stockrowWhat it does
Advanced Energy Industries designs, manufactures, sells and services equipment that converts and controls electrical power. Its products take power from a utility or a building and make it suitable for equipment that needs a predictable, repeatable supply. They can also measure and control power and temperature.
The company sells to equipment manufacturers, distributors and end users around the world. Its semiconductor products supply power for processes used to make chips, including etching and depositing materials. In data centers, its products power server and storage systems, including custom server racks and power shelves used by cloud providers and their partners. Other applications include medical devices, industrial production, telecommunications and networking equipment.
Advanced Energy also operates service centers that repair, calibrate, upgrade and refurbish its products. It offers conversions and used equipment as well. Customers can tailor power products to the requirements of particular applications, including their efficiency, power density and performance needs.
The company was incorporated in Colorado in 1981 and is headquartered in Denver, Colorado. Steve Kelley is its president and chief executive officer. Advanced Energy operates as a single power-electronics segment, selling into several end markets.
How it makes money
Advanced Energy earns revenue by selling power products and related services to equipment manufacturers, distributors and end customers. It operates as one segment rather than reporting separate operating segments for its end markets. Revenue was $1,798.8 million in 2025 and $696 million in the third quarter of 2026.
For semiconductor equipment, the company sells plasma power, high-voltage power, system power and sensing products. Plasma power is used in processes that etch or deposit materials during chip manufacturing. Semiconductor Equipment revenue was $839.9 million in FY2025. In Data Center Computing, Advanced Energy supplies products designed into servers, storage systems and custom power shelves. That market generated $587.3 million in FY2025.
The company also sells power conversion and measurement products for industrial and medical equipment, and application-specific power products for wireless infrastructure and networking equipment. Customers choose products based on factors including efficiency, power density, noise, power consumption and the ability to tailor a solution to an application.
Service revenue comes from work on the installed base, including repairs, calibration, upgrades and refurbishment. Repair work depends in part on where customers are in the business cycle. The company also supplies used equipment.
Advanced Energy reported taking pricing actions in mature product lines primarily to offset increased input costs. In the third quarter of 2026, gross margin was 42.1%; the company attributed the improvement from a year earlier in part to higher volume and manufacturing efficiency.
| Product or service | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| Product | $1.6 billion | 44.9% | 22.7% |
| Semiconductor Equipment | $839.9 million | 23.3% | 5.98% |
| Data Center Computing | $587.3 million | 16.3% | 106.7% |
| Industrial and Medical | $282.3 million | 7.85% | −10.7% |
| Services and other | $183.9 million | 5.11% | 10.6% |
| Telecom and Networking | $89.3 million | 2.48% | 0.22% |
Customers and how it sells
Advanced Energy sells worldwide to original equipment manufacturers, distributors and end users through direct and indirect channels. Its primary direct sales operations are in the United States, Asia and Europe, and it maintains customer service centers globally. In industrial and medical markets, the company uses direct sales for larger and strategic accounts as well as distributors and its website to reach customers.
Three customers accounted for significant shares of FY2025 revenue. Advanced Energy expects its largest customers to continue representing a significant percentage of revenue. It ships products into just-in-time bins for large semiconductor equipment customers, keeping quantities within customer-specified limits.
The United States contributed $541.4 million of revenue in FY2025. Other reported geographic figures included $252.8 million for Mexico, $218.2 million for Japan and $130.2 million for Taiwan. Advanced Energy also manufactures primarily in the Philippines, Malaysia and Mexico.
In data centers, the company sells to cloud service providers and their partners as well as into server and storage systems. It has won business from customers outside the hyperscalers and says multiple such customers are qualified and in the early shipment phase.
| Region | Revenue, FY2025 | Share | Change on the year |
|---|---|---|---|
| All others | $656.2 million | 36.5% | 9.37% |
| United States | $541.4 million | 30.1% | 6.43% |
| Mexico | $252.8 million | 14.1% | 57.9% |
| Japan | $218.2 million | 12.1% | 307.1% |
| Taiwan | $130.2 million | 7.24% | −18.4% |
Suppliers and costs
Advanced Energy manufactures primarily in the Philippines, Malaysia and Mexico, with limited specialty manufacturing in the United States, the United Kingdom and Europe. Its Thailand factory has begun generating revenue, and multiple data center customers have qualified it. The company has also increased output at its other factories.
Manufacturing requires mechanical and electrical components, often made to company specifications. Advanced Energy uses numerous suppliers, including contract manufacturers, but some key parts come from a sole supplier or a limited group. It seeks to qualify alternative suppliers, hold inventories of critical components and source parts competitively.
The company has identified isolated component shortages, particularly integrated circuits. It has built strategic inventory and put surge capacity in place because constrained parts can arrive late in a quarter. Research and development is another cost: expenses were $232.4 million in 2025, while selling, general and administrative expenses were $242.4 million. Advanced Energy attributed higher 2025 gross margin mainly to higher volume and manufacturing cost reductions.
- Revenue$1.8B
- Cost of revenue−$1.1B
- Research and development−$232.4M
- Selling, general and administrative−$242.4M
- Other operating costs−$34.6M
- Operating income$168.0M
Competitive position
Advanced Energy competes in markets where technology and customer requirements change. Product performance, compatibility, price, quality, reliability, delivery and support are competitive factors. The company says no single competitor dominates any of its markets.
In semiconductor equipment, competitors include COMET Holding, Daihen, MKS Instruments and TRUMPF Hüttinger. In data center computing, it competes with Delta Electronics, Flex and Lite-On Technology. Industrial and medical competitors include Cosel, Delta, MEAN WELL, TDK-Lambda, TRUMPF Hüttinger and XP Power. In telecom and networking, it competes with Delta, Kexin Communication Technologies and Lite-On.
The company invests in research and development, holds patents and trade secrets, and customizes products for customer applications. It has also won plasma power designs for advanced-node processes after multi-year design efforts. Its service network provides support after equipment is installed.
Our reading: Customer-specific engineering and lengthy design efforts provide some protection, because a supplier must develop and qualify products for demanding applications. Our reading: Intellectual property and service relationships add support, but their strength is limited by the presence of established competitors and continuing technological change. (item1; call_prepared)
| Competitor | Where they compete | Threat (our reading) |
|---|---|---|
| COMET Holding AG | Semiconductor equipment | Medium |
| Daihen Corp. | Semiconductor equipment | Medium |
| MKS Instruments, Inc. | Semiconductor equipment | Medium |
| TRUMPF Hüttinger GmbH + Co. KG | Semiconductor equipment and industrial and medical | High |
| Delta Electronics, Inc. | Data centers, industrial and medical, telecom and networking | High |
| Flex Ltd. | Data center computing | Medium |
| Lite-On Technology Corp. | Data centers and telecom and networking | High |
| Cosel Co., Ltd. | Industrial and medical | Medium |
Growth opportunities
Advanced Energy’s growth strategy combines new products, customer design wins and manufacturing capacity. In semiconductor equipment, it aims to gain share in plasma power and adjacent applications as chipmakers add process steps and use more complex power equipment. The company won advanced-node plasma power designs and additional semiconductor test designs in the third quarter of 2026. It expects new products to contribute to semiconductor revenue as customers ramp production.
In data centers, higher-power processors and denser server racks increase requirements for power efficiency and density. Advanced Energy expects growth from new hyperscale programs, customers outside the hyperscaler group and the eventual ramp of higher-voltage solutions. It has displayed a modular power distribution board and liquid-cooled power technology for evolving rack architectures.
The company is expanding its factory network to support demand. It says its Thailand facility has begun generating revenue and that it is on track to expand annual revenue-generating capacity to over $5 billion by the end of 2028. Capacity is not a revenue forecast and depends on factors including component supply.
Advanced Energy raised its 2026 revenue growth outlook to around 40%. It expects continued year-on-year growth in industrial and medical revenue for the next few quarters and is using digital marketing to reach more customers in that market.
- $1.5BFY2021
- $1.8BFY2022
- $1.7BFY2023
- $1.5BFY2024
- $1.8BFY2025
Structural risks
- Customer concentration: Three customers represented significant shares of FY2025 revenue. The loss of a large customer could materially affect results.
- Cycles and demand: The industries in which Advanced Energy competes are subject to unpredictable fluctuations and cycles. A significant demand decrease could also increase charges for excess inventory.
- Component supply: Some key parts are available from only one or a limited number of suppliers. The company has identified shortages in isolated components, particularly integrated circuits, and says some supply constraints cannot be mitigated.
- International trade and operations: Tariffs, export controls, trade restrictions and retaliatory measures could affect demand, production costs or the company’s ability to sell and service products. International operations also face supply-chain interruptions and changing regulations.
- Execution and engineering: Advanced Energy is expanding its manufacturing footprint and investing in product development. It says limited engineering bandwidth prevents it from addressing some opportunities.
- Debt restrictions: Debt obligations and credit agreement covenants can restrict actions including additional borrowing, investments, dividends and share repurchases.
Bottom line
Our reading
Our reading: Advanced Energy is a specialized power-equipment supplier whose business depends on customer designs, manufacturing execution and continued investment in technology. (item1; call_prepared) Its semiconductor and data center opportunities are accompanied by concentrated customer revenue, cyclical demand and component-supply constraints. (item1; item1a; call_qa) Its service network and installed base provide an additional revenue stream, although product demand and factory capacity remain central to growth. (item1; call_prepared; call_qa)