FormFactor posts record Q2 revenue of $258m on HBM and logic demand
FormFactor reported second-quarter fiscal 2026 revenues of $258.2 million, its highest on record, representing a 14.2% sequential increase from $226.1 million in Q1 and a 31.9% rise year-on-year from $195.8 million. GAAP net income for the quarter reached $56.2 million, or $0.71 per diluted share, compared with $9.1 million, or $0.12 per diluted share, in the same period a year ago. The Livermore, California-based company, which makes probe cards and semiconductor test systems used across the chip production lifecycle, said demand was broad-based across DRAM, Foundry and Logic end markets.
GAAP gross margin expanded to 50.7% in Q2, up from 38.4% in Q1 and 37.3% a year earlier. On a non-GAAP basis, gross margin reached 53.3%, a rise of nearly 15 percentage points year-on-year. Free cash flow turned sharply positive at $52.6 million, compared with negative $47.1 million in Q2 2025, reflecting both the margin improvement and significantly lower capital expenditure after last year's facility investment cycle.
What drove the improvement
Chief executive Mike Slessor attributed the performance to sustained investment in what he described as FormFactor's position at the intersection of high-performance compute and advanced packaging. He noted that over the four quarters to June 2026 the company grew revenue by more than 30%, expanded non-GAAP gross margin by 1,500 basis points, and tripled earnings per share.
Two growth vectors received specific mention. High Bandwidth Memory drove sequential revenue gains in the Probe Cards segment, while Co-Packaged Optics contributed to growth in the Systems segment. The company also announced an expanded multi-year partnership with Keystone Microtech, reinforcing its position in Taiwan's semiconductor supply chain, though no financial terms were disclosed for that arrangement.
Market context and outlook
FormFactor operates in a test and measurement niche that sits upstream of chip fabrication, supplying equipment that semiconductor manufacturers and foundries use to verify device performance before volume production. That positioning makes it a sensitive indicator of capex momentum across the industry, particularly in DRAM and advanced logic. The current cycle is being shaped by AI accelerator demand: hyperscalers and cloud providers are driving orders for HBM-enabled memory stacks and advanced packaging technologies such as chiplets and co-packaged optics, both of which require more intensive test coverage than conventional planar devices.
Competitors in the probe card and semiconductor test space include Cohu and Teradyne on the systems side, and a range of specialist probe card manufacturers in Japan and Taiwan. FormFactor's Taiwan partnership with Keystone Microtech is strategically relevant given that TSMC's advanced node production, the primary destination for leading-edge AI chips, is concentrated there.
For Q3 2026, FormFactor guided revenue of $270 million, plus or minus $10 million, which would represent another sequential record. Non-GAAP gross margin guidance of 54.0%, plus or minus 1.5 percentage points, implies further expansion. Non-GAAP earnings per diluted share are guided at $0.86, plus or minus $0.09. Slessor flagged particular strength in Foundry and Logic and continued Systems momentum as the drivers for the third quarter.
The company's forward-looking disclosures noted exposure to US export controls and tariff dynamics, citing US-China trade restrictions as a factor that could affect international revenue. FormFactor did not break out its China revenue contribution in the press release, directing investors to the geographic breakdown published separately on its investor relations website.