MAGNACHIP SEMICONDUCTOR Corp

Previous wording

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 the United States or China are subject to heightened risks and uncertainties arising from trade and export control policies, including the imposition of new tariffs, increases in existing tariffs, or other export control measures implemented by the United States, China, or other governmental authorities. Furthermore, ongoing geopolitical tensions, including conflicts and instability in the Middle East, such as the military conflict 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.

Current wording

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 the United States or China are subject to heightened risks and uncertainties arising from trade and export control policies, including the imposition of new tariffs, increases in existing tariffs, or other export control measures implemented by the United States, China, or other governmental authorities. Furthermore, ongoing geopolitical tensions, including conflicts and instability in the Middle East, such as the military conflict involving the United States, Israel, and Iran, among others, 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.

Previous wording

In July 2026, we entered into a strategic partnership with Navitas Semiconductor Corporation (“Navitas”) to accelerate adoption of SiC technologies in high-voltage (“HV”) and ultra-high-voltage (“UHV”) power markets. Under the terms of the agreement, we will license certain Navitas technology to enter the HV and UHV SiC markets, enabling us to build on Navitas' proven SiC device platforms for next-generation power conversion applications.

Current wording

In July 2026, we entered into a strategic partnership with Navitas to accelerate adoption of SiC technologies in high-voltage (“HV”) and ultra-high-voltage (“UHV”) power markets. Under the terms of the agreement, we will license certain Navitas technology to enter the HV and UHV SiC markets, enabling us to build on Navitas' proven SiC device platforms for next-generation power conversion applications.

Previous wording

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.

Current wording

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 suspended enforcement of the Affiliates Rule, with reinstatement scheduled under the published rule for November 10, 2026, absent an extension. Once the Affiliates Rule is reinstated, we expect to invest additional resources and efforts in the screening of prospects, customers, distributors, and end-users. In addition, the Affiliates Rule could subject transactions involving certain customers, distributors, or other counterparties to additional export licensing requirements based on their ownership, even if those counterparties are not themselves named on a restricted-party list. Where applicable to our transactions, these requirements could delay or prevent shipments and result in lost sales, in addition to increasing our compliance costs. 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. While we do not anticipate that the rest of the new or recently updated U.S. Export Regulations and related rules will have a material impact directly on our current business, we will continue reviewing and assessing these rules and regulations and their potential effect on our business. Additional changes to the U.S. Export Regulations are expected, such as recently pr…

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Previous wording

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) stock-based compensation expense, (ii) foreign currency loss (gain), net, (iii) derivative valuation loss (gain), net and (iv) other charges. EBITDA for the periods indicated is defined as income(loss) from continuing operations before interest income, interest expense, income tax benefit, net and depreciation and amortization.

Current wording

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) stock-based compensation expense, (ii) foreign currency loss (gain), net, (iii) derivative valuation loss (gain), net and (iv) early termination and other charges. EBITDA for the periods indicated is defined as income (loss) from continuing operations before interest income, interest expense, income tax expense (benefit), net and depreciation and amortization.

Previous wording

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 income (loss) from continuing operations to Adjusted EBITDA from continuing operations is as follows:

Current wording

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 from continuing operations to Adjusted EBITDA from continuing operations is as follows:

Previous wording

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 stock-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.

Current wording

We present Adjusted Operating Income (Loss) as a supplemental measure of our performance. We prepare Adjusted Operating Income (Loss) by adjusting operating income (loss) to eliminate the impact of stock-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.

Previous wording

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 (i) stock-based compensation expense and (ii) other charges.

Current wording

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 (i) stock-based compensation expense and (ii) early termination and other charges.

Previous wording

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 income (loss) from continuing operations, adjusted to exclude (i) stock-based compensation expense, (ii) foreign currency loss (gain), net, (iii) derivative valuation loss (gain), net, (iv) other charges and (v) income tax effect on non-GAAP adjustments.

Current wording

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 income (loss) from continuing operations, adjusted to exclude (i) stock-based compensation expense, (ii) foreign currency loss (gain), net, (iii) derivative valuation loss (gain), net, (iv) early termination and other charges and (v) income tax effect on non-GAAP adjustments.

Previous wording

The following table summarizes the adjustments to income (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:

Current wording

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:

Previous wording

For the three and six months ended June 30, 2026 and 2025, income tax effect on non-GAAP adjustments was calculated by comparing the tax expense of each jurisdiction with and without the non-GAAP adjustments.

Current wording

For the three and nine months ended September 30, 2026 and 2025, income tax effect on non-GAAP adjustments was calculated by comparing the tax expense of each jurisdiction with and without the non-GAAP adjustments.

Previous wording

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 six months ended June 30, 2026 and 2025, our products were sold to 160 and 163 end customers, respectively, and our net sales to our ten largest customers represented 73.2% and 74.0% of our net sales, respectively.

Current wording

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 nine months ended September 30, 2026 and 2025, our products were sold to 166 and 173 end customers, respectively, and our net sales to our ten largest customers represented 71.8% and 74.2% of our net sales, respectively.

Previous wording

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 June 30, 2026, the outstanding intercompany loan balance including accrued interest between MSK and our Dutch subsidiary was $76.9 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.

Current wording

Impact of Foreign Currency Exchange Rates on Reported Results of Operations. Historically, a portion of our revenues and greater than the majority of our operating expenses and cost of sales 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 September 30, 2026, the outstanding intercompany loan balance including accrued interest between MSK and our Dutch subsidiary was $77.9 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.

Previous wording

The Power Solutions business. Net Sales from Power Solutions business were $44.7 million for the three months ended June 30, 2026, a $2.9 million, or 6.1%, decrease compared to $47.6 million for the three months ended June 30, 2025. This decrease was primarily due to a decrease in revenue from both our Power Analog Solutions and Power IC businesses, as described below.

Current wording

The Power Solutions business. Net Sales from Power Solutions business were $44.0 million for the three months ended September 30, 2026, a $2.0 million, or 4.3%, decrease compared to $45.9 million for the three months ended September 30, 2025. This decrease was primarily due to a decrease in revenue from our Power Analog Solutions business, as described below.

Previous wording

Net sales from Power Analog Solutions business were $40.6 million for the three months ended June 30, 2026, a $1.7 million, or 4.0%, decrease compared to $42.3 million for the three months ended June 30, 2025. The decrease in net sales from our Power Analog Solutions business line was primarily attributable to weaker demand for our older generation products resulting from intensified pricing competition, which was offset in part by a higher demand for MOSFETs and IGBTs in the industrial applications.

Current wording

Net sales from Power Analog Solutions business were $39.6 million for the three months ended September 30, 2026, a $1.9 million, or 4.6%, decrease compared to $41.5 million for the three months ended September 30, 2025. The decrease in net sales from our Power Analog Solutions business line was primarily attributable to weaker demand for our older generation products resulting from intensified pricing competition, which was offset in part by a higher demand for high-end MOSFETs used in industrial applications and IGBTs used primarily in solar inverters.

Previous wording

The Power Solutions business. Gross profit from our Power Solutions business was $8.6 million for the three months ended June 30, 2026, which represented a $1.1 million, or 11.0%, decrease from gross profit of $9.7 million for the three months ended June 30, 2025. Gross profit as a percentage of net sales for the three months ended June 30, 2026 decreased to 19.3% compared to 20.4% for the three months ended June 30, 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 competitive pricing pressure on our older generation products, particularly in China.

Current wording

The Power Solutions business. Gross profit from our Power Solutions business was $6.2 million for the three months ended September 30, 2026, which represented a $2.4 million, or 27.7%, decrease from gross profit of $8.5 million for the three months ended September 30, 2025. Gross profit as a percentage of net sales for the three months ended September 30, 2026 decreased to 14.0% compared to 18.6% for the three months ended September 30, 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 competitive pricing pressure on our older generation products, particularly from Chinese competitors.

Previous wording

Net sales in Korea decreased from $44.4 million for the six months ended June 30, 2025 to $39.5 million for the six months ended June 30, 2026, or by $4.9 million, or 11.1%, primarily due to a decrease in revenue resulting 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 medium-voltage MOSFETs in industrial applications. A lower demand for our Power IC products, primarily for LED televisions and OLED IT devices also had an unfavorable impact on net sales.

Current wording

Net sales in Korea decreased from $23.3 million for the three months ended September 30, 2025 to $18.2 million for the three months ended September 30, 2026, or by $5.1 million, or 21.9%, primarily due to a decrease in revenue resulting from the competitive pricing pressure on our older generation products in consumer applications.

Previous wording

Net sales in the Asia Pacific (other than Korea) increased from $43.4 million for the six months ended June 30, 2025 to $47.6 million for the six months ended June 30, 2026, or by $4.2 million, or 9.6%, 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.

Current wording

Net sales in the Asia Pacific (other than Korea) increased from $20.3 million for the three months ended September 30, 2025 to $23.9 million for the three months ended September 30, 2026, or by $3.6 million, or 17.6%, primarily due to a higher demand for high-end MOSFETs used in industrial applications, and IGBTs used primarily in solar inverters.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $16.4 million, or 18.1% of net sales, for the six months ended June 30, 2026, compared to $18.2 million, or 19.7% of net sales, for the six months ended June 30, 2025. The decrease of $1.8 million, or 9.7%, 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.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $8.8 million, or 20.0% of net sales, for the three months ended September 30, 2026, compared to $8.3 million, or 18.1% of net sales, for the three months ended September 30, 2025. The increase of $0.5 million, or 5.6%, was primarily attributable to an increase in employee compensation, driven mainly by the timing of stock-based compensation grant, which was offset in part by a decrease in professional fees mainly comprised of legal and consulting fees.

Previous wording

Research and Development Expenses. Research and development expenses were $7.9 million, or 17.7% of net sales, for the three months ended June 30, 2026, compared to $6.5 million, or 13.6% of net sales, for the three months ended June 30, 2025. The increase of $1.4 million, or 21.7%, was primarily attributable to higher personnel costs resulting from the increased headcount in research and development, as well as the timing of continued investment in our new generation product development activities.

Current wording

Research and Development Expenses. Research and development expenses were $8.4 million, or 19.0% of net sales, for the three months ended September 30, 2026, compared to $7.8 million, or 16.9% of net sales, for the three months ended September 30, 2025. The increase of $0.6 million, or 7.5%, was primarily attributable to higher personnel costs resulting from the increased headcount in research and development, as well as differences in the timing of stock-based compensation grant.

Previous wording

As a result of the foregoing, operating loss of $10.0 million was recorded for the three months ended June 30, 2026 compared to an operating loss of $6.6 million for the three months ended June 30, 2025. As discussed above, the increase in operating loss of $3.4 million resulted primarily from a $1.4 million increase in research and development expenses, a $1.1 million increase in other charges and a $1.1 million decrease in gross profit.

Current wording

As a result of the foregoing, operating loss of $12.9 million was recorded for the three months ended September 30, 2026 compared to an operating loss of $11.5 million for the three months ended September 30, 2025. As discussed above, the increase in operating loss of $1.3 million resulted primarily from a $2.4 million decrease in gross profit, a $0.6 million increase in research and development expenses and a $0.5 million increase inselling, general and administrative expenses, which was offset in part by a $2.1 million decrease in early termination and other charges.

Previous wording

Interest Expense. Interest expense was $0.3 million and $0.4 million for the three months ended June 30, 2026 and 2025, respectively.

Current wording

Interest Expense. Interest expense was $0.3 million and $0.5 million for the three months ended September 30, 2026 and 2025, respectively.

Previous wording

Foreign Currency Gain (Loss), Net. Net foreign currency loss for the three months ended June 30, 2026 was $0.5 million compared to a net foreign currency gain of $10.8 million for the three months ended June 30, 2025. The net foreign currency loss for the three months ended June 30, 2026 was due to the depreciation in value of the Korean won relative to the U.S. dollar during the period. The net foreign currency gain for the three months ended June 30, 2025 was due to the appreciation in value of the Korean won relative to the U.S. dollar during the period.

Current wording

Foreign Currency Gain (Loss), Net. Net foreign currency gain for the three months ended September 30, 2026 was $1.8 million compared to a net foreign currency loss of $4.3 million for the three months ended September 30, 2025. The net foreign currency gain for the three months ended September 30, 2026 was due to the appreciation in value of the Korean won relative to the U.S. dollar during the period. The net foreign currency loss for the three months ended September 30, 2025 was due to the depreciation in value of the Korean won relative to the U.S. dollar during the period.

Previous wording

A substantial portion of our net foreign currency gain or loss is a non-cash translation gain or loss associated with the intercompany long-term loans to our Korean subsidiary, which is denominated in U.S. dollars, and is affected by changes in the exchange rate between the Korean won and the U.S. dollar. As of June 30, 2026 and June 30, 2025, the outstanding intercompany loan balances including accrued interest between our Korean subsidiary, Magnachip Semiconductor, Ltd., and our Dutch subsidiary were $76.9 million and $241.7 million, respectively. Foreign currency translation gain or loss from intercompany balances were included in determining our consolidated net income since the intercompany balances were not considered long-term investments in nature because management intended to settle these intercompany balances at their respective maturity dates.

Current wording

A substantial portion of our net foreign currency gain or loss is a non-cash translation gain or loss associated with the intercompany long-term loans to our Korean subsidiary, which is denominated in U.S. dollars, and is affected by changes in the exchange rate between the Korean won and the U.S. dollar. As of September 30, 2026 and September 30, 2025, the outstanding intercompany loan balances including accrued interest between our Korean subsidiary, Magnachip Semiconductor, Ltd., and our Dutch subsidiary were $77.9 million and $244.7 million, respectively. Foreign currency translation gain or loss from intercompany balances were included in determining our consolidated net income since the intercompany balances were not considered long-term investments in nature because management intended to settle these intercompany balances at their respective maturity dates.

Previous wording

Income tax benefit was $4.1 million for the three months ended June 30, 2025, which was primarily attributable to the estimated taxable loss in our Korean subsidiary for the respective period, including loss recognized in connection with the shutdown of the discontinued Display business during the second quarter of 2025.

Current wording

Income tax benefit was $4.2 million for the three months ended September 30, 2025, which was primarily attributable to the estimated taxable loss in our Korean subsidiary for the respective period, including loss recognized in connection with the shutdown of the discontinued Display business during the second quarter of 2025.

Previous wording

Loss from continuing operations for the six months ended June 30, 2026 was $12.3 million compared to income from continuing operations of $5.2 million for the six months ended June 30, 2025. The $17.5 million increase in loss from continuing operations was primarily attributable to an $11.0 million increase in net foreign currency loss, a $5.3 million increase in operating loss and a $0.6 million decrease in income tax benefit.

Current wording

Loss from continuing operations for the three months ended September 30, 2026 was $13.3 million compared to loss from continuing operations of $10.6 million for the three months ended September 30, 2025. The $2.7 million increase in loss from continuing operations was primarily attributable to a $9.0 million decrease in income tax benefit and a $1.3 million increase in operating loss, which was offset in part by a $6.1 million improvement in net foreign currency loss.

Previous wording

Income from discontinued operations, net of tax for the three months ended June 30, 2026 was $2.8 million compared to a loss from discontinued operations, net of tax of $8.9 million for the three months ended June 30, 2025. The $11.7 million improvement in loss from discontinued operations, net of tax primarily resulted from the absence of $7.4 million of impairment charges, primarily related to certain design tool software contracts and $1.6 million of early termination charges incurred in the prior-year period.

Current wording

Income from discontinued operations, net of tax for the three months ended September 30, 2026 was $0.7 million compared to a loss from discontinued operations, net of tax of $2.5 million for the three months ended September 30, 2025. The $3.2 million improvement in loss from discontinued operations, net of tax primarily resulted from the absence of $5.1 million of impairment charges, primarily related to certain design tool software contracts, which was offset in part by a $2.3 million decrease in gross profit.

Previous wording

As a result of the foregoing, a net loss of $4.8 million was recorded for the three months ended June 30, 2026 compared to a net income of $0.3 million for the three months ended June 30, 2025. As discussed above, the deterioration in net loss of $5.1 million resulted from a $16.8 million increase in loss from continuing operations, which was offset by an $11.7 million improvement in loss from discontinued operations, net of tax.

Current wording

As a result of the foregoing, a net loss of $12.5 million was recorded for the three months ended September 30, 2026 compared to a net loss of $13.1 million for the three months ended September 30, 2025. As discussed above, the improvement in net loss of $0.5 million resulted from a $3.2 million improvement in loss from discontinued operations, net of tax, which was offset in part by a $2.7 million increase in loss from continuing operations.

Previous wording

Results of Operations – Comparison of Six Months Ended June 30, 2026 and 2025

Current wording

Results of Operations – Comparison of Nine Months Ended September 30, 2026 and 2025

Previous wording

The following table sets forth consolidated results of operations for the six months ended June 30, 2026 and 2025:

Current wording

The following table sets forth consolidated results of operations for the nine months ended September 30, 2026 and 2025:

Previous wording

The Power Solutions business. Net Sales from Power Solutions business were $90.9 million for the six months ended June 30, 2026, a $1.4 million, or 1.6%, decrease compared to $92.3 million for the six months ended June 30, 2025. This decrease was primarily due to a decrease in revenue related to our Power IC business as described below.

Current wording

The Power Solutions business. Net Sales from Power Solutions business were $134.9 million for the nine months ended September 30, 2026, a $3.4 million, or 2.5%, decrease compared to $138.3 million for the nine months ended September 30, 2025. This decrease was primarily due to a decrease in revenue related to both our Power Analog Solutions and Power IC businesses, as described below.

Previous wording

Net sales from Power Analog Solutions business were relatively flat at $82.2 million for the six months ended June 30, 2026, compared to $82.1 million for the six months ended June 30, 2025. The increase in net sales from our Power Analog Solutions business line was primarily attributable to higher demand for MOSFETs and IGBTs in the industrial applications, which was substantially offset by weaker demand for our older generation products resulting from intensified pricing competition.

Current wording

Net sales from Power Analog Solutions business were $121.9 million for the nine months ended September 30, 2026, a $1.8 million, or 1.5%, decrease compared to $123.7 million for the nine months ended September 30, 2025. The decrease in net sales from our Power Analog Solutions business line was primarily attributable to weaker demand for our older generation products resulting from intensified pricing competition, which was offset in part by a higher demand for IGBTs used primarily in solar inverters.

Previous wording

Net sales from Power IC business were $4.1 million for the three months ended June 30, 2026, a $1.2 million, or 23.0%, decrease compared to $5.4 million for the three months ended June 30, 2025. The decrease in net sales from our Power IC business line was primarily attributable to a decrease in sales of our Power IC products, primarily for LED televisions and OLED IT devices.

Current wording

Net sales from Power IC business were $13.0 million for the nine months ended September 30, 2026, a $1.6 million, or 10.9%, decrease compared to $14.6 million for the nine months ended September 30, 2025. The decrease in net sales from our Power IC business line was primarily attributable to lower demand for OLED IT devices and LED televisions.

Previous wording

The Power Solutions business. Gross profit from our Power Solutions business was $15.8 million for the six months ended June 30, 2026, which represented a $3.2 million, or 16.9%, decrease from gross profit of $19.1 million for the six months ended June 30, 2025. Gross profit as a percentage of net sales for the six months ended June 30, 2026 decreased to 17.4% compared to 20.7% for the six months ended June 30, 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.

Current wording

The Power Solutions business. Gross profit from our Power Solutions business was $22.0 million for the nine months ended September 30, 2026, which represented a $5.6 million, or 20.3%, decrease from gross profit of $27.6 million for the nine months ended September 30, 2025. Gross profit as a percentage of net sales for the nine months ended September 30, 2026 decreased to 16.3% compared to 20.0% for the nine months ended September 30, 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 from Chinese competitors.

Previous wording

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 six months ended June 30, 2026 and 2025:

Current wording

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 nine months ended September 30, 2026 and 2025:

Previous wording

Net sales in Korea decreased from $22.7 million for the three months ended June 30, 2025 to $18.8 million for the three months ended June 30, 2026, or by $3.9 million, or 17.1%, primarily due to a decrease in revenue resulting from the competitive pricing pressure on our older generation products in consumer applications and a lower demand for our Power IC products, primarily for LED televisions and OLED IT devices.

Current wording

Net sales in Korea decreased from $67.7 million for the nine months ended September 30, 2025 to $57.7 million for the nine months ended September 30, 2026, or by $10.0 million, or 14.8%, primarily due to a decrease in revenue resulting from the competitive pricing pressure on our older generation products in consumer applications. A lower demand for our Power IC products, primarily for LED televisions and OLED IT devices also had an unfavorable impact on net sales.

Previous wording

Net sales in the Asia Pacific (other than Korea) increased from $22.4 million for the three months ended June 30, 2025 to $24.0 million for the three months ended June 30, 2026, or by $1.6 million, or 7.0%, 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.

Current wording

Net sales in the Asia Pacific (other than Korea) increased from $63.7 million for the nine months ended September 30, 2025 to $71.5 million for the nine months ended September 30, 2026, or by $7.8 million, or 12.2%, primarily due to a higher demand for power products such as MOSFETs and high-end MOSFETs used in computing and industrial applications, and IGBTs used primarily in solar inverters.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $8.7 million, or 19.6% of net sales, for the three months ended June 30, 2026, compared to $9.0 million, or 18.8% of net sales, for the three months ended June 30, 2025. The decrease of $0.2 million, or 2.6%, 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.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative expenses were $25.2 million, or 18.7% of net sales, for the nine months ended September 30, 2026, compared to $26.5 million, or 19.2% of net sales, for the nine months ended September 30, 2025. The decrease of $1.3 million, or 4.9%, was primarily attributable to a decrease in professional fees mainly comprised of legal and consulting fees, which was offset in part by an increase in employee compensation, driven mainly by the timing of stock-based compensation grant.

Previous wording

Research and Development Expenses. Research and development expenses were $14.6 million, or 16.1% of net sales, for the six months ended June 30, 2026, compared to $11.9 million, or 12.9% of net sales, for the six months ended June 30, 2025. The increase of $2.7 million, or 22.4%, was primarily attributable to higher personnel costs resulting from the increased headcount in research and development, as well as the timing of continued investment in our new generation product development activities.

Current wording

Research and Development Expenses. Research and development expenses were $23.0 million, or 17.0% of net sales, for the nine months ended September 30, 2026, compared to $19.7 million, or 14.2% of net sales, for the nine months ended September 30, 2025. The increase of $3.3 million, or 16.5%, was primarily attributable to higher personnel costs resulting from the increased headcount in research and development, as well as differences in the timing of stock-based compensation grant.

Previous wording

Other Charges. For the three months ended June 30, 2026, we recorded $2.0 million of other charges, consisting of a $1.1 million customer goodwill payment related to a certain product, and $0.9 million of one-time employee incentives. For the three months ended June 30, 2025, we recorded $0.5 million of one-time employee incentives and $0.3 million of certain executive separation benefit related accruals.

Current wording

Early termination and other charges. For the nine months ended September 30, 2026, we recorded $3.9 million of other charges, consisting of $0.6 million in tax-related charges, $1.3 million of costs associated with the electrical substation upgrade in our Gumi fabrication facility, a $1.1 million customer goodwill payment related to a certain product, and $0.9 million of one-time employee incentives. For the nine months ended September 30, 2025, we recorded $2.6 million of termination-related charges in connection with the voluntary resignation program, $1.7 million of certain executive separation benefits and $0.5 million of one-time employee incentives.

Previous wording

As a result of the foregoing, operating loss of $17.1 million was recorded for the six months ended June 30, 2026 compared to an operating loss of $11.9 million for the six months ended June 30, 2025. As discussed above, the increase in operating loss of $5.3 million resulted primarily from a $3.2 million decrease in gross profit, a $2.7 million increase in research and development expenses and a $1.1 million increase in other charges, which was offset in part by a $1.8 million decrease in selling, general and administrative expenses

Current wording

As a result of the foregoing, operating loss of $30.0 million was recorded for the nine months ended September 30, 2026 compared to an operating loss of $23.4 million for the nine months ended September 30, 2025. As discussed above, the increase in operating loss of $6.6 million resulted primarily from a $5.6 million decrease in gross profit and a $3.3 million increase in research and development expenses, which was offset in part by a $1.3 million decrease in selling, general and administrative expenses and a $0.9 million decrease in early termination and other charges.