Q2 due to termination-clause treatment, a figure CFO Jim Schmidt had to explain twice on the call after analysts flagged the disconnect between revenue recognition and cash collection, noting revenue will drop back to $5 million in the third quarter before settling at $10 million per quarter thereafter. Vinciarelli described the current cohort as "a multiplicity of OEM licensees, one hyperscaler as of now," and indicated that near-term licenses do not carry sourcing commitments but that future agreements will increasingly tie licensing to Vicor's second-gen VPD product roadmap. Management reiterated that a second ITC case reaching final determination in 2027 could produce additional exclusion orders, which Vinciarelli framed as leverage to bring holdout customers to the table, predicting "a crossing of the chasm within the industry" over the next couple of years as hyperscalers and OEMs conclude that sourcing infringing product carries unacceptable supply chain risk.
Guidance Raised, But Underlying Product Margins Actually Slipped
Vicor guided to roughly 10% sequential revenue growth in the third quarter and now expects to clear $600 million for full-year 2026, with double-digit sequential growth expected in Advanced Products specifically. Total Q2 product and royalty revenue reached $143.4 million, up 26.9% sequentially, with Advanced Products revenue climbing 45% sequentially to $94.2 million and now representing 65.7% of total revenue. Backlog rose 26% sequentially to $379.7 million, though Vinciarelli said the new licensing deal contributed "relatively little" to that increase, attributing most of the strength to existing customers scaling usage, citing the automatic test equipment market as one example where business with key customers is "a large multiple of what it has been in past years." Less encouraging: Craig-Hallum's Richard Shannon pointed out that stripping out royalty revenue, core product gross margin actually declined a couple hundred basis points sequentially. Schmidt attributed this to a one-time, non-capitalizable expense tied to relocating equipment within the Andover fab to make room for incoming tools, acknowledging "it wasn't cheap to do that," while maintaining that utilization gains should lift product margins going forward.
Customer Concentration Questions Go Unanswered
Analysts pressed repeatedly on customer concentration, referencing Cerebras and asking whether it would represent 25% to 30% of business next year; Vinciarelli declined to confirm specifics but said Vicor enjoys "a very strong relationship" with the companies in question. One analyst referenced AMD directly, citing "channel checks" and visible gold-colored components in AMD's new processors. Vinciarelli neither confirmed nor denied the AMD relationship but used the moment to describe Vicor's chip-in-package technology, noting the gold appearance comes from a proprietary 3-dimensional interconnect process and that "while it's got a golden look, it doesn't carry the cost of gold with it, to the contrary... we are going to have the lowest cost part." Management also confirmed the company banked a $14.3 million CHIPS Act investment tax credit refund from the IRS on July 13, related to its 2023 tax return, with additional credit amounts expected in future quarters.