10-Q

PART I—FINANCIAL INFORMATION

Item 1. Interim Consolidated Financial Statements (Unaudited)

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS (Unaudited)


	March 31, 2026			December 31, 2025
	(In thousands of U.S. dollars, except share data)
Assets
Current assets
Cash and cash equivalents	$	94,554		$	103,756
Accounts receivable, net		24,176			26,022
Inventories, net		32,848			34,151
Other receivables		4,203			2,882
Prepaid expenses		5,591			5,062
Hedge collateral (Note 8)		4,970			1,200
Other current assets (Note 17)		3,681			3,782
Total current assets		170,023			176,855
Property, plant and equipment, net		95,072			100,204
Operating lease right-of-use assets		1,797			2,070
Intangible assets, net		404			454
Long-term prepaid expenses, net		531			584
Deferred income taxes		61,222			64,248
Other non-current assets		6,416			7,114
Total assets	$	335,465		$	351,529
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable	$	21,330		$	20,848
Other accounts payable		10,813			11,444
Accrued expenses (Note 7)		5,490			6,929
Accrued income taxes		45			81
Operating lease liabilities		1,344			1,427
Current portion of long-term borrowings (Note 11)		26,431			—
Other current liabilities		6,264			2,681
Total current liabilities		71,717			43,410
Long-term borrowings (Note 11)		15,855			44,599
Accrued severance benefits, net		11,660			11,502
Non-current operating lease liabilities		509			690
Other non-current liabilities		2,921			3,078
Total liabilities		102,662			103,279
Commitments and contingencies (Note 17)
Stockholders’ equity
Common stock, $0.01 par value, 150,000,000 shares authorized, 58,249,450 shares issued and 36,440,854 outstanding at March 31, 2026 and 58,027,696 shares issued and 36,219,100 outstanding at December 31, 2025		581			579
Additional paid-in capital		282,178			281,537
Retained earnings		210,205			214,852
Treasury stock, 21,808,596 shares at March 31, 2026 and 21,808,596 shares at December 31, 2025, respectively		(229,910	)		(229,910	)
Accumulated other comprehensive loss		(30,251	)		(18,808	)
Total stockholders’ equity		232,803			248,250
Total liabilities and stockholders’ equity	$	335,465		$	351,529

The accompanying notes are an integral part of these consolidated financial statements.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)


	Three Months Ended
	March 31, 2026			March 31, 2025
	(In thousands of U.S. dollars, except share data)
Net sales	$	46,208		$	44,722
Cost of sales		39,014			35,360
Gross profit		7,194			9,362
Operating expenses:
Selling, general and administrative expenses		7,666			9,203
Research and development expenses		6,698			5,437
Total operating expenses		14,364			14,640
Operating loss		(7,170	)		(5,278	)
Interest income		1,063			1,540
Interest expense		(373	)		(423	)
Foreign currency loss, net		(115	)		(405	)
Other income (loss), net		(10	)		114
Loss from continuing operations before income tax benefit, net		(6,605	)		(4,452	)
Income tax benefit, net		(1,908	)		(401	)
Loss from continuing operations		(4,697	)		(4,051	)
Income (Loss) from discontinued operations, net of tax		50			(4,827	)
Net loss	$	(4,647	)	$	(8,878	)
Basic earnings (loss) per common share—
Continuing operations	$	(0.13	)	$	(0.11	)
Discontinued operations	$	0.00		$	(0.13	)
Total	$	(0.13	)	$	(0.24	)
Diluted earnings (loss) per common share—
Continuing operations	$	(0.13	)	$	(0.11	)
Discontinued operations	$	0.00		$	(0.13	)
Total	$	(0.13	)	$	(0.24	)
Weighted average number of shares—
Basic		36,407,581			36,887,841
Diluted		36,407,581			36,887,841

The accompanying notes are an integral part of these consolidated financial statements.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (Unaudited)


	Three Months Ended
	March 31, 2026			March 31, 2025
	(In thousands of U.S. dollars)
Net loss	$	(4,647	)	$	(8,878	)
Other comprehensive income (loss)
Foreign currency translation adjustments		(7,975	)		755
Derivative adjustments		(3,468	)		661
Total other comprehensive income (loss)		(11,443	)		1,416
Total comprehensive loss	$	(16,090	)	$	(7,462	)

The accompanying notes are an integral part of these consolidated financial statements.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)


	Common Stock														Accumulated
(In thousands of U.S. dollars, except share data)	Shares			Amount		Additional Paid-In Capital			Retained Earnings			Treasury Stock			Other Comprehensive Loss			Total
Three Months Ended March 31, 2026:
Balance at December 31, 2025		36,219,100		$	579	$	281,537		$	214,852		$	(229,910	)	$	(18,808	)	$	248,250
Stock-based compensation		—			—		643			—			—			—			643
Settlement of restricted stock units		221,754			2		(2	)		—			—			—			—
Other comprehensive loss, net		—			—		—			—			—			(11,443	)		(11,443	)
Net loss		—			—		—			(4,647	)		—			—			(4,647	)
Balance at March 31, 2026		36,440,854		$	581	$	282,178		$	210,205		$	(229,910	)	$	(30,251	)	$	232,803
Three Months Ended March 31, 2025:
Balance at December 31, 2024		36,912,118		$	574	$	279,423		$	244,576		$	(225,883	)	$	(21,893	)	$	276,797
Stock-based compensation		—			—		1,030			—			—			—			1,030
Settlement of restricted stock units		72,962			1		(1	)		—			—			—			—
Acquisition of treasury stock		(309,291	)		—		—			—			(1,164	)		—			(1,164	)
Other comprehensive income, net		—			—		—			—			—			1,416			1,416
Net loss		—			—		—			(8,878	)		—			—			(8,878	)
Balance at March 31, 2025		36,675,789		$	575	$	280,452		$	235,698		$	(227,047	)	$	(20,477	)	$	269,201

The accompanying notes are an integral part of these consolidated financial statements.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)


	Three Months Ended
	March 31, 2026			March 31, 2025
	(In thousands of U.S. dollars)
Cash flows from operating activities
Net loss	$	(4,647	)	$	(8,878	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities
Depreciation and amortization		2,882			3,273
Provision for severance benefits		1,212			1,514
Loss (gain) on foreign currency, net		4,262			(35	)
Provision (reversal) for inventory reserves		(321	)		1,208
Stock-based compensation		643			1,030
Deferred income taxes		8			(415	)
Others, net		74			225
Changes in operating assets and liabilities
Accounts receivable, net		1,611			635
Inventories		(191	)		(3,259	)
Other receivables		(1,547	)		(811	)
Prepaid expenses		(152	)		1,233
Other current assets		(1,725	)		970
Accounts payable		571			2,542
Other accounts payable		(254	)		(2,622	)
Accrued expenses		(1,068	)		(111	)
Accrued income taxes		(33	)		(6	)
Other current liabilities		593			(901	)
Other non-current liabilities		53			354
Payment of severance benefits		(228	)		(325	)
Others, net		(187	)		(290	)
Net cash provided by (used in) operating activities		1,556			(4,669	)
Cash flows from investing activities
Payment of hedge collateral		(3,785	)		—
Proceeds from disposal of property, plant and equipment		49			—
Purchase of property, plant and equipment		(3,915	)		(208	)
Payment for intellectual property registration		(24	)		(63	)
Collection of guarantee deposits		1,891			21
Payment of guarantee deposits		(158	)		(139	)
Net cash used in investing activities		(5,942	)		(389	)
Cash flows from financing activities
Acquisition of treasury stock		(176	)		(1,306	)
Repayment of financing related to water treatment facility arrangement		(110	)		(111	)
Repayment of principal portion of finance lease liabilities		(34	)		(38	)
Net cash used in financing activities		(320	)		(1,455	)
Effect of exchange rates on cash and cash equivalents		(4,496	)		557
Net decrease in cash and cash equivalents		(9,202	)		(5,956	)
Cash and cash equivalents
Cash and cash equivalents at beginning of period		103,756			138,610
Cash and cash equivalents at end of period	$	94,554		$	132,654
Supplemental cash flow information
Cash paid for interest on long-term borrowings	$	384		$	321
Cash refunded for income taxes	$	(42	)	$	(337	)
Non-cash investing activities
Property, plant and equipment additions in other accounts payable	$	1,292		$	1,840
Non-cash financing activities
Unsettled common stock repurchases	$	—		$	247

The accompanying notes are an integral part of these consolidated financial statements.

MAGNACHIP SEMICONDUCTOR CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(TABULAR DOLLARS IN THOUSANDS, EXCEPT SHARE DATA)

1. Business, Basis of Presentation and Significant Accounting Policies

Business

Magnachip Semiconductor Corporation (together with its subsidiaries, the “Company”) is a designer and manufacturer of analog and mixed-signal power semiconductor platform solutions for various applications, including industrial, automotive, communication, consumer and computing.

The Company develops and manufactures Power discrete (“Power Analog Solutions”) products and develops Power integrated circuit (“IC”) products. Power Analog Solutions products include metal oxide semiconductor field effect transistors (“MOSFETs”) and insulated-gate bipolar transistors (“IGBTs”) for a range of devices, including televisions, smartphones, mobile phones, wearable devices, desktop personal computers (“PCs”), notebook PCs, tablet PCs, home appliance, other consumer electronics, automotive and industrial applications such as power suppliers, e-bikes, photovoltaic inverters, LED lighting and motor drives. Power IC products include AC-DC/DC-DC converters, LED drivers, regulators, power management integrated circuits (“PMICs”) and level shifter for a range of devices, including televisions, wearable devices, notebooks, tablet PCs and other consumer electronics, as well as automotive applications.

In 2024, the Power IC business was operated by Magnachip Mixed-Signal, Ltd. (“MMS”), which later transferred the business to Magnachip Semiconductor, Ltd. (“MSK”) effective January 1, 2025, pursuant to an intercompany business transfer agreement executed between MMS and MSK. The transfer was based on the mutual understanding that consolidating the Power Analog Solutions and Power IC businesses under a single company would create a more effective framework for expanding and strengthening the Company’s business for Power products.

Basis of Presentation

The accompanying unaudited interim consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S. GAAP”). These interim consolidated financial statements include normal recurring adjustments and the elimination of all intercompany accounts and transactions which are, in the opinion of management, necessary to provide a fair statement of the Company’s financial condition and results of operations for the periods presented. These interim consolidated financial statements are presented in accordance with Accounting Standards Codification (“ASC”) 270, “Interim Reporting” and, accordingly, do not include all of the information and note disclosures required by U.S. GAAP for complete financial statements.

The December 31, 2025 balance sheet data was derived from the Company’s audited financial statements, but does not include all disclosures required by U.S. GAAP. The interim consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

There have been no material changes to the Company’s significant accounting policies as of and for the three months ended March 31, 2026 as compared to the significant accounting policies described in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

Recent Accounting Pronouncements Not Yet Adopted

In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”). Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03. ASU 2024-03 requires public companies to disclose, in the notes to the financial statements, specific information about certain costs and expenses at each interim and annual reporting period. This includes disclosing amounts related to purchases of inventory, employee compensation, depreciation, and intangible asset amortization. In addition, public companies will need to provide qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively. ASU 2024-03 is effective for public business entities for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted and the amendments in this update may be applied prospectively or retrospectively. The Company is currently evaluating the impact of this accounting standard update on its consolidated financial statements and related disclosures.

2. Discontinued Operations

On March 7, 2025, the Company’s Board of Directors authorized a strategy to transition to a pure-play Power company, focusing future investments on the Power Analog Solutions and Power IC businesses. In connection with this strategy, the Company evaluated various strategic alternatives for its Display business, including a sale, merger, joint venture, licensing, or wind-down; however, the Company was unable to complete a transaction on terms that the Company’s Board of Directors believed were in the best interests of the Company and its stockholders.

Accordingly, on April 6, 2025, the Company’s Board of Directors unanimously approved the decision to shut down the Company’s Display business (the “Discontinued Business”), including the liquidation of MMS, the Company’s indirect wholly owned subsidiary that operated the Display business. As a result, the Display business qualifies as a discontinued operation in accordance with ASC 205-20.

The following table summarizes the results from discontinued operations, net of tax, for the three months ended March 31, 2026 and 2025 (in thousands):


	Three Months Ended
	March 31, 2026			March 31, 2025
Net sales	$	1,646		$	9,556
Cost of sales		1,154			6,439
Gross profit		492			3,117
Operating expenses:
Selling, general and administrative expenses		108			1,543
Research and development expenses		133			6,281
Other charges		—			127
Total operating expenses		241			7,951
Operating income (loss) from discontinued operations		251			(4,834	)
Interest income		—			131
Interest expense		(14	)		(120	)
Foreign currency gain (loss), net		49			(4	)
Other income, net		8			—
Income (Loss) from discontinued operations before income tax expense, net		294			(4,827	)
Income tax expense, net		244			—
Income (Loss) from discontinued operations, net of tax	$	50		$	(4,827	)

The following table presents the major classes of assets and liabilities of the discontinued operations that were included in the consolidated balance sheets (in thousands):


	March 31, 2026		December 31, 2025
Accounts receivable, net	$	1,572	$	2,689
Inventories, net		2,981		2,252
Accrued severance benefits, net		32		24

The following table provides supplemental cash flows information related to discontinued operations (in thousands):


	Three Months Ended
	March 31, 2026		March 31, 2025
Significant non-cash operating activities:
Depreciation and amortization	$	5	$	153
Provision for severance benefits		10		207
Stock-based compensation		—		162
Investing activities:
Capital expenditures	$	—	$	—

Although the Company has discontinued our Display business, certain limited activities remain active solely for the purpose of completing the orderly wind-down of operations and fulfilling pre-existing customer obligations, including the sale of “end of life” (“EOL”) Display products, which is being conducted by MSK. A small team has been retained exclusively to facilitate these wind-down activities.

As such, the result of these limited ongoing activities do not qualify for presentation as part of continuing operations and are instead presented as part of discontinued operations. The following table presents the revenue, gross profit and operating expenses related to the Company’s continuing involvement with the Discontinued Business for the period presented (in thousands):


	Three Months Ended March 31, 2026
Net sales	$	1,646
Gross profit		1,154
Operating expenses		247

3. Inventories

Inventories as of March 31, 2026 and December 31, 2025 consist of the following (in thousands):


	March 31, 2026			December 31, 2025
Finished goods	$	8,310		$	7,542
Semi-finished goods and work-in-process		26,447			29,245
Raw materials		4,169			4,198
Materials in-transit		65			—
Less: inventory reserve		(6,143	)		(6,834	)
Inventories, net	$	32,848		$	34,151

Changes in inventory reserve for the three months ended March 31, 2026 and 2025 are as follows (in thousands):


	Three Months Ended
	March 31, 2026			March 31, 2025
Beginning balance	$	(6,834	)	$	(7,732	)
Change in reserve
Inventory reserve charged to costs of sales		(1,161	)		(2,299	)
Sale of previously reserved inventory		1,455			1,268
		294			(1,031	)
Write off		20			197
Translation adjustments		377			(188	)
Ending balance	$	(6,143	)	$	(8,754	)

Inventory reserve represents the Company’s best estimate in value lost due to excessive inventory level, physical deterioration, obsolescence, changes in price levels, or other causes based on individual facts and circumstances. Inventory reserve relates to inventory items including finished goods, semi-finished goods, work-in-process and raw materials. Write off of this reserve is recognized only when the related inventory has been disposed or scrapped.

4. Property, Plant and Equipment

Property, plant and equipment as of March 31, 2026 and December 31, 2025 are comprised of the following (in thousands):


	March 31, 2026			December 31, 2025
Buildings and related structures	$	23,143		$	24,371
Machinery and equipment		128,225			137,024
Finance lease right-of-use assets		470			495
Others		27,889			32,342
		179,727			194,232
Less: accumulated depreciation		(119,380	)		(128,171	)
Land		11,073			11,679
Construction in progress		23,652			22,464
Property, plant and equipment, net	$	95,072		$	100,204

Aggregate depreciation expenses associated with continuing operations totaled $2,829 thousand and $3,048 thousand for the three months ended March 31, 2026 and 2025, respectively.

Pledge Agreement

On March 26, 2024, Magnachip Semiconductor, Ltd., a Korean limited liability company (“MSK”) and indirect wholly owned subsidiary of the Company, executed a Standard Credit Agreement (together with its General Terms and Conditions, the “Loan Agreement”) with Korea Development Bank (“KDB”). In connection with the Loan Agreement, on March 26, 2024, MSK entered into a Kun-Pledge (Mortgage) Agreement (the “Pledge Agreement”) with KDB pursuant to which MSK pledged its real property and buildings located in Gumi, Korea in favor of KDB.

On December 16, 2024, MSK executed a Standard Credit Agreement (as amended) (together with its General Terms and Conditions, the “Equipment Financing Credit Agreement”) with KDB. In connection with the Equipment Financing Credit Agreement, on December 8, 2024, MSK amended the Kun-Pledge Agreement (the “Equipment Pledge Agreement”) with KDB, originally executed on or about March 26, 2024, to increase the maximum secured amount and to expand the scope of collateral to include certain machinery and equipment owned by MSK, which are located in its fabrication facility in Gumi, Korea.

See “Note 11. Borrowings” to these consolidated financial statements below for more information regarding the Loan Agreement and Equipment Financing Credit Agreement.

5. Intangible Assets

Intangible assets as of March 31, 2026 and December 31, 2025 are comprised of the following (in thousands):


	March 31, 2026
	Gross amount		Accumulated amortization			Net amount
Intellectual property assets	$	7,317	$	(6,913	)	$	404
Intangible assets	$	7,317	$	(6,913	)	$	404


	December 31, 2025
	Gross amount		Accumulated amortization			Net amount
Intellectual property assets	$	7,672	$	(7,218	)	$	454
Intangible assets	$	7,672	$	(7,218	)	$	454

Aggregate amortization expenses associated with continuing operations totaled $48 thousand and $72 thousand for the three months ended March 31, 2026 and 2025, respectively.

6. Leases

The Company has operating and finance leases for buildings and other assets such as vehicles and office equipment. The Company’s leases have remaining lease terms ranging from one year to four years.

The tables below present financial information related to the Company’s leases.

Supplemental balance sheets information related to leases as of March 31, 2026 and December 31, 2025 are as follows (in thousands):


Leases	Classification	March 31, 2026		December 31, 2025
Assets
Operating lease	Operating lease right-of-use assets	$	1,797	$	2,070
Finance lease	Property, plant and equipment, net		176		217
Total lease assets		$	1,973	$	2,287
Liabilities
Current
Operating lease	Operating lease liabilities	$	1,344	$	1,427
Finance lease	Other current liabilities		115		130
Non-current
Operating lease	Non-current operating lease liabilities		509		690
Finance lease	Other non-current liabilities		97		128
Total lease liabilities		$	2,065	$	2,375

The following table presents the weighted average remaining lease term and discount rate:


	March 31, 2026			December 31, 2025
Weighted average remaining lease term
Operating leases	1.4 years			1.5 years
Finance leases	1.9 years			2.1 years
Weighted average discount rate
Operating leases		6.0	%		6.5	%
Finance leases		7.0	%		7.0	%

The components of lease cost from continuing operations included in the Company’s consolidated statements of operations, are as follows (in thousands):


	Three Months Ended
	March 31, 2026		March 31, 2025
Operating lease cost	$	371	$	484
Finance lease cost
Amortization of right-of-use assets		30		36
Interest on lease liabilities		4		7
Total lease cost	$	405	$	527

The above table does not include an immaterial cost of short-term leases for the three months ended March 31, 2026 and 2025.

Other lease information associated with continuing operations is as follows (in thousands):


	Three Months Ended
	March 31, 2026		March 31, 2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	358	$	622
Operating cash flows from finance leases		4		7
Financing cash flows from finance leases		34		38

Non-cash transaction amounts of lease liabilities arising from obtaining right-of-use assets were $185 thousand and $966 thousand for the three months ended March 31, 2026 and 2025, respectively.

The aggregate future lease payments for operating and finance leases as of March 31, 2026 are as follows (in thousands):


	Operating Leases			Finance Leases
Remainder of 2026	$	1,114		$	100
2027		749			104
2028		68			21
2029		1			2
Total future lease payments		1,932			227
Less: Imputed interest		(79	)		(15	)
Present value of future payments	$	1,853		$	212

7. Accrued Expenses

Accrued expenses as of March 31, 2026 and December 31, 2025 are comprised of the following (in thousands):


	March 31, 2026		December 31, 2025
Payroll, benefits and related taxes, excluding severance benefits	$	4,331	$	4,999
Withholding tax attributable to intercompany interest income		111		7
Outside service fees		556		841
Others		492		1,082
Accrued expenses	$	5,490	$	6,929

8. Derivative Financial Instruments

The Company’s Korean subsidiary, Magnachip Semiconductor, Ltd., from time to time has entered into zero cost collar contracts to hedge the risk of changes in the functional-currency-equivalent cash flows attributable to currency rate changes on U.S. dollar denominated revenues.

Details of the zero cost collar contracts as of March 31, 2026 are as follows (in thousands):


Date of transaction	Total notional amount		Month of settlement
July 10, 2025	$	9,000	April 2026 to June 2026
July 17, 2025	$	9,000	July 2026 to September 2026
September 30, 2025	$	21,000	April 2026 to December 2026
November 07, 2025	$	42,000	April 2026 to June 2027

Details of the zero cost collar contracts as of December 31, 2025 are as follows (in thousands):


Date of transaction	Total notional amount		Month of settlement
February 03, 2025	$	9,000	January 2026 to March 2026
July 10, 2025	$	9,000	April 2026 to June 2026
July 17, 2025	$	9,000	July 2026 to September 2026
September 30, 2025	$	27,000	January 2026 to December 2026
November 07, 2025	$	42,000	April 2026 to June 2027

The zero cost collar contracts qualify as cash flow hedges under ASC 815, “Derivatives and Hedging,” since at both the inception of the contracts and on an ongoing basis, the hedging relationship was and is expected to be highly effective in achieving offsetting cash flows attributable to the hedged risk during the term of the contracts.

The fair values of the Company’s outstanding zero cost collar contracts recorded as assets and liabilities as of March 31, 2026 and December 31, 2025 are as follows (in thousands):


Derivatives designated as hedging instruments:		March 31, 2026		December 31, 2025
Assets Derivatives:
Zero cost collars	Other current assets	$	—	$	3
Liability Derivatives:
Zero cost collars	Other current liabilities	$	4,712	$	1,644
Zero cost collars	Other non-current liabilities	$	458	$	126

Offsetting of derivative liabilities as of March 31, 2026 is as follows (in thousands):


	Gross amounts		Gross amounts		Net amounts of liabilities		Gross amounts not offset in the balance sheets
As of March 31, 2026	of recognized liabilities		offset in the balance sheets		presented in the balance sheets		Financial instruments		Cash collateral pledged			Net amount
Liability Derivatives:
Zero cost collars	$	5,170	$	—	$	5,170	$	—	$	(4,970	)	$	200

Offsetting of derivative assets and liabilities as of December 31, 2025 is as follows (in thousands):


	Gross amounts		Gross amounts		Net amounts of assets/liabilities		Gross amounts not offset in the balance sheets
As of December 31, 2025	of recognized assets/liabilities		offset in the balance sheets		presented in the balance sheets		Financial instruments		Cash collateral pledged			Net amount
Asset Derivatives:
Zero cost collars	$	3	$	—	$	3	$	—	$	—		$	3
Liability Derivatives:
Zero cost collars	$	1,770	$	—	$	1,770	$	—	$	(1,200	)	$	570

For derivative instruments that are designated and qualify as cash flow hedges, gains or losses on the derivative aside from components excluded from the assessment of effectiveness are reported as a component of accumulated other comprehensive income or loss (“AOCI”) and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings. Gains and losses on the derivative, representing hedge components excluded from the assessment of effectiveness, are recognized in current earnings.

The following table summarizes the impact of derivative instruments on the consolidated statements of operations for the three months ended March 31, 2026 and 2025 (in thousands):


Derivatives in ASC 815 Cash Flow Hedging Relationships	Amount of Gain (Loss) Recognized in AOCI on Derivatives					Location/Amount of Loss Reclassified from AOCI Into Statement of Operations							Location/Amount of Gain (Loss) Recognized in Statement of Operations on Derivatives
	Three Months Ended March 31,						Three Months Ended March 31,							Three Months Ended March 31,
	2026			2025			2026			2025				2026			2025
Zero cost collars	$	(3,693	)	$	136	Net sales	$	(225	)	$	(525	)	Other income (loss), net	$	(20	)	$	29
	$	(3,693	)	$	136		$	(225	)	$	(525	)		$	(20	)	$	29

As of March 31, 2026, the amount expected to be reclassified from accumulated other comprehensive loss into loss within the next 12 months is $3,812 thousand.

The Company is required to deposit additional cash collateral with Nomura Financial Investment (Korea) Co., Ltd. (“NFIK”) for any exposure in excess of $500 thousand. As of March 31, 2026, $4,970 thousand of additional cash collateral were required by NFIK and recorded as hedge collateral on the consolidated balance sheet. As of December 31, 2025, $1,200 thousand of additional cash collateral were required by NFIK and recorded as hedge collateral on the consolidated balance sheet.

These zero cost collar contracts may be terminated by the counterparty if the Company’s total cash and cash equivalents is less than $30,000 thousand at the end of a fiscal quarter, unless a waiver is obtained.

9. Fair Value Measurements

Fair Value of Financial Instruments

As of March 31, 2026, the following table represents the Company’s liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):


	Carrying Value March 31, 2026		Fair Value Measurement March 31, 2026		Quoted Prices in Active Markets for Identical Liability (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Liabilities:
Derivative liabilities (Other current liabilities)	$	4,712	$	4,712		—	$	4,712		—
Derivative liabilities (Other non-current liabilities)	$	458	$	458		—	$	458		—

As of December 31, 2025, the following table represents the Company’s assets and liabilities measured at fair value on a recurring basis and the basis for that measurement (in thousands):


	Carrying Value December 31, 2025		Fair Value Measurement December 31, 2025		Quoted Prices in Active Markets for Identical Assets/Liability (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Assets:
Derivative assets (Other current assets)	$	3	$	3		—	$	3		—
Liabilities:
Derivative liabilities (Other current liabilities)	$	1,644	$	1,644		—	$	1,644		—
Derivative liabilities (Other non-current liabilities)	$	126	$	126		—	$	126		—

Items not reflected in the table above include cash equivalents, accounts receivable, other receivables, accounts payable, and other accounts payable, fair value of which approximate carrying values due to the short-term nature of these instruments. The fair value of assets and liabilities whose carrying value approximates fair value is determined using Level 2 inputs. The carrying value of the Company’s outstanding Term Loan and CAPEX Loan approximates its fair value because its interest rate reflects the market rate for the respective periods. The fair value of this debt is categorized within Level 2 of the fair value hierarchy.

10. Accrued Severance Benefits

The majority of accrued severance benefits are for employees in the Company’s Korean subsidiaries. Pursuant to the Employee Retirement Benefit Security Act of Korea, eligible employees and executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of March 31, 2026, 97% of all employees of the Company were eligible for severance benefits.

Changes in accrued severance benefits are as follows (in thousands):


	Three Months Ended
	March 31, 2026			March 31, 2025
Beginning balance	$	37,060		$	45,594
Provisions		1,212			1,514
Severance payments		(228	)		(325	)
Translation adjustments		(1,950	)		103
		36,094			46,886
Less: Cumulative contributions to severance insurance deposit accounts		(24,419	)		(28,821	)
The National Pension Fund		(15	)		(24	)
Accrued severance benefits, net	$	11,660		$	18,041

The severance benefits funded through the Company’s National Pension Fund have been and will be used exclusively for payment of severance benefits to eligible employees. These amounts have been deducted from the accrued severance benefit balance.

Beginning in July 2018, the Company contributes to certain severance insurance deposit accounts a certain percentage of severance benefits that are accrued for eligible employees for their services from January 1, 2018 pursuant to Employee Retirement Benefit Security Act of Korea. These accounts consist of time deposits and other guaranteed principal and interest, and are maintained at insurance companies, banks or security companies for the benefit of employees. The Company deducts the contributions made to these severance insurance deposit accounts from its accrued severance benefits.

The Company is liable to pay the following future benefits to its non-executive employees upon their normal retirement age (in thousands):


	Severance benefit
2027	$	379
2028	$	—
2029	$	1,683
2030	$	2,113
2031	$	3,092
2032 – 2037	$	17,093

The above amounts were determined based on the non-executive employees’ current salary rates and the number of service years that will be accumulated upon their retirement dates. These amounts do not include amounts that might be paid to non-executive employees that will cease working with the Company before their normal retirement ages.

Korea’s mandatory retirement age is 60 years of age or older under the Employment Promotion for the Aged Act. The Company sets the retirement age of employees at 60.

11. Borrowings

Borrowings as of March 31, 2026 and December 31, 2025 are as follows (in thousands):


	March 31, 2026			December 31, 2025
Term Loan due March 2027	$	26,431		$	27,877
CAPEX Loans due June 2035		15,855			16,722
Total borrowings	$	42,286		$	44,599
Less: current portion of long-term borrowings		(26,431	)		—
Long-term borrowings	$	15,855		$	44,599

Term Loan

The Loan Agreement provides for a working capital term loan (the “Term Loan”) of KRW 40,000,000,000 (approximately $29,835 thousand based on the KRW/USD exchange rate of 1,340.7:1 as of March 26, 2024 as quoted by KEB Hana Bank), which was funded in full to MSK on March 26, 2024.

The Term Loan bears interest at a variable rate equal to the 3-month CD rate quoted by KDB, plus 1.21%, which rate is adjusted quarterly. The initial interest rate on the Term Loan was 4.86% per annum. The Term Loan requires monthly interest-only payments and matures on March 26, 2027, at which time the full principal balance will be due and payable. All obligations of MSK under the Loan Agreement and the Term Loan are secured by the Fab 3 properties pursuant to the Pledge Agreement.

As of March 31, 2026, approximately $26,431 thousand aggregate principal amount of the Term Loan was outstanding, bearing interest at a variable rate of 4.06% per annum as of that date.

CAPEX Loans

On December 16, 2024, MSK executed a Standard Credit Agreement (as amended) (together with its General Terms and Conditions, the “Equipment Financing Credit Agreement”) with KDB. In connection with the Equipment Financing Credit Agreement, on December 8, 2024, MSK also amended the Kun-Pledge Agreement (the “Equipment Pledge Agreement”) with KDB, originally executed on or about March 26, 2024, to increase the maximum secured amount and to expand the scope of collateral to include certain machinery and equipment owned by MSK, which are located in its fabrication facility located in Gumi, Korea (“Fab 3 machinery and equipment”).

The Equipment Financing Credit Agreement provides for loans for MSK’s capital expenditures (the “CAPEX Loans”) up to an aggregate of KRW 38,000,000,000 ($26,523 thousand based on the KRW/USD exchange rate of 1,432.7:1 as of December 16, 2024 as quoted by KEB Hana Bank), which have been and will be funded directly to capital expenditure supply vendors by KDB upon the submission of a request form by MSK with the necessary evidence such as purchase agreement, invoice and other documentation, as applicable.

The CAPEX Loans bear interest at a fixed rate quoted by the treasury bond market yield (a six-year Korea treasury bill rate). The CAPEX Loans mature in ten years from the initial loan disbursement date (the “Maturity Date”), with an initial two-year (measured from the first loan disbursement date) interest-only payment period during which only interest is paid monthly, followed by eight years of amortizing payments where the principal is repaid in equal installments every three months and interest is paid monthly. The Equipment Financing Credit Agreement contains customary representations of MSK in connection with the execution of the agreement and with each borrowing of the CAPEX Loans and customary terms and conditions for a secured equipment financing loan of this type in Korea. All obligations of MSK under the Equipment Financing Credit Agreement and the CAPEX Loans are secured by certain Fab 3 machinery and equipment pursuant to the Equipment Pledge Agreement.

During 2025, under its existing Equipment Financing Credit Agreement with KDB, MSK entered into three CAPEX Loans in the aggregate principal amount of KRW 23,995,000,000, consisting of (i) KRW 9,520,000,000 on June 26, 2025, (ii) KRW 5,075,000,000 on September 26, 2025, and (iii) KRW 9,400,000,000 on December 30, 2025 (approximately $15,855 thousand in the aggregate based on the KRW/USD exchange rate of 1,513.4:1 as of March 31, 2026, as quoted by KEB Hana Bank). The CAPEX Loans bear a weighted average interest rate of 2.91% per annum and mature on June 26, 2035.

As of March 31, 2026, the aggregate principal amount outstanding under the CAPEX Loans was approximately $15,855 thousand, and the scheduled principal repayment amounts are as following (in thousands):


	Principal Repayments
Remainder of 2026	$	—
2027	$	991
2028	$	1,982
2029	$	1,982
2030	$	1,982
2031 – 2035	$	8,918

12. Foreign Currency Loss, Net

Net foreign currency gain or loss includes non-cash translation gain or loss associated with intercompany balances. A substantial portion of the Company’s net foreign currency gain or loss is non-cash translation gain or loss associated with intercompany long-term loans to MSK, the Company’s Korean subsidiary. The loans are denominated in U.S. dollars and are affected by changes in the exchange rate between the Korean won and the U.S. dollar. As of March 31, 2026 and December 31, 2025, the outstanding intercompany loan balances including accrued interest between MSK and the Dutch subsidiary were $76,000 thousand and $75,063 thousand, respectively. The Korean won to U.S. dollar exchange rates were 1,513.4:1 and 1,434.9:1 using the first base rate as of March 31, 2026 and December 31, 2025, respectively, as quoted by the KEB Hana Bank.

13. Income Taxes

The Company and its subsidiaries file income tax returns in Korea, Japan, Taiwan, the U.S. and in various other jurisdictions. The Company is subject to income or non-income tax examinations by tax authorities of these jurisdictions for all open tax years.

For the three months ended March 31, 2026 and 2025, the Company recorded income tax benefits of $1,908 thousand and $401 thousand, respectively, primarily related to its primary operating entity in Korea, based on the estimated taxable loss for each respective period.

14. Geographic and Other Information

The Company operates within a single operating segment, Power Solutions business, which consists of the Power Analog Solutions and Power IC businesses.

The Chief Executive Officer, as the chief operating decision maker (“CODM”), organizes the Company and measures performance of two business lines of Power Analog Solutions and Power IC in the Power Solutions business at the level of revenue and gross profit margin by comparing actual results against previously forecasted targets.

The Company’s CODM does not evaluate the performance of each business line using any other information, such as asset or liability.

The following sets forth information relating to the operating segment, Power Solutions business (in thousands). For financial information below gross profit, including operating income and expenses as well as other income and expenses, please refer to the Company’s consolidated statements of operations.


	Three Months Ended
	March 31, 2026		March 31, 2025
Net Sales
Power Solutions business
Power Analog Solutions	$	41,647	$	39,857
Power IC		4,561		4,865
Total Power Solutions business		46,208		44,722
Total Net Sales	$	46,208	$	44,722


	Three Months Ended
	March 31, 2026		March 31, 2025
Cost of Sales
Power Solutions business
Power Analog Solutions	$	36,296	$	32,757
Power IC		2,718		2,603
Total Power Solutions business		39,014		35,360
Total cost of sales	$	39,014	$	35,360


	Three Months Ended
	March 31, 2026		March 31, 2025
Gross Profit
Power Solutions business
Power Analog Solutions	$	5,351	$	7,100
Power IC		1,843		2,262
Total Power Solutions business		7,194		9,362
Total gross profit	$	7,194	$	9,362

The following is a summary of net sales by geographic region, based on the location to which the products are billed (in thousands):


	Three Months Ended
	March 31, 2026		March 31, 2025
Korea	$	20,666	$	21,716
Asia Pacific (other than Korea)		23,587		20,992
United States		1,239		1,182
Europe		716		832
Total	$	46,208	$	44,722

For the three months ended March 31, 2026 and 2025, of the Company’s net sales in Asia Pacific (other than Korea), net sales in China and Hong Kong together represented 83.8% and 83.1%, respectively, and net sales in Taiwan represented 11.0% and 11.3%, respectively.

Net sales from the Company’s top ten largest customers accounted for 73.4% and 75.4% for the three months ended March 31, 2026 and 2025, respectively.

For the three months ended March 31, 2026, the Company had one customer that represented 31.0% of net sales. For the three months ended March 31, 2025, the Company had one customer that represented 32.9% of net sales.

As of March 31, 2026, two customers accounted for 40.6% and 14.6% of the Company’s accounts receivable, respectively. As of December 31, 2025, two customers accounted for 35.4% and 15.7% of the Company’s accounts receivable, respectively.

15. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss consists of the following as of March 31, 2026 and December 31, 2025, respectively (in thousands):


	March 31, 2026			December 31, 2025
Foreign currency translation adjustments	$	(26,068	)	$	(18,093	)
Derivative adjustments		(4,183	)		(715	)
Total	$	(30,251	)	$	(18,808	)

Changes in accumulated other comprehensive loss for the three months ended March 31, 2026 and 2025 are as follows (in thousands):


Three Months Ended March 31, 2026	Foreign currency translation adjustments			Derivative adjustments			Total
Beginning balance	$	(18,093	)	$	(715	)	$	(18,808	)
Other comprehensive loss before reclassifications		(7,975	)		(3,693	)		(11,668	)
Amounts reclassified from accumulated other comprehensive loss		—			225			225
Net current-period other comprehensive loss		(7,975	)		(3,468	)		(11,443	)
Ending balance	$	(26,068	)	$	(4,183	)	$	(30,251	)


Three Months Ended March 31, 2025	Foreign currency translation adjustments			Derivative adjustments			Total
Beginning balance	$	(20,927	)	$	(966	)	$	(21,893	)
Other comprehensive income before reclassifications		755			136			891
Amounts reclassified from accumulated other comprehensive loss		—			525			525
Net current-period other comprehensive income		755			661			1,416
Ending balance	$	(20,172	)	$	(305	)	$	(20,477	)

16. Loss Per Share

The following table illustrates the computation of basic and diluted loss per common share for the three months ended March 31, 2026 and 2025:


	Three Months Ended
	March 31, 2026			March 31, 2025
	(In thousands of U.S. dollars, except share data)
Basic loss per common share
Loss from continuing operations	$	(4,697	)	$	(4,051	)
Income (Loss) from discontinued operations, net of tax		50			(4,827	)
Net loss	$	(4,647	)	$	(8,878	)
Basic weighted average common stock outstanding		36,407,581			36,887,841
Basic earnings (loss) per common share
Continuing operations	$	(0.13	)	$	(0.11	)
Discontinued operations	$	0.00		$	(0.13	)
Total	$	(0.13	)	$	(0.24	)
Diluted loss per common share
Loss from continuing operations	$	(4,697	)	$	(4,051	)
Income (Loss) from discontinued operations, net of tax		50			(4,827	)
Net loss	$	(4,647	)	$	(8,878	)
Basic weighted average common stock outstanding		36,407,581			36,887,841
Net effect of dilutive equity awards		—			—
Diluted weighted average common stock outstanding		36,407,581			36,887,841
Diluted earnings (loss) per common share
Continuing operations	$	(0.13	)	$	(0.11	)
Discontinued operations	$	0.00		$	(0.13	)
Total	$	(0.13	)	$	(0.24	)

Diluted earnings (loss) per common share adjusts basic earnings (loss) per common share for the potentially dilutive impact of stock options and restricted stock units. As the Company has reported loss from continuing operations for the three months ended March 31, 2026 and 2025, all potentially dilutive securities are antidilutive and accordingly not considered, therefore basic loss per common share equals diluted loss per common share.

The following outstanding instruments were excluded from the computation of diluted loss per common share, as they have an anti-dilutive effect on the calculation:


	Three Months Ended
	March 31, 2026		March 31, 2025
Options		222,448		728,792
Restricted Stock Units		1,373,835		1,783,538

17. Commitments and Contingencies

Advances to Suppliers

The Company, from time to time, may make advances in form of prepayments or deposits to suppliers, including external foundries, to meet its planned production. The Company recorded advances of $508 thousand and $512 thousand as other current assets as of March 31, 2026 and December 31, 2025, respectively.

18. Subsequent Events

Derivative contracts

In April 2026, the Company and NFIK entered into derivative contracts of zero cost collars for the period from April 2027 to September 2027. The total notional amounts are $18,000 thousand.

FORWARD LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Report”) contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended, that involve risks and uncertainties. Forward-looking statements give our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify these statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “anticipate,” “estimate,” “expect,” “project,” “intend,” “plan,” “believe” and other words and terms of similar meaning in connection with any discussion of the timing or nature of future operating or financial performance or other events. All statements other than statements of historical facts included in this Report that address activities, events or developments that we expect, believe or anticipate will or may occur in the future are forward-looking statements.

These forward-looking statements are largely based on our expectations and beliefs concerning future events, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors relating to our operations and business environment, all of which are difficult to predict and many of which are beyond our control. Although we believe our estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond our control. In addition, management’s assumptions about future events may prove to be inaccurate. Management cautions all readers that the forward-looking statements contained in this Report are not guarantees of future performance, and we cannot assure any reader that those statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to the factors listed in this section, in “Part II: Item 1A. Risk Factors” herein and in “Part I, Item 1A. Risk Factors” in our Annual Report on Form 10-K for our fiscal year ended December 31, 2025 filed on March 16, 2026 (“2025 Form 10-K”).

All forward-looking statements speak only as of the date of this Report. We do not intend to publicly update or revise any forward-looking statements as a result of new information or future events or otherwise, except as required by law. These cautionary statements qualify all forward-looking statements attributable to us or persons acting on our behalf.

Statements made in this Report, unless the context otherwise requires, that include the use of the terms “we,” “us,” “our” and “Magnachip” refer to Magnachip Semiconductor Corporation and its consolidated subsidiaries. The term “Korea” refers to the Republic of Korea or South Korea.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis should be read in conjunction with the unaudited consolidated financial statements and the related notes included elsewhere in this Report.

Overview

We are a designer and manufacturer of analog and mixed-signal power semiconductor platform solutions for various applications, including industrial, automotive, communication, consumer and computing. We provide a broad range of standard products to customers worldwide. We, with about 45 years of operating history, own a substantial number of registered patents and pending applications, and have extensive engineering, design and manufacturing process expertise.

We develop and manufacture Power Analog Solutions products and develop Power integrated circuit (“IC”) products. Power Analog Solutions products include metal oxide semiconductor field effect transistors (“MOSFETs”) and insulated-gate bipolar transistors (“IGBTs”) for a range of devices, including televisions, smartphones, mobile phones, wearable devices, desktop PCs, notebook PCs, tablet PCs, home appliance, other consumer electronics, automotive and industrial applications such as power suppliers, e-bikes, photovoltaic inverters, LED lighting and motor drives.

Our Power IC products provide Power IC solutions to major television suppliers and large panel display suppliers. These products include AC-DC/DC-DC converters, LED drivers, regulators, power management integrated circuits (“PMICs”) and level shifter for a range of devices, including televisions, wearable devices, notebooks, tablet PCs and other consumer electronics, as well as automotive applications.

Our wide variety of analog and mixed-signal power semiconductor products combined with our mature technology platform allow us to address multiple high-growth end markets and rapidly develop and introduce new products and services in response to market demands. Our design center and substantial manufacturing operations in Korea place us at the core of the global electronics device supply chain. We believe this enables us to quickly and efficiently respond to our customers’ needs, and allows us to better serve and capture additional demand from existing and new customers. Substantially all of our Power IC products are produced using an external foundry. Through strategic cooperation with an external foundry, we seek to ensure we outsource wafers at competitive prices and produce quality products.

To maintain and increase our profitability, we must accurately forecast trends in demand for electronics devices that incorporate semiconductor products we produce. We must understand our customers’ needs as well as the likely end market trends and demand in the markets they serve, including trends and cyclicality in the semiconductor industry, which are influenced by broader macroeconomic conditions, including inflation, interest rates, geopolitical developments and global trade policies. For example, certain shipments to customers with operations in or exposure to China or the United States are subject to heightened risks and uncertainties related to trade and export control policies, including the imposition of new tariffs or increases in existing tariffs. Furthermore, ongoing geopolitical tensions, including conflicts and instability in the Middle East, such as a potential escalation involving the United States, Israel, and Iran, as well as tensions between China and Taiwan, may contribute to increased volatility in global markets and increased costs, as well as disruptions in supply chains and impacts to customer demand. We must also invest in relevant research and development activities and purchase necessary materials on a timely basis to meet our customers’ demand while maintaining our target margins and cash flow.

The semiconductor markets in which we participate are highly competitive. The prices of our products tend to decrease regularly over their useful lives, and such price decreases can be significant as new generations of products are introduced by us or our competitors. We strive to offset the impact of declining selling prices for existing products through cost reductions and the introduction of new products that command selling prices above the average selling price of our existing products. In addition, we seek to manage our inventories and manufacturing capacity so as to mitigate the risk of losses from product obsolescence.

Demand for our products and services is driven by overall demand for industrial, automotive, communication, consumer and computing products and can be adversely affected by periods of weak consumer and enterprise spending, changes in global trade conditions, export controls, tariffs, geopolitical uncertainty, or by market share losses by our customers. Macroeconomic conditions, including inflation, increased energy costs and supply chain constraints, have contributed to increased logistics and input costs across the supply chain, and such costs may remain elevated. We continue to monitor for potential disruptions or cost increases resulting from geopolitical tensions, including in the Middle East and Eastern Europe, as well as evolving global trade policies. In order to mitigate the impact of market volatility on our business, we continually strive to diversify our portfolio of products, customers, and target applications. We also expect that new competitors will emerge in these markets that may place increased pressure on the pricing for our products and services. While we believe we are well positioned competitively to compete in these markets and against these

new competitors as a result of our long operating history, existing manufacturing capacity and our worldwide customer base, if we are not effective in competing in these markets, our operating results may be adversely affected.

Net sales for our Power Analog Solutions and Power IC products are driven by design wins in which we are selected by an electronics original equipment manufacturer (“OEM”) or other potential customers to supply its demand for a particular product. A customer will often have more than one supplier designed into multi-source components for a particular product line. Once we have design wins and the products enter into mass production, we often specify the pricing of a particular product for a set period of time, with periodic discussions and renegotiations of pricing with our customers. In any given period, our net sales depend heavily upon the end-market demand for the goods in which our products are used, the inventory levels maintained by our customers and, in some cases, allocation of demand for components for a particular product among selected qualified suppliers.

In contrast to completely fabless semiconductor companies, our internal manufacturing capacity provides us with greater control over certain manufacturing costs and the ability to implement process and production improvements for our internally manufactured products, which can favorably impact gross profit margins. Our internal manufacturing capacity also allows for better control over delivery schedules, improved consistency over product quality and reliability and improved ability to protect intellectual property from misappropriation on these internally manufactured products. However, having internal manufacturing capacity exposes us to the risk of under-utilization of manufacturing capacity that results in lower gross profit margins, particularly during downturns in the semiconductor industry.

Our Power Analog Solutions and Power IC businesses require investments in capital equipment. Analog and mixed-signal manufacturing facilities and processes are typically distinguished by the design and process implementation expertise rather than the use of the most advanced equipment. Many of these processes also tend to migrate more slowly to smaller geometries due to technological barriers and increased costs. For example, some of our products use high-voltage technology that requires larger geometries and that may not migrate to smaller geometries for several years, if at all. As a result, our manufacturing base and strategy do not require substantial investment in leading edge process equipment for those products, allowing us to utilize our facilities and equipment over an extended period of time with moderate required capital investments. In addition, we are less likely to experience significant industry overcapacity, which can cause product prices to decline significantly. In general, we seek to invest in manufacturing capacity that can be used for multiple high-value applications over an extended period of time. In addition, we outsource manufacturing of those Power IC products which do require advanced technology and 8-inch wafer capacity. We believe this balanced capital investment strategy enables us to optimize our capital investments and facilitates more diversified product and service offerings.

As we expanded our design capabilities to products that require lower geometries unavailable at our existing manufacturing facilities, we have started outsourcing 8-inch wafer for Power IC products after the sale of our fabrication facility located in Cheongju, Korea in 2020. This additional source of manufacturing has been an important part of our supply chain management. By outsourcing manufacturing of Power IC products to an external foundry, we have been able to adapt dynamically to changing customer requirements and address growing markets without substantial capital investments by us. However, relying on the external foundry exposes us to the risk of being unable to secure manufacturing capacity, particularly during global shortages of foundry services. Although we work strategically with the external foundry to ensure long-term wafer capacity, if these efforts are at any time unsuccessful, our ability to deliver products to our customers may be negatively impacted, which would adversely affect our relationship with customers and opportunities to secure new design-wins.

Our success going forward will depend upon our ability to adapt to future challenges such as the emergence of new competitors for our products and services or the consolidation of current competitors. Additionally, we must innovate to remain ahead of, or at least rapidly adapt to, technological breakthroughs that may lead to a significant change in the technology necessary to deliver our products and services. We believe that our established relationships and close collaboration with leading customers enhance our awareness of new product opportunities, market and technology trends and improve our ability to adapt and grow successfully.

Recent Developments

Gumi Power Substation Upgrade

A planned upgrade to the electrical substation in our Gumi fabrication facility by a third party is currently expected to temporarily impact our fabrication operations during the third quarter of 2026. To help mitigate potential customer supply disruptions, we currently plan to increase inventory production during the second quarter and a portion of the third quarter of 2026 in advance of the electrical substation upgrade being carried out by a third party owner of the substation. As a result, we expect our factory utilization rate to be somewhat higher in the second quarter of 2026, followed by lower utilization in the third quarter. Accordingly, we expect higher utilization to have a favorable impact on gross profit margin in the second quarter, while lower utilization in the third quarter is expected to adversely affect gross profit margins in the third and fourth quarters.

Shut-Down of Display business

On March 7, 2025, our Board of Directors authorized a strategy to transition to a pure-play Power company, focusing our investments on the Power Analog Solutions and Power IC businesses to enhance profitability and maximize shareholder value. As part of this strategy, we explored all strategic options including a sale, merger, joint venture, licensing, and wind-down for our Display business (Display IC products). However, we were not able to consummate a transaction following several months of discussions with several interested parties on terms that our Board of Directors believed were in the best interests of the Company and our stockholders.

Accordingly, on April 6, 2025, our Board of Directors unanimously approved the plan to shut down our Display business (the “Discontinued Business”) by the end of the second quarter of 2025, including the liquidation of MMS, our indirect wholly owned subsidiary that operated the Discontinued Business. For additional information regarding the announcement of our plan to shut down display business, see the Company’s Current Report on Form 8-K filed on April 8, 2025.

Although we have discontinued our Display business, certain limited activities remain solely for the purpose of completing the orderly wind-down of operations and fulfilling pre-existing customer obligations, including the sale of “end of life” (“EOL”) Display products, which is being conducted by MSK. A small team has been retained exclusively to facilitate these wind-down activities. The sale of EOL Display products generated cash inflow of $5.8 million during the second half of 2025 and is expected to generate cash inflow of over $10 million in the next two years, depending upon customer demand. In addition, we continue to evaluate the potential monetization of the intellectual property assets of the Discontinued Business. Any proceeds from such monetization, if realized, could result in additional cash inflows.

The total cash cost of the liquidation of MMS was approximately $13 million, which is expected to be offset by the cash inflow that may be generated as described above. The one-time liquidation cost consisted of statutory severance and other employee-related costs, contract termination charges and other associated costs. Of this total cash cost, we paid $6.5 million of statutory severance and other employee-related costs in the second quarter of 2025. Further, we originally expected to pay certain contract termination charges in full along with the statutory severance and other employee-related costs, but negotiated with the respective vendors for those contract termination charges totaling $6.0 million to be paid over the duration of the remaining existing contract terms.

Macroeconomic Industry Conditions

The semiconductor industry continues to face a number of macroeconomic challenges, including rising inflation, higher interest rates, supply chain disruptions, inventory corrections, shifting customer and end-user demand, fluctuations in currency rates, and geopolitical tensions, including without limitation ongoing conflicts involving Russia and Ukraine, sustained military action and conflicts in the Middle East, and trade conflicts or trade wars (especially those between the United States and China) including those arising directly or indirectly from tariffs imposed by the United States, any one or more of which may cause (if they have not already caused) volatility and unpredictability in the supply chain or market for semiconductor products and end-user demand. In particular, the military conflict involving the United States, Israel, and Iran has created significant volatility in global energy and materials markets and may adversely affect our manufacturing costs, supply chain continuity, and customer demand. For example, the resulting disruptions to oil, gas, and critical raw material shipments could constrain availability and/or increase costs of key inputs used in semiconductor production and could lead to delays or reduced demand across end markets, which may materially and adversely impact our business, financial condition, and results of operations. The length and severity of these macroeconomic events and their overall impact on our business, results of operations and financial condition remain uncertain.

Developments in Export Control Regulations

On October 7, 2022, the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce published changes to U.S. export control regulations (U.S. Export Regulations), including new restrictions on Chinese entities’ ability to obtain advanced computing chips, develop and maintain supercomputers, and manufacture advanced semiconductors. Further, on October 12, 2022, a

new rule went into effect requiring U.S. persons to obtain a license prior to engaging in certain activities that could “support” certain end-uses and end-users, including those related to weapons of mass destruction. Additionally, on October 21, 2022, BIS brought into effect a series of new Foreign Direct Product (FDP) rules and various new controls on advanced computing items, significantly expanding the scope of items that are subject to export control under the U.S. Export Regulations. More recently, on October 25, 2023, BIS published additional rules, which went into effect on November 17, 2023 to expand, clarify, and correct the rules published in October 2022. A further corrected and clarified version of these rules went into effect on April 4, 2024. On January 16, 2025, BIS published amendments and clarifications of the U.S. Export Regulations which further tightened controls of advanced computing items. On September 30, 2025, BIS published an “Affiliates Rule” to expand end-user controls to cover certain affiliates of entities designated on BIS Entity List or Military End User List or designated on the Specially Designated Nationals and Blocked Persons (SDN) List administered by the U.S. Department of the Treasury, Office of Foreign Assets Control. BIS subsequently delayed enforcement of the Affiliates Rule until November 2026. Based on our understanding of the U.S. Export Regulations and related rules currently in effect, we expect to invest additional resources and efforts in the screening of prospects, customers, and end-users in order to comply with the new Affiliates Rule once it goes into effect; while we do not anticipate that the rest of the rules will have a material impact on our current business, we will continue reviewing and assessing these rules and regulations and their potential impact on our business. BIS has recently altered aspects of its semiconductor licensing policies to a case-by-case review, taking into account requirements such as export volume thresholds and third party testing requirements. Additional changes to the U.S. Export Regulations are expected, such as recently proposed rule changes that may expand restrictions on export transactions involving end users or end uses with military connections; but the scope or timing of such changes is uncertain. We will continue to monitor such developments, including potential additional trade restrictions, and other regulatory or policy changes by the U.S. and foreign governments.

Explanation and Reconciliation of Non-U.S. GAAP Measures

Adjusted EBITDA, Adjusted Operating Income (Loss) and Adjusted Net Income (Loss)

We use the terms Adjusted EBITDA, Adjusted Operating Income (Loss) and Adjusted Net Income (Loss) (including on a per share basis) in this Report. Adjusted EBITDA, as we define it, is a non-U.S. GAAP measure. We define Adjusted EBITDA for the periods indicated as EBITDA (as defined below), adjusted to exclude (i) equity-based compensation expense, (ii) foreign currency loss, net and (iii) derivative valuation loss (gain), net. EBITDA for the periods indicated is defined as net income(loss) before interest income, interest expense, income tax benefit, net and depreciation and amortization.

See the footnotes to the table below for further information regarding these items. We present Adjusted EBITDA as a supplemental measure of our performance because:

•

we believe that Adjusted EBITDA, by eliminating the impact of a number of items that we do not consider to be indicative of our core ongoing operating performance, provides a more comparable measure of our operating performance from period-to-period and may be a better indicator of future performance;

•

we believe that Adjusted EBITDA is commonly requested and used by securities analysts, investors and other interested parties in the evaluation of a company as an enterprise level performance measure that eliminates the effects of financing, income taxes and the accounting effects of capital spending, as well as other one time or recurring items described above; and

•

we believe that Adjusted EBITDA is useful for investors, among other reasons, to assess a company’s period-to-period core operating performance and to understand and assess the manner in which management analyzes operating performance.

We use Adjusted EBITDA in a number of ways, including:

•

for planning purposes, including the preparation of our annual operating budget;

•

to evaluate the effectiveness of our enterprise level business strategies;

•

in communications with our Board of Directors concerning our consolidated financial performance; and

•

in certain of our compensation plans as a performance measure for determining incentive compensation payments.

We encourage you to evaluate each adjustment and the reasons we consider them appropriate. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses (income) similar to the adjustments in this presentation. Adjusted EBITDA is not a measure defined in accordance with U.S. GAAP and should not be construed as an alternative to income (loss) from continuing operations or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities as a measure of liquidity. A reconciliation of loss to Adjusted EBITDA from continuing operations is as follows:


	Three Months Ended March 31, 2026			Three Months Ended March 31, 2025
	(Dollars in millions)
Loss from continuing operations	$	(4.7	)	$	(4.1	)
Interest income		(1.1	)		(1.5	)
Interest expense		0.4			0.4
Income tax benefit, net		(1.9	)		(0.4	)
Depreciation and amortization		2.9			3.1
EBITDA from continuing operations	$	(4.4	)	$	(2.4	)
Adjustments:
Equity-based compensation expense(a)		0.6			0.9
Foreign currency loss, net(b)		0.1			0.4
Derivative valuation loss (gain), net(c)		0.0			(0.0	)
Adjusted EBITDA from continuing operations	$	(3.6	)	$	(1.2	)

(a)

This adjustment eliminates the impact of non-cash equity-based compensation expenses. Although we expect to incur non-cash equity-based compensation expenses in the future, these expenses do not generally require cash settlement, and, therefore, are not used by us to assess the profitability of our operations. We believe that analysts and investors will find it helpful to review our operating performance without the effects of these non-cash expenses as supplemental information.

(b)

This adjustment mainly eliminates the impact of non-cash foreign currency translation associated with intercompany debt obligations and foreign currency denominated receivables and payables, as well as the cash impact of foreign currency transaction gains or losses on collection of such receivables and payment of such payables. Although we expect to incur foreign currency translation gains or losses in the future, we believe that analysts and investors will find it helpful to review our operating performance without the effects of these primarily non-cash gains or losses, which we cannot control. Additionally, we believe the isolation of this adjustment provides investors with enhanced comparability to prior and future periods of our operating performance results.

(c)

This adjustment eliminates the impact of gain or loss recognized in income on derivatives, which represents derivatives value changes excluded from the risk being hedged. We enter into derivative transactions to mitigate foreign exchange risks. As our derivative transactions are limited to a certain portion of our expected cash flows denominated in U.S. dollars, and we do not enter into derivative transactions for trading or speculative purposes, we do not believe that these charges or gains are indicative of our core operating performance.

Adjusted EBITDA has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

•

Adjusted EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments;

•

Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted EBITDA does not reflect the interest expense, or the cash requirements necessary to service interest or principal payments, on our debt;

•

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often need to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements;

•

Adjusted EBITDA does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees;

•

Adjusted EBITDA does not reflect the costs of holding certain assets and liabilities in foreign currencies; and

•

other companies in our industry may calculate Adjusted EBITDA differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted EBITDA should not be considered as a measure of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted EBITDA only supplementally.

We present Adjusted Operating Income (Loss) as supplemental measures of our performance. We prepare Adjusted Operating Income (Loss) by adjusting operating income (loss) to eliminate the impact of equity-based compensation expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Operating Income (Loss) is useful to investors to provide a supplemental way to understand our underlying operating performance and allows investors to monitor and understand changes in our ability to generate income (loss) from ongoing business operations.

Adjusted Operating Income (Loss) is not a measure defined in accordance with U.S. GAAP and should not be construed as an alternative to operating income (loss) or any other performance measure derived in accordance with U.S. GAAP. We encourage you to evaluate each adjustment and the reasons we consider them appropriate. Other companies in our industry may calculate Adjusted Operating Income (Loss) differently than we do, limiting its usefulness as a comparative measure. In addition, in evaluating Adjusted Operating Income (Loss), you should be aware that in the future we may incur expenses (income) similar to the adjustments in this presentation. We define Adjusted Operating Income (Loss) for the periods indicated as operating income (loss) adjusted to exclude equity-based compensation expense.

The following table summarizes the adjustments to operating loss that we make in order to calculate Adjusted Operating Loss for the periods indicated:


	Three Months Ended March 31, 2026			Three Months Ended March 31, 2025
	(Dollars in millions)
Operating loss	$	(7.2	)	$	(5.3	)
Adjustments:
Equity-based compensation expense(a)		0.6			0.9
Adjusted Operating Loss	$	(6.5	)	$	(4.4	)

(a)

We present Adjusted Net Income (Loss) (including on a per share basis) as a further supplemental measure of our performance. We prepare Adjusted Net Income (Loss) (including on a per share basis) by adjusting net income (loss) to eliminate the impact of a number of non-cash expenses and other items that may be either one time or recurring that we do not consider to be indicative of our core ongoing operating performance. We believe that Adjusted Net Income (Loss) (including on a per share basis) is particularly useful because it reflects the impact of our asset base and capital structure on our operating performance. We present Adjusted Net Income (Loss) (including on a per share basis) for a number of reasons, including:

•

we use Adjusted Net Income (Loss) (including on a per share basis) in communications with our Board of Directors concerning our consolidated financial performance without the impact of non-cash expenses and the other items as we discussed below since we believe that it is a more consistent measure of our core operating results from period to period; and

•

we believe that reporting Adjusted Net Income (Loss) (including on a per share basis) is useful to readers in evaluating our core operating results because it eliminates the effects of non-cash expenses as well as the other items we discuss below, such as foreign currency gains and losses, which are out of our control and can vary significantly from period to period.

Adjusted Net Income (Loss) (including on a per share basis) is not a measure defined in accordance with U.S. GAAP and should not be construed as an alternative to income (loss) from continuing operations or any other performance measure derived in accordance with U.S. GAAP, or as an alternative to cash flows from operating activities as a measure of liquidity. We encourage you to evaluate each adjustment and the reasons we consider them appropriate. Other companies in our industry may calculate Adjusted Net Income (Loss) (including on a per share basis) differently than we do, limiting its usefulness as a comparative measure. In addition, in evaluating Adjusted Net Income (Loss) (including on a per share basis), you should be aware that in the future we may incur expenses (income) similar to the adjustments in this presentation. We define Adjusted Net Income (Loss) (including on a per share basis); for the periods indicated as net income (loss), adjusted to exclude (i) equity-based compensation expense, (ii) foreign currency loss, net, (iii) derivative valuation loss (gain), net and (iv) income tax effect on non-GAAP adjustments.

The following table summarizes the adjustments to loss from continuing operations that we make in order to calculate Adjusted Loss (including on a per share basis) from continuing operations for the periods indicated:


	Three Months Ended March 31, 2026			Three Months Ended March 31, 2025
	(Dollars in millions, except per share data)
Loss from continuing operations	$	(4.7	)	$	(4.1	)
Adjustments:
Equity-based compensation expense(a)		0.6			0.9
Foreign currency loss, net(b)		0.1			0.4
Derivative valuation loss (gain), net(c)		0.0			(0.0	)
Income tax effect on non-GAAP adjustments(d)		(0.2	)		0.0
Adjusted Loss from continuing operations	$	(4.1	)	$	(2.8	)
Reported loss per share—basic	$	(0.13	)	$	(0.11	)
Reported loss per share—diluted	$	(0.13	)	$	(0.11	)
Weighted average number of shares—basic		36,407,581			36,887,841
Weighted average number of shares—diluted		36,407,581			36,887,841
Adjusted loss per share—basic	$	(0.11	)	$	(0.08	)
Adjusted loss per share—diluted	$	(0.11	)	$	(0.08	)
Weighted average number of shares—basic		36,407,581			36,887,841
Weighted average number of shares—diluted		36,407,581			36,887,841

(a)

(b)

(c)

(d)

For the three months ended March 31, 2026 and 2025, income tax effect on non-GAAP adjustments were calculated by calculating the tax expense of each jurisdiction with or without the non-GAAP adjustments.

We believe that all adjustments to income (loss) from continuing operations used to calculate Adjusted Net Income (Loss) from continuing operations was applied consistently to the periods presented.

Adjusted Net Income (Loss) has limitations as an analytical tool, and you should not consider it in isolation, or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are:

•

Adjusted Net Income (Loss) does not reflect changes in, or cash requirements for, our working capital needs;

•

Adjusted Net Income (Loss) does not consider the potentially dilutive impact of issuing equity-based compensation to our management team and employees;

•

Adjusted Net Income (Loss) does not reflect the costs of holding certain assets and liabilities in foreign currencies; and

•

Other companies in our industry may calculate Adjusted Net Income (Loss) differently than we do, limiting its usefulness as a comparative measure.

Because of these limitations, Adjusted Net Income (Loss) should not be considered as a measure of profitability of our business. We compensate for these limitations by relying primarily on our U.S. GAAP results and using Adjusted Net Income (Loss) only as a supplement.

Factors Affecting Our Results of Operations

Net Sales. We derive all of our sales (net of sales returns and allowances) from our Power Solutions business, which consists of our Power Analog Solution and Power IC businesses. Our product inventory is primarily located in Korea and is available for drop shipment globally. Outside of Korea, we maintain limited product inventory, and our sales representatives generally relay orders to our fabrication facility in Korea for fulfillment. We have strategically located our sales offices near concentrations of major customers. Our sales offices are located in Korea, Japan, Taiwan and Greater China. Our network of authorized agents and distributors is in the United States, Europe and the Asia Pacific region.

We recognize revenue when a customer obtains control of the product, which is generally upon product shipment, delivery at the customer’s location or upon customer acceptance, depending on the terms of the arrangement. For the three months ended March 31, 2026 and 2025, our products were sold to 143 and 140 end customers, respectively, and our net sales to our ten largest customers represented 73.4% and 75.4% of our net sales, respectively.

Gross Profit. Our overall gross profit generally fluctuates as a result of changes in overall sales volumes and in the average selling prices of our products and services. Other factors that influence our gross profit include changes in product mix, the introduction of new products and services and subsequent generations of existing products and services, shifts in the utilization of our manufacturing facility and the yields achieved by our manufacturing operations, changes in material, labor and other manufacturing costs including outsourced manufacturing expenses, and variation in depreciation expense.

Average Selling Prices (“ASP”). Average selling prices for our products tend to be highest at the time of introduction of new products which utilize the latest technology and tend to decrease over time as such products mature in the market and are replaced by new generation products. We strive to offset the impact of declining selling prices for existing products through our product development activities and by introducing new products that command selling prices above the average selling price of our existing products. In addition, we seek to manage our inventories and manufacturing capacity so as to preclude losses from product and productive capacity obsolescence.

Material Costs. Our material costs consist of costs of raw materials, such as silicon wafers, chemicals, gases and tape and packaging supplies. We use processes that require specialized raw materials, such as silicon wafers, that are generally available from a limited number of suppliers. If demand increases or supplies decrease, the costs of our raw materials could increase significantly.

Labor Costs. A significant portion of our employees are located in Korea. Under Korean labor laws, most employees and certain executive officers with one or more years of service are entitled to severance benefits upon the termination of their employment based on their length of service and rate of pay. As of March 31, 2026, 97% of our employees were eligible for severance benefits.

Depreciation Expense. We periodically evaluate the carrying values of long-lived assets, including property, plant and equipment and intangible assets, as well as the related depreciation periods. We depreciate our property, plant and equipment using the straight-line method over the estimated useful lives of our assets. Depreciation rates vary from 30-40 years on buildings to 3-12 years for certain equipment and assets. Our evaluation of carrying values is based on various analyses including cash flow and profitability projections. If our projections indicate that future undiscounted cash flows are not sufficient to recover the carrying value of the related long-lived assets, the carrying value of the assets is impaired and will be reduced, with the reduction charged to expense so that the carrying value is equal to fair value.

Selling Expenses. We sell our products worldwide through a direct sales force as well as a network of sales agents and representatives to OEMs, including major branded customers and contract manufacturers, and indirectly through distributors. Selling expenses consist primarily of the personnel costs for the members of our direct sales force, a network of sales representatives and other costs of distribution. Personnel costs include base salary, benefits and incentive compensation.

General and Administrative Expenses. General and administrative expenses consist of the costs of various corporate operations, including finance, legal, human resources and other administrative functions. These expenses primarily consist of payroll-related expenses, consulting and other professional fees and office facility-related expenses.

Research and Development. The rapid technological change and product obsolescence that characterize our industry require us to make continuous investments in research and development. Product development time frames vary but, in general, we incur research and development costs one to two years before generating sales from the associated new products. These expenses include personnel costs for members of our engineering workforce, cost of photomasks, silicon wafers and other non-recurring engineering charges related to product design. Additionally, we develop base line process technology through experimentation and through the design and use of characterization wafers that help achieve commercially feasible yields for new products. The majority of research and development expenses of our Power IC business are material and design-related costs for Power IC products. Power IC uses standard BCD process technologies which can be sourced from multiple foundries. The majority of research and development expenses of our Power Analog Solutions business are certain equipment, material and design-related costs for Power Analog Solutions products.

Impact of Foreign Currency Exchange Rates on Reported Results of Operations. Historically, a portion of our revenues and cost of sales and greater than the majority of our operating expenses have been denominated in non-U.S. currencies, principally the Korean won, and we expect that this will remain true in the future. Because we report our results of operations in U.S. dollars converted from our non-U.S. revenues and expenses based on monthly average exchange rates, changes in the exchange rate between the Korean won and the U.S. dollar could materially impact our reported results of operations and distort period to period comparisons. In particular, because of the difference in the amount of our consolidated revenues and expenses that are in U.S. dollars relative to Korean won, depreciation in the U.S. dollar relative to the Korean won could result in a material increase in reported costs relative to revenues, and therefore could cause our profit margins and operating income to appear to decline materially, particularly relative to prior periods. The converse is true if the U.S. dollar were to appreciate relative to the Korean won. Moreover, our foreign currency gain or loss may be affected by changes in the exchange rate between the Korean won and the U.S. dollar, including those related to the intercompany long-term loans to our Korean subsidiary, Magnachip Semiconductor, Ltd. or MSK, which is denominated in U.S. dollars. As of March 31, 2026, the outstanding intercompany loan balance including accrued interest between MSK and our Dutch subsidiary was $76.0 million. While the intercompany loan balance including accrued interest has decreased compared to prior periods, changes in exchange rates could continue to affect our reported foreign currency gain or loss. As a result of such foreign currency exchange rate fluctuations, it could be more difficult to detect underlying trends in our business and results of operations. In addition, to the extent that fluctuations in currency exchange rates cause our results of operations to differ from our expectations or the expectations of our investors, the trading price of our stock could be adversely affected.

From time to time, we may engage in exchange rate hedging activities in an effort to mitigate the impact of exchange rate fluctuations. Our Korean subsidiary, Magnachip Semiconductor, Ltd., enters into foreign currency zero cost collar contracts in order to mitigate a portion of the impact of U.S. dollar-Korean won exchange rate fluctuations on our operating results. Obligations under these foreign currency zero cost collar contracts must be cash collateralized if our exposure exceeds certain specified thresholds. These zero cost collar contracts may be terminated by a counterparty in a number of circumstances, including if our total cash and cash equivalents is less than $30.0 million at the end of a fiscal quarter unless a waiver is obtained from the counterparty. We cannot assure that any hedging technique we implement will be effective. If our hedging activities are not effective, changes in currency exchange rates may have a more significant impact on our results of operations.

Foreign Currency Gain or Loss. Foreign currency translation gains or losses on transactions by us or our subsidiaries in a currency other than our or our subsidiaries’ functional currency are included in foreign currency gain (loss), net in our consolidated statements of operations. A substantial portion of this net foreign currency gain or loss relates to non-cash translation gain or loss related to the principal balance of intercompany balances at our Korean subsidiary, Magnachip Semiconductor, Ltd., that are denominated in U.S. dollars. This gain or loss results from fluctuations in the exchange rate between the Korean won and U.S. dollar.

Income Taxes. We record our income taxes in each of the tax jurisdictions in which we operate. This process involves using an asset and liability approach whereby deferred tax assets and liabilities are recorded for differences in the financial reporting bases and tax basis of our assets and liabilities. We exercise significant management judgment in determining our provision for income taxes, deferred tax assets and liabilities. We assess whether it is more likely than not that the deferred tax assets existing at the period-end will be realized in future periods. In such assessment, we consider all available positive and negative evidence, including scheduled reversals of deferred tax liabilities, projected future taxable income, tax planning strategies and recent results of operations. In the event we were to determine that we would be able to realize the deferred income tax assets in the future in excess of their net recorded amount, we would adjust the valuation allowance, which would reduce the provision for income taxes.

We are subject to income- or non-income-based tax examinations by tax authorities of the U.S., Korea and multiple other foreign jurisdictions for all open tax years. Significant estimates and judgments are required in determining our worldwide provision for income- or non-income based taxes. Some of these estimates are based on interpretations of existing tax laws or regulations. The ultimate amount of tax liability may be uncertain as a result.

Capital Expenditures. We primarily invest in manufacturing equipment, software design tools and other tangible assets mainly for fabrication facility maintenance, capacity expansion and technology improvement. Capacity expansions and technology improvements typically occur in anticipation of increases in demand. We typically pay for capital expenditures in partial installments with portions due on order, delivery and final acceptance. Our capital expenditures mainly include our payments for the purchase of property, plant and equipment.

Inventories. We monitor our inventory levels in light of product development changes and market expectations. We may be required to take additional charges for quantities in excess of demand, cost in excess of market value and product age. Our analysis may take into consideration historical usage, expected demand, anticipated sales price, new product development schedules, the effect new products might have on the sales of existing products, product age, customer design activity, customer concentration and other factors. These forecasts require us to estimate our ability to predict demand for current and future products and compare those estimates with our current inventory levels and inventory purchase commitments. Our forecasts for our inventory may differ from actual inventory use.

Results of Operations – Comparison of Three Months Ended March 31, 2026 and 2025

The following table sets forth consolidated results of operations for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31, 2026						Three Months Ended March 31, 2025
	Amount			% of Net Sales			Amount			% of Net Sales			Change Amount
	(Dollars in millions)
Net sales	$	46.2			100.0	%	$	44.7			100.0	%	$	1.5
Cost of sales		39.0			84.4			35.4			79.1			3.7
Gross profit		7.2			15.6			9.4			20.9			(2.2	)
Operating expenses:
Selling, general and administrative expenses		7.7			16.6			9.2			20.6			(1.5	)
Research and development expenses		6.7			14.5			5.4			12.2			1.3
Total operating expenses		14.4			31.1			14.6			32.7			(0.3	)
Operating loss		(7.2	)		(15.5	)		(5.3	)		(11.8	)		(1.9	)
Interest income		1.1			2.3			1.5			3.4			(0.5	)
Interest expense		(0.4	)		(0.8	)		(0.4	)		(0.9	)		0.1
Foreign currency loss, net		(0.1	)		(0.2	)		(0.4	)		(0.9	)		0.3
Other income (loss), net		(0.0	)		(0.0	)		0.1			0.3			(0.1	)
		0.6			1.2			0.8			1.8			(0.3	)
Loss from continuing operations before income tax benefit, net		(6.6	)		(14.3	)		(4.5	)		(10.0	)		(2.2	)
Income tax benefit, net		(1.9	)		(4.1	)		(0.4	)		(0.9	)		(1.5	)
Loss from continuing operations		(4.7	)		(10.2	)		(4.1	)		(9.1	)		(0.6	)
Income (Loss) from discontinued operations, net of tax		0.1			0.1			(4.8	)		(10.8	)		4.9
Net loss	$	(4.6	)		(10.1	)%	$	(8.9	)		(19.9	)%	$	4.2

Results by business line


	Three Months Ended March 31, 2026					Three Months Ended March 31, 2025
	Amount		% of Net Sales			Amount		% of Net Sales			Change Amount
	(Dollars in millions)
Net Sales
Power Solutions business
Power Analog Solutions	$	41.6		90.1	%	$	39.9		89.1	%	$	1.8
Power IC		4.6		9.9			4.9		10.9			(0.3	)
Total Power Solutions business		46.2		100.0			44.7		100.0			1.5
Total net sales	$	46.2		100.0	%	$	44.7		100.0	%	$	1.5


	Three Months Ended March 31, 2026					Three Months Ended March 31, 2025
	Amount%		% of Net Sales			Amount%		% of Net Sales			Change Amount
	(Dollars in millions)
Gross Profit
Power Solutions business
Power Analog Solutions	$	5.4		12.8	%	$	7.1		17.8	%	$	(1.7	)
Power IC		1.8		40.4			2.3		46.5			(0.4	)
Total Power Solutions business		7.2		15.6			9.4		20.9			(2.2	)
Total gross profit	$	7.2		15.6	%	$	9.4		20.9	%	$	(2.2	)

Net Sales

We operate within a single operating segment, Power Solutions business, which consists of our Power Analog Solutions and Power IC businesses.

The Power Solutions business. Net Sales from Power Solutions business were $46.2 million for the three months ended March 31, 2026, a $1.5 million, or 3.3%, increase compared to $44.7 million for the three months ended March 31, 2025. This increase was primarily due to an increase in revenue related to our Power Analog Solutions business, which was offset in part by a decrease in revenue from our Power IC business as described below.

Net sales from Power Analog Solutions business were $41.6 million for the three months ended March 31, 2026, a $1.8 million, or 4.5%, increase compared to $39.9 million for the three months ended March 31, 2025. The increase in net sales from our Power Analog Solutions business line was primarily attributable to a higher demand for power products such as MOSFETs in the computing application, and IGBTs in the industrial application, particularly solar inverters.

Net sales from Power IC business were $4.6 million for the three months ended March 31, 2026, a $0.3 million, or 6.2%, decrease compared to $4.9 million for the three months ended March 31, 2025. The decrease in net sales from our Power IC business line was primarily attributable to a decrease in sales of certain OLED IT devices.

Gross Profit

The Power Solutions business. Gross profit from our Power Solutions business was $7.2 million for the three months ended March 31, 2026, which represented a $2.2 million, or 23.2%, decrease from gross profit of $9.4 million for the three months ended March 31, 2025. Gross profit as a percentage of net sales for the three months ended March 31, 2026 decreased to 15.6% compared to 20.9% for the three months ended March 31, 2025. The year-over-year decrease in gross profit and gross profit as a percentage of net sales was primarily attributable to an unfavorable product mix, driven by ASP erosion resulting from increased pricing pressure on our older generation products, particularly in China.

Net Sales by Geographic Region

We report net sales by geographic region based on the location to which the products are billed. The following table sets forth our net sales by geographic region and the percentage of total net sales represented by each geographic region for the three months ended March 31, 2026 and 2025:


	Three Months Ended March 31, 2026					Three Months Ended March 31, 2025
	Amount		% of Net Sales			Amount		% of Net Sales			Change Amount
	(Dollars in millions)
Korea	$	20.7		44.7	%	$	21.7		48.6	%	$	(1.1	)
Asia Pacific (other than Korea)		23.6		51.0			21.0		46.9			2.6
United States		1.2		2.7			1.2		2.6			0.1
Europe		0.7		1.5			0.8		1.9			(0.1	)
	$	46.2		100.0	%	$	44.7		100.0	%	$	1.5

Net sales in Korea decreased from $21.7 million for the three months ended March 31, 2025 to $20.7 million for the three months ended March 31, 2026, or by $1.1 million, or 4.8%, primarily due to a decreased revenue from the competitive pricing pressure on our older generation products in consumer applications, which was offset in part by an increased demand for power products such as low-voltage MOSFETs in communication applications. A lower demand for our Power IC products, primarily for OLED IT devices, also had an unfavorable impact on net sales.

Net sales in the Asia Pacific (other than Korea) increased from $21.0 million for the three months ended March 31, 2025 to $23.6 million for the three months ended March 31, 2026, or by $2.6 million, or 12.4%, primarily due to a higher demand for power products such as MOSFETs and high-end MOSFETs in computing and industrial applications, and IGBTs primarily for solar inverters.

Operating Expenses

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $7.7 million, or 16.6% of net sales for the three months ended March 31, 2026, compared to $9.2 million, or 20.6% of net sales for the three months ended March 31, 2025. The decrease of $1.5 million, or 16.7%, was primarily attributable to a decrease in employee compensation, driven mainly by the execution of the voluntary resignation program primarily for shared function employees and separation of certain executive officers in 2025, as well as a decrease in professional fees mainly comprised of legal and consulting fees.

Research and Development Expenses. Research and development expenses were $6.7 million, or 14.5% of net sales, for the three months ended March 31, 2026, compared to $5.4 million, or 12.2% of net sales, for the three months ended March 31, 2025. The increase of $1.3 million, or 23.2%, was primarily attributable to higher personnel costs resulting from the increased headcount in research and development, and an increase in development activities for new generation power products.

Operating Loss

As a result of the foregoing, operating loss of $7.2 million was recorded for the three months ended March 31, 2026 compared to operating loss of $5.3 million for the three months ended March 31, 2025. As discussed above, the increase in operating loss of $1.9 million resulted primarily from a $2.2 million decrease in gross profit and a $1.3 million increase in research and development expenses, which was offset in part by a $1.5 million decrease in selling, general and administrative expenses.

Other Income (Expense)

Interest Income. Interest income was $1.1 million and $1.5 million for the three months ended March 31, 2026 and 2025, respectively.

Interest Expense. Interest expense was $0.4 million for each of the three months ended March 31, 2026 and 2025.

Foreign Currency Loss, Net. Net foreign currency loss for the three months ended March 31, 2026 was $0.1 million compared to net foreign currency loss of $0.4 million for the three months ended March 31, 2025. The net foreign currency loss for the three months ended March 31, 2026 and 2025 was due to the depreciation in value of the Korean won relative to the U.S. dollar during the period.


Large accelerated filer	☐	Accelerated filer	☒

Non-accelerated filer	☐	Smaller reporting company	☒

		Emerging growth company	☐


		Page No.
PART I FINANCIAL INFORMATION		3
Item 1.	Interim Consolidated Financial Statements (Unaudited)	3
	Magnachip Semiconductor Corporation and Subsidiaries Consolidated Balance Sheets as of March 31, 2026 and December 31, 2025	3
	Magnachip Semiconductor Corporation and Subsidiaries Consolidated Statements of Operations for the Three Months Ended March 31, 2026 and 2025	4
	Magnachip Semiconductor Corporation and Subsidiaries Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2026 and 2025	5
	Magnachip Semiconductor Corporation and Subsidiaries Consolidated Statements of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 and 2025	6
	Magnachip Semiconductor Corporation and Subsidiaries Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2026 and 2025	7
	Magnachip Semiconductor Corporation and Subsidiaries Notes to Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	[Reserved]	41
Item 4.	Controls and Procedures	41
PART II OTHER INFORMATION		42
Item 1.	Legal Proceedings	42
Item 1A.	Risk Factors	42
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42
Item 3.	Defaults Upon Senior Securities	42
Item 4.	Mine Safety Disclosures	43
Item 5.	Other Information	43
Item 6.	Exhibits	44
SIGNATURES		45


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs(1)		Approximate dollar value of Shares that may yet be Purchased under the Plans or Programs (in thousands)(1)
January 2026		—		—		—	$	20,951
February 2026		—		—		—	$	20,951
March 2026		—		—		—	$	20,951
Total		—		—		—	$	20,951


Exhibit Number	Description

10.1#*	Employment Agreement, dated as of October 22, 2018, by and between Magnachip Semiconductor Corporation and Seunghoon Lee.

31.1#	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Principal Executive Officer.

31.2#	Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Principal Financial Officer.

32.1†	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Executive Officer.

32.2†	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, of the Principal Financial Officer.

101.INS#	Inline XBRL Instance Document.

101.SCH#	Inline XBRL Taxonomy Extension Schema Document.

101.CAL#	Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF#	Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB#	Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE#	Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).


	MAGNACHIP SEMICONDUCTOR CORPORATION (Registrant)

Dated: May 8, 2026	By:	/s/ Camillo Martino
		Camillo Martino
		Chairman and Interim Chief Executive Officer (Principal Executive Officer)

Dated: May 8, 2026	By:	/s/ Shinyoung Park
		Shinyoung Park
		Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)