XP Power's Semiconductor-Led Order Surge Signals a Multi-Year Upswing

H1 orders jump 55%, gross margin hits 45.9%, and Malaysia capacity comes online just as the semi cycle accelerates.

XPP.L · Earnings Call · 2026-08-04

A Return to Growth at the Inflection Point

XP Power's first-half 2026 report marks a decisive turn. After years of restructuring, the company is seeing a broad-based recovery: Semiconductor Manufacturing orders surged 116%, lifting overall order intake to GBP 167.2 million, up 55% year-on-year in constant currency. The order book expanded by GBP 58 million to GBP 174 million, providing rare visibility. CFO Matthew Webb framed it plainly: “the standout feature of the first half was order intake, which reached GBP 167.2 million, up almost 55% on the prior period in constant currency with growth across all 3 sectors and all 3 regions.” — Matthew Webb, Chief Financial Officer · 2026-08-04

Margin Expansion and Operational Discipline

The rebound is not just top-line. Adjusted gross margin jumped 450 basis points to 45.9%, driven by the closure of the China factory, restructuring benefits, product cost savings, and better price/mix. This flowed straight to the bottom line: adjusted operating profit rose 23% in constant currency to GBP 8.6 million, with adjusted diluted EPS climbing from 0.4p to 14.2p. The company also highlighted a change in its cash conversion definition—now measured as a percentage of EBITDA with a through-cycle target around 85%. This re-baselining reflects maturity and alignment with peers.

Capacity, Strategy, and the Multi-Year Semi Cycle

CEO Gavin Griggs emphasized that the Malaysia facility is on track for full production in Q4, with first customer shipments expected then. The company is scaling Vietnam aggressively, having hired over 1,200 staff in Q2. This is deliberate investment against visible demand. Griggs captured the sentiment:

We're also seeing a broad recovery across our end markets. Semiconductor customers are preparing for what we expect to be a multiyear investment cycle.
Gavin Griggs, Chief Executive Officer · 2026-08-04

The company's strategic pivot away from the Chinese semiconductor market (due to export license expirations and entity list issues) has been more than offset by wins elsewhere—including gains from a competitor's business continuity issue.

Market Confluence and a Valuation Signal

XP Power is riding a powerful global wave. The Semiconductor Manufacturing Equipment theme is one of the most prominent in the current tape history, with names like ASML, AMAT, and others rallying on AI-driven demand. The company's own keyword trajectory shows this is the dominant theme for them this quarter, but it is also a well-established market theme—the question is whether XP can sustain its outperformance via technology leadership and customer intimacy.

The Q&A session provided an interesting relative-value data point: CEO Gavin Griggs compared the recent acquisition of Astrodyne by TE Connectivity at ~5.5x sales, noting XP's own EV/sales is lower. He said: “The multiple paid, I think, is clearly interesting when you compare it to our share price.” — Gavin Griggs, Chief Executive Officer · 2026-08-04This suggests the market has not fully re-rated XP for its order momentum.

Finally, the company's Industrial Tech and Healthcare segments both showed order growth (22% and 25% respectively), providing a balanced recovery rather than reliance on a single end market. With a book-to-bill of 1.53 for the group, the path to double-digit organic growth appears compelling.