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Semtech SMTC shares have plunged 47.3% in the past three months, underperforming the Zacks Semiconductor - Analog and Mixed industry, Zacks Computer and Technology sector and the S&P 500 index’s decline of 13%, 13.4% and 6.2%, respectively
Semtech Three-Month Performance Chart
Image Source: Zacks Investment Research
Semtech’s underperformance highlights challenges stemming from its CopperEdge business. SMTC’s CopperEdge signal integrity solutions are embedded in active copper cables, which are further used for connecting GPUs, CPUs, switches, storage units and other components within server racks, ensuring seamless transmission of data.
Per a regulatory filing released in February 2025, one of the major customers of its CopperEdge solutions is implementing architectural changes in its server racks, causing CopperEdge product sales to fall below the previously anticipated $50 million for fiscal 2026.
Following this disclosure, several lawsuits were filed against the company on suspicion of violating security laws, further undermining investors’ confidence in the stock. However, these short-term challenges are outweighed by SMTC’s strong financials due to the traction in its innovative products.
Semtech’s Latest Innovation Signals Integrity
To address thermal challenges, high costs and improved transmission speed for artificial intelligence and machine learning workloads, Semtech recently launched 1.6T Octal Small Form-factor Pluggable (OSFP) Active Copper Cable. The solution leverages Amphenol’s APH OSFP interconnects, offering design and integration flexibility to SMTC’s data center customers.
Semtech combined its CopperEdge 224G per lane linear equalizer integrated circuits with Amphenol’s leading cable technology to come up with this new interconnect solution. This solution, developed in collaboration with Amphenol, is reported to consume 90% less power than its digital signal processing counterparts while also ensuring significantly low latency.
The launch of 1.6T (OSFP) Active Copper Cable has the potential to aid in the recovery of SMTC’s CopperEdge business. Semtech’s other products, including LoRa technology and LoRaWAN standards, are already experiencing strong demand among its industrial customers. These factors have the potential to drive Semtech’s top and bottom lines.
The Zacks Consensus Estimate for Semtech’s fiscal 2026 and 2027 revenues reflects this optimism, with revenues expected to grow 15.9% and 10.6%, respectively. EPS is projected to increase 96.6% for fiscal 2026 and 27.4% for fiscal 2027.