Advanced Energy Industries (AEIS) 28th Annual Needham Growth Conference Virtual summary

Revenue and business mix

• Q3 revenue breakdown: 42% semiconductor equipment, 37% data center, remainder from industrial, medical, telecom, and networking.

• Data center business expected to double in 2025, with 25%-30% growth forecast for 2026 based on secured design wins and ongoing business.

• Industrial and medical markets are recovering, with inventory levels stabilizing and order rates increasing.

• Aerospace and defense exposure is currently low but expected to rise significantly in 2026.

• Progress made toward increasing sole source revenue to 80%, especially in semiconductor and industrial medical markets.

Data center and technology trends

• AI data center market is rapidly evolving, requiring annual product updates to meet increasing power demands.

• Capacity expanded in the Philippines, Mexicali, and a new Thailand factory to support growth and flexibility.

• Design win activity remains intense, with a focus on power density and technology reuse for efficiency.

• 800V development projects underway, with initial revenues expected in 2027 and more significant impact in 2028-2029.

• Win rates with key customers are close to 100% due to selective engagement.

Margins, capacity, and supply chain

• Data center margins have improved, now approaching corporate average due to targeted strategy and product mix.

• Manufacturing efficiency and increased volume have helped maintain overall margin goals despite data center growth.

• Strategic inventory and supplier management implemented to mitigate component shortages and supply chain risks.

• New Thailand factory to start with high-volume data center products, absorbing fixed costs efficiently.

• Tariffs have a 100 basis point impact on gross margins, but mitigation efforts and geographic positioning help offset costs.