Silvaco swings to non-GAAP profit as revenue jumps 48% in Q2
Silvaco Group has reported second-quarter 2026 revenue of $17.8 million, a 48% year-on-year increase, and said it achieved non-GAAP operating profitability for the first time in nearly two years. The Nasdaq-listed vendor of TCAD, EDA software and semiconductor IP (SIP) also announced new strategic partnerships with NVIDIA and Dassault Systèmes, and secured a $10 million convertible note investment from Micron Technologies.
The strongest growth came from the SIP product line, where revenue reached $6.0 million in the quarter, up 238% year-on-year, with IP bookings rising 81% sequentially to $5.4 million. TCAD revenue grew 16% year-on-year to $7.9 million, while EDA contributed $3.9 million, up 14%. GAAP gross margin improved to 85%, a gain of more than 14 percentage points against the same period in 2025. On a non-GAAP basis, operating income came in at $0.6 million, compared with a $6.0 million non-GAAP operating loss in Q2 2025. The company ended the quarter with $13.0 million in cash.
Partnership activity and FTCO push
The Micron investment is tied to expanded use of Silvaco's Fab Technology Co-Optimisation (FTCO) platform, which uses AI-driven surrogate models to replicate physics-based semiconductor process simulations in real time. Gurtej Sandhu, Principal Fellow and Corporate Vice President at Micron Technologies, said the platform had helped engineers make "faster, better-informed process decisions" in advanced memory development. The NVIDIA partnership targets GPU-accelerated digital twins for semiconductor design and manufacturing, combining physics simulation with AI. The Dassault Systèmes SIMULIA collaboration is focused on interoperable digital twin workflows intended to improve first-time-right process development and accelerate yield ramps.
Chief executive Walden Rhines said the company had also secured one new FTCO customer during the quarter, with further wins expected in the second half of 2026. He added that identified pipeline opportunities grew to over $292 million by quarter end, following $64 million in new opportunities added in Q2 alone. Rhines said Silvaco expects record revenue in Q4 and double-digit revenue growth again in 2027, though those are forward-looking estimates and the company carries an accumulated deficit of $78.8 million as of 30 June.
Market context and competitive positioning
Silvaco occupies a specialist niche in the semiconductor design toolchain. Its TCAD simulation tools compete with offerings from Synopsis and Ansys, while its EDA products sit in a market dominated by Cadence Design Systems and Synopsys. The SIP segment, which drove the strongest growth this quarter, reflects a broader industry trend toward reusable IP blocks as chip designers face pressure to shorten design cycles and manage the complexity of advanced process nodes.
The FTCO proposition sits at the intersection of process engineering and AI, a space attracting significant interest from foundries and integrated device manufacturers as they look to compress the time between process development and volume yield. Silvaco's dual partnerships with NVIDIA and Dassault Systèmes position the company as an integration layer connecting GPU computing and multiphysics simulation tools, rather than competing head-on with either hyperscale AI infrastructure or established simulation vendors.
For Q3 2026, Silvaco guided for revenue of $17.0 million, plus or minus 10%, with bookings of $18.0 million and non-GAAP gross margin of around 88%. The company's China revenue exposure, at 21% of Q2 sales, warrants monitoring given continuing US export-control restrictions on advanced semiconductor technology; Silvaco's safe-harbour disclosures cite trade policy and tariff changes among the material risks to its outlook. The company said it expects to introduce agentic AI offerings with key strategic customers before year end, though no commercial terms or customer names were disclosed at this stage.