indie Semiconductor (INDI) Q3 2026 earnings review
indie's chip sales grow fast, but each sale earns less
indie, which makes chips that help cars see, sold more but kept a smaller share of each sale. Sales excluding Wuxi, a Chinese unit it is selling, rose 14% from last quarter, ahead of plan. Chief executive Donald McClymont's outlook points to about 33% total growth in the fourth quarter. But gross margin excluding one-offs, the share of sales left after production costs, fell to about 42%.
| Sales from the businesses indie will keep | $40.7M +14% from last quarter; plan was about $40M |
|---|---|
| Total revenue | $70.2M +31% from a year ago |
| Gross margin, excluding one-offs (our math) | 41.6% 49.6% a year ago |
| Fourth-quarter revenue outlook | $73–81M middle of the range: 33% growth from a year ago |
⚖️ Verdict: 🟢 Bullish
The story got better, because the kept businesses grew faster than planned and the next quarter's plan points higher still. One caution: margins slipped below what indie's own plan had implied, and the chipmaker raised money by selling shares and borrowing.
The question now is whether indie can fund itself until it turns a profit. If China's regulators approve the Wuxi sale, about $135 million arrives; if not, indie may need new shares or debt. Whether the deal closes by year-end, as finance chief Naixi Wu said she is optimistic it will, settles it.
🐂 Bull Case
Kept Businesses Grew 14% in One Quarter
indie is selling Wuxi, a Chinese subsidiary, so its future rests on the businesses it will keep: radar, camera and light-based chips for cars and robots. The company calls these its core business. Finance chief Naixi Wu said core sales reached about $40.7 million, slightly ahead of the roughly $40 million plan.
That reverses the second quarter, when Wuxi carried the result and the core fell short of its target. Chief executive Donald McClymont said new vision and radar programmes, not share gains at existing customers, drive the growth.
- Core sales: $40.7 million, up 14% from last quarter
- Core sales from a year ago: up about 33%, by our math
This matters because Wuxi's revenue leaves the accounts once the sale closes. McClymont said the kept business would more than replace it in 2027. By our math, that needs core sales of about $267 million next year, roughly 69% above this year's core total.
What to watch: core sales in the fourth-quarter report, due early next year, against indie's own plan. A result at plan would put core growth from a year ago close to the pace that replacing Wuxi in 2027 requires.
Memory Shortage Speeds Up Vision Chip Orders
The iND880 is indie's vision processor, a chip that handles camera images without separate memory chips, known as DRAM. McClymont said DRAM prices rose three to four times, so carmakers are switching to the iND880, sometimes within two or three months.
indie has won more than 40 vision designs this year, including robots and drones. McClymont put the share already shipping at "probably less than 20% of the total". But the rush depends on a memory shortage, and when it ends, buyers lose their reason to hurry.
What to watch: whether McClymont still reports DRAM-driven wins shipping within a quarter on the next call. That would show the wins keep turning into sales as the shortage runs its course.
Positives this quarter didn't test
Three newer businesses collected wins this quarter, but none came with a revenue figure. Each still needs numbers of its own before it can carry the case.
- Physical AI, chips that let robots and drones sense their surroundings: new robot and drone design wins, but McClymont left them out of the contract backlog; a first revenue figure would move this
- Quantum photonics, lasers for quantum computers and secure links: "record revenue and record bookings", with bookings up 17% from last quarter; a dollar figure would move this
- In-cabin software from emotion3D, which watches drivers and passengers: a carmaker programme for Australia starting in 2027; licence and royalty income in next year's results would move this
🐻 Bear Case
indie Keeps a Smaller Share of Each Sale
indie said its narrower operating loss showed "continued significant progress towards achieving profitability". The release did not report gross margin, the share of sales left after the cost of making the chips. The chipmaker has not put that figure in its outlook since late 2025.
Cost of goods sold, excluding one-offs, climbed to 58% of revenue from 50% a year ago. The quarterly filing tied $2.6 million of that rise to product mix and noted a change in average selling prices.
- Gross margin excluding one-offs: 49.6% a year ago, 45.2% last quarter, 41.6% now, by our math
- Range implied by the August outlook: 42.6–45.9%, by our math
- Fourth-quarter margin implied by the new outlook: about 42%, by our math
McClymont blamed "fairly severe margin pressure" at Wuxi. But Wuxi's share of revenue slipped to 42% from 43% a year ago, so its weight did not cause the drop. He expects margin to "tick up into the low fifties" after the sale, yet indie does not publish the core margin.
What to watch: fourth-quarter gross margin, which McClymont said should "go up a little bit". A reading at or below 42% would leave the low-fifties claim resting on numbers indie has not shown.
Cash Holds Steady Only Through New Borrowing
indie still spends more cash than it brings in. It plans to sell its Wuxi stake to United Faith, a listed Chinese company, for about $135 million. China's regulators have not yet approved the deal, and Wu said indie is "optimistic that a transaction can still close by the end of the year".
Cash, including restricted cash, fell only $4.7 million in the quarter. But indie sold $8.4 million of new shares, and Wuxi took out about $13 million of bank loans. By our math, the quarter used about $26 million before that new money.
- Cash used in operations, first nine months: $73.4 million, against $42.8 million a year earlier
- Total debt: $430 million, up from $353 million in December
Wu said: "We expect to reach non GAAP profitability in the second quarter of 27 and to turn cash flow positive the following quarter." Her timeline leaves about three more quarters of cash outflow to fund.
What to watch: whether the Wuxi sale closes and the cash arrives in the fourth quarter. Without it, indie would lean on its share-sale programme, which has about $51 million left, or on new debt to pay for the image-sensor business it is buying from ams-OSRAM.
Radar Reached Volume Production Without a Revenue Figure
indie's radar chipset, sold through a large car-parts supplier, passed carmakers' production approval and now ships in high volume, McClymont said. The release added that the chipset "has been selected by one of the top three North American OEMs", the big carmakers. That answers part of a standing worry about when the ramp would start.
Yet indie again gave no radar revenue for 2026, after McClymont pointed earlier this year to roughly $30–50 million. He now describes an eventual 50–70 million units a year at $5–6 each, but gave no date.
What to watch: radar revenue or unit shipments in the fourth-quarter report, now that shipments run in volume. A figure inside the earlier range would show the ramp arrived on schedule.
Risks this quarter didn't answer
Four standing risks got no answer in these results. Each item below gives the latest reading and the disclosure that would move it.
- Convertible notes: the 2029 and 2031 notes could turn into about 87 million new shares; paying them down with Wuxi proceeds, as Wu proposed, would shrink this
- China exposure: Greater China took 63% of shipments, up from 50% a year ago; closing the Wuxi sale would cut it
- Packaging and test capacity for chips: neither the release nor the call mentioned it; any new shortage would move this
- The 2028 sales target of more than $700 million: not mentioned again; a restated target for the business after the Wuxi sale would settle it
👓 Other Themes
Car Demand Softer in China, Firmer Elsewhere
McClymont said car demand grew in Europe and the US in the third quarter but softened inside China, though Chinese exports held up. He cited EU registrations up 9.3% in September and US sales up more than 4%. In his view, indie is "somewhat insulated from the cycle" because new programmes matter more than total car output.
Contract Backlog Edged Up to $6.2 Billion
Each November indie reports a strategic backlog, its estimate of revenue from design wins over a ten-year window. McClymont put it at $6.2 billion excluding Wuxi, slightly above last year on the same basis. He said indie has "taken a conservative approach" and left out its robot and drone wins, which are too early to size.
💲 Other KPIs
Inventory climbed to $80.0 million, up 75% from a year ago. Revenue rose 31% over the same period. Stock on hand now equals about 114% of a quarter's sales, against 85% a year ago, and has stayed above 100% for three quarters. Chips still in production and finished chips drove the build, which absorbed cash this year.
Money customers owe indie reached $79.3 million, up 17% from June, while sales grew 10%. The balance has climbed 38% since December, well ahead of revenue, which ties up cash. One customer accounts for 10% of the balance, and one buyer supplied 12% of quarterly revenue.
indie's share count, including shares its partners can swap into, reached 233.4 million, up 7.4% from a year ago. Stock bonuses and new share sales added to it, and the fourth-quarter outlook assumes 240 million. Because the count keeps climbing, the loss per share improves more slowly than the loss itself.
🔮 Guidance
New. The plan has total sales growing about 33% from a year ago, to $77 million at the middle of the range. That is about 10% above the third quarter. The range spans $8 million, wider than the third quarter's $6 million. indie landed above the middle of its range in each of the last four quarters, though only by 0.3% this time.
New. indie plans about $47 million from the businesses it will keep, 64% above a year ago by its own count. By our math, that is a 15.5% step from the third quarter, a little faster than the 14% just delivered. Wuxi supplies the remaining $30 million of the total.
New. The outlook holds Wuxi, the Chinese unit indie is selling, near $30 million, against $29.5 million in the third quarter. By our math that is about 1% above a year ago. Wuxi stays in the accounts until the sale closes, which Wu said she is optimistic will happen by year-end.
New. The plan has the loss per share excluding one-offs narrowing to about 4 cents from 5 cents, with no tax expense. The August plan also called for 4 cents, and indie missed it as gross margin fell. By our math, the new target implies gross margin near 42%, if Wuxi's minority owners keep a similar share of profit.
New. Spending on research, sales and administration, excluding one-offs, edges up about $1 million to $37.5 million. In the third quarter indie spent $36.4 million, about $0.6 million under plan. With revenue planned roughly $7 million above the third quarter, most of the extra sales would flow through to a smaller loss.
New. Wu set dates for indie's first profit excluding one-offs and its first positive cash flow. McClymont had said in early 2025 that indie would break even by that year's fourth quarter, and it did not. Wu said existing cash covers the path even without Wuxi proceeds, after paying for the image-sensor business.
❓ Key Questions
How much radar revenue did indie earn in 2026?
McClymont earlier pointed to roughly $30–50 million for the year, but neither the release nor the call gave a radar figure. A number would show whether volume production started on time or slipped into 2027.
What gross margin do the kept businesses earn?
McClymont expects a blended margin in the low fifties after the Wuxi sale, but indie publishes only the combined figure, which fell to about 42%. The core margin decides how fast the loss closes.
How much of indie's cash sits inside Wuxi?
Wuxi took out bank loans this quarter and leaves the accounts at closing, taking its cash with it. Readers cannot judge the cash cushion of the remaining business without that split.
What happens if China's approval misses the April deadline?
indie can end the deal if approvals take longer than 18 months from the October 2025 signing. It would then lose about $135 million of expected cash while paying for the ams-OSRAM image-sensor business.
What will the ams-OSRAM image-sensor business add?
McClymont said it will add little revenue or spending this quarter and earn margins near indie's average or a bit lower. Its yearly revenue and losses would show whether the €35 million cash price fits indie's budget.