Silicom Uses $16.2M in Operating Cash in H1 2026
Operating cash flow was a $16.197 million use, mainly attributed to higher inventory; management said cash resources are sufficient for at least the next twelve months.
Sentiment and the balance of points
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Silicom Ltd. (SILC) reported sales of $42.904 million for the six months ended June 30, 2026, compared with $29.404 million a year earlier. Gross profit was $12.812 million versus $8.990 million. Operating loss was $4.801 million, compared with $6.371 million, and net loss was $4.454 million versus $6.143 million.
Cash used in operating activities was $16.197 million, compared with $3.497 million provided in the first half of 2025; the company attributed the cash use mainly to higher inventory. Inventory was $70.725 million as of June 30, 2026, versus $52.650 million at December 31, 2025. Cash and cash equivalents were $25.146 million, down from $35.156 million at year-end. Working capital was $83.191 million and the current ratio was 3.06 as of June 30, 2026. Management stated that cash resources are sufficient for operating needs for at least the next twelve months.
Positive
- Sales were $42.904 million, compared with $29.404 million.
- Net loss was $4.454 million, compared with $6.143 million.
Negative
- Operating cash flow was a $16.197 million use, versus $3.497 million provided.
Filing Explained
Silicom’s
Key Figures
Key Terms
held-to-maturity financial
Level 2 inputs financial
anti-dilutive effect financial
right-of-use assets financial
current ratio financial
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16
OR 15d-16 OF THE SECURITIES EXCHANGE ACT OF 1934
For the month of September, 2026
Commission File Number
(Translation of Registrant’s name into English)
(Address of Principal Executive Offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
Form 20-F ☒ Form 40-F ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):___
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):___
On September 28, 2026, the Registrant released its financial results for the six months ended
Attached hereto as Exhibit 99.1 are the unaudited, condensed interim consolidated financial statements of the registrant for the six months ended June 30, 2026 and 2025 (including the notes thereto).
Attached hereto as Exhibit 99.2 is the registrant’s review of its results of operations and financial condition for the six months ended June 30, 2026 and 2025.
This Form 6-K, including all exhibits hereto, is hereby incorporated by reference into all effective registration statements filed by the registrant under the Securities Act of 1933.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| SILICOM LTD. (Registrant) |
|||
| Date: September 28, 2026 | By | /s/ Eran Gilad | |
| Eran Gilad | |||
| Chief Financial Officer | |||
Exhibit 99.1
Silicom Ltd. and its Subsidiaries
Condensed Interim Consolidated Financial Statements
As of June 30, 2026 (Unaudited) |
Silicom Ltd. and its Subsidiaries
Condensed Interim Consolidated Financial Statements as of June 30, 2026 (unaudited)
Contents
| Page | |
| Condensed Interim Consolidated Balance Sheets | F - 3 |
| Condensed Interim Consolidated Statements of Operations | F - 5 |
| Condensed Interim Consolidated Statements of Changes in Shareholders’ Equity | F - 6 |
| Condensed Interim Consolidated Statements of Cash Flows | F - 7 |
| Notes to the Condensed Interim Consolidated Financial Statements | F - 8 |
F - 2
Silicom Ltd. and its Subsidiaries
| Condensed Interim Consolidated Balance Sheets (unaudited) |
| June 30, | December 31, | |||||||||||
| 2026 | 2025 | |||||||||||
| Note | US$ thousands | US$ thousands | ||||||||||
| Assets | ||||||||||||
| Current assets | ||||||||||||
| Cash and cash equivalents | ||||||||||||
| Short-term bank deposits | ||||||||||||
| Marketable securities | 3 | |||||||||||
| Accounts receivable: | ||||||||||||
| Trade, net | ||||||||||||
| Other | ||||||||||||
| Inventories | 4 | |||||||||||
| Total current assets | ||||||||||||
| Marketable securities | 3 | |||||||||||
| Assets held for employees' severance benefits | ||||||||||||
| Deferred tax assets | ||||||||||||
| Property, plant and equipment, net | ||||||||||||
| Intangible assets, net | ||||||||||||
| Operating leases right-of-use, net | 5 | |||||||||||
| Total assets | ||||||||||||
| Avi Eizenman | Liron Eizenman | Eran Gilad | ||
| Chairman of the Board of Directors | Chief Executive Officer | Chief Financial Officer |
Kfar-Saba, Israel
August 4, 2026
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F - 3
Silicom Ltd. and its Subsidiaries
| Condensed Interim Consolidated Balance Sheets (unaudited) (Continued) |
| June 30, | December 31, | |||||||||||
| 2026 | 2025 | |||||||||||
| Note | US$ thousands | US$ thousands | ||||||||||
| Liabilities and shareholders' equity | ||||||||||||
| Current liabilities | ||||||||||||
| Trade accounts payable | ||||||||||||
| Other accounts payable and accrued expenses | ||||||||||||
| Operating lease liabilities | 5 | |||||||||||
| Total current liabilities | ||||||||||||
| Long-term liabilities | ||||||||||||
| Operating lease liabilities | 5 | |||||||||||
| Liability for employees' severance benefits | ||||||||||||
| Deferred tax liabilities | ||||||||||||
| Total liabilities | ||||||||||||
| Shareholders' equity | ||||||||||||
| Ordinary shares, ILS |
||||||||||||
| Additional paid-in capital | ||||||||||||
| Treasury shares (at cost) |
||||||||||||
| shares as at June 30, 2026 and December 31, 2025, respectively | ( |
) | ( |
|||||||||
| Retained earnings | ||||||||||||
| Total shareholders' equity | ||||||||||||
| Total liabilities and shareholders’ equity | ||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F - 4
Silicom Ltd. and its Subsidiaries
| Condensed Interim Consolidated Statements of Operations (unaudited) |
| Six-month period | ||||||||||||
| ended June 30, | ||||||||||||
| 2026 | 2025 | |||||||||||
| US$ thousands | ||||||||||||
| (Except for share and | ||||||||||||
| Note | per share data) | |||||||||||
| Sales | 7 | |||||||||||
| Cost of sales | ||||||||||||
| Gross profit | ||||||||||||
| Operating expenses | ||||||||||||
| Research and development | ||||||||||||
| Sales and marketing | ||||||||||||
| General and administrative | ||||||||||||
| Total operating expenses | ||||||||||||
| Operating loss | ( |
) | ( |
) | ||||||||
| Financial income, net | ||||||||||||
| Loss before income taxes | ( |
) | ( |
) | ||||||||
| Income taxes | ||||||||||||
| Net loss | ( |
) | ( |
) | ||||||||
| Loss per share: | ||||||||||||
| Basic and diluted loss per ordinary share (US$) | 2D | ( |
) | ( |
) | |||||||
| Weighted average number of ordinary | ||||||||||||
| shares used to compute basic and diluted loss | ||||||||||||
| per share (in thousands) | ||||||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F - 5
Silicom Ltd. and its Subsidiaries
| Condensed Interim Consolidated Statements of Changes in Shareholders' Equity (unaudited) |
| Ordinary shares | Additional paid-in capital | Treasury shares(3) | Retained earnings | Total shareholders’ equity | ||||||||||||||||||||
|
Number of shares(1) |
US$ thousands | |||||||||||||||||||||||
| Balance at | ||||||||||||||||||||||||
| December 31, 2024 | ( |
) | ||||||||||||||||||||||
| Exercise of RSUs(2) | * |
|||||||||||||||||||||||
| Purchase of treasury shares | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance at | ||||||||||||||||||||||||
| June 30, 2025 | ( |
) | ||||||||||||||||||||||
| Balance at | ||||||||||||||||||||||||
| December 31, 2025 | ( |
) | ||||||||||||||||||||||
| Exercise of RSUs(2) | * |
|||||||||||||||||||||||
| Share-based compensation | - | |||||||||||||||||||||||
| Net loss | - | ( |
) | ( |
) | |||||||||||||||||||
| Balance at | ||||||||||||||||||||||||
| June 30, 2026 | ( |
) | ||||||||||||||||||||||
| (1) | Net of |
| (2) |
Restricted share units (hereinafter - "RSUs") |
| (3) |
Company shares held by the Company - presented as a reduction of equity at their cost to the Company. |
|
The treasury shares have no rights. |
|
| * | Less than 1 thousand. |
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F - 6
Silicom Ltd. and its Subsidiaries
| Condensed Interim Consolidated Statements of Cash Flows (unaudited) |
| Six-month period | ||||||||
| ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| US$ thousands | ||||||||
| Cash flows from operating activities | ||||||||
| Net loss | ( |
) | ( |
) | ||||
| Adjustments required to reconcile net loss to net cash | ||||||||
| provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | ||||||||
| Write-down of obsolete inventory | ||||||||
| Changes in marketable securities and exchange rate differences | ( |
) | ( |
) | ||||
| Share-based compensation expense | ||||||||
| Deferred taxes, net | ( |
) | ||||||
| Changes in assets and liabilities: | ||||||||
| Accounts receivable - trade | ( |
) | ||||||
| Accounts receivable - other | ( |
) | ||||||
| Change in liability for employees' severance benefits, net | ||||||||
| Inventories | ( |
) | ( |
) | ||||
| Trade accounts payable | ||||||||
| Other accounts payable and accrued expenses | ( |
) | ||||||
| Net cash provided by (used in) operating activities | ( |
) | ||||||
| Cash flows from investing activities | ||||||||
| Proceeds from maturity of short-term bank deposits | ||||||||
| Investment in property, plant and equipment | ( |
) | ( |
) | ||||
| Investment in intangible assets | ( |
) | ( |
) | ||||
| Proceeds from maturity of marketable securities | ||||||||
| Purchases of marketable securities | ( |
) | ( |
) | ||||
| Net cash provided by (used in) investing activities | ( |
) | ||||||
| Cash flows from financing activities | ||||||||
| Purchase of treasury shares | ( |
) | ||||||
| Net cash used in financing activities | ( |
) | ||||||
| Effect of exchange rate changes on cash balances held | ||||||||
| Increase (decrease) in cash and cash equivalents | ( |
) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | ||||||||
| Supplementary cash flow information | ||||||||
| Non-cash transactions: | ||||||||
| Additions of right of use assets and lease liabilities | ||||||||
| Termination of lease agreements | ( |
) | ( |
) | ||||
| Investments in property, plant and equipment | ||||||||
The accompanying notes are an integral part of these condensed interim consolidated financial statements.
F - 7
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 1 - General
Silicom Ltd. is an Israeli corporation engaged in designing, manufacturing, marketing and supporting high performance networking and data infrastructure solutions for a broad range of servers, server based systems and communications devices.
The Company's shares have been traded in the United States on the National Association of Securities Dealers Automated Quotation System ("NASDAQ") since February 1994. Since January 2, 2014 the Company's shares have been traded on the NASDAQ Global Select Market (prior thereto they were traded on the NASDAQ Global Market).
In these financial statements the terms "Company" or "Silicom" refer to Silicom Ltd. and its wholly owned subsidiaries, Silicom Connectivity Solutions, Inc. (hereinafter - "Silicom Inc.") and Silicom Denmark A/S (Fiberblaze A/S) (hereinafter – "Silicom Denmark"), whereas the term "subsidiaries" refers to Silicom Inc. and Silicom Denmark.
Note 2 - Summary of Significant Accounting Policies
| A. | Basis of presentation |
The accompanying condensed interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America for interim financial information and contain all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information included therein. These condensed interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements and related notes included in the Company's Annual Report on Form 20-F for the year ended December 31, 2025. The significant accounting policies applied in the Company’s audited consolidated financial statements for the year ended December 31, 2025, and notes thereto included in the Company's Annual Report are applied consistently in these unaudited condensed interim consolidated financial statements. Results for the interim period presented are not necessarily indicative of the results expected for the full year.
In preparing the Company's condensed interim consolidated financial statements, management considered the impact of the ongoing geopolitical conflicts in the Middle East, including the hostilities involving Israel, Iran, Hamas and Hezbollah. Although ceasefire arrangements were reached in certain areas, regional tensions continue. Any armed conflicts or political instability in the region could adversely affect the Company's business conditions and results of operations. As of and for the six months ended June 30, 2026, the impact of these events on the Company's results of operations and financial condition was not material.
| B. | Estimates and assumptions |
The preparation of the condensed interim consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the condensed interim consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include credit loss, income taxes, impairment of inventories, capitalized software costs and the assumptions used to estimate the fair value of share-based compensation.
F - 8
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 2 - Summary of Significant Accounting Policies (cont’d)
| C. | Fair Value Measurements |
The Company's financial instruments consist mainly of cash and cash equivalents, bank deposit, marketable securities, trade and other receivables trade accounts payable and other payable. The carrying amounts of these financial instruments, except for marketable securities, approximate their fair value because of the short maturity of these investments. The fair value of marketable securities is presented in Note 3 to these condensed interim consolidated financial statements. Assets held for severance benefits are recorded at their current cash redemption value.
The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company determines fair value based on assumptions that market participants would use in pricing an asset or liability in the principal or most advantageous market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:
Level 1 Inputs: Unadjusted quoted prices in active markets for identical assets or liabilities accessible to the reporting entity at the measurement date.
Level 2 Inputs: Other than quoted prices included in Level 1 inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the asset or liability.
Level 3 Inputs: Unobservable inputs for the asset or liability used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at measurement date.
| D. | Basic earnings (loss) and diluted earnings (loss) per share |
Basic earnings (loss) per ordinary share is calculated by dividing the net income attributable to ordinary shares, by the weighted average number of ordinary shares outstanding and vested RSU’s (net of treasury shares). Diluted earnings (loss) per ordinary share calculation is similar to basic earnings (loss) per ordinary share except that the weighted average of ordinary shares outstanding is increased to include outstanding potential ordinary shares during the period if dilutive. Potential ordinary shares arise from stock options and unvested RSUs, and the dilutive effect is reflected by the application of the treasury stock method.
The following table summarizes information related to the computation of basic and diluted earnings (loss) per ordinary share for the periods indicated.
| Six-month period ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| Net loss attributable to ordinary shares | ||||||||
| (US$ thousands) | ( |
) | ( |
) | ||||
| Weighted average number of ordinary shares outstanding used in basic and diluted loss per ordinary share calculation | ||||||||
| Basic and diluted loss per ordinary shares (US$) | ( |
) | ( |
) | ||||
| Weighted average number of shares related to options | ||||||||
| and RSUs excluded from the diluted loss per share | ||||||||
| calculation because of anti-dilutive effect | ||||||||
| E. | Recent Accounting Pronouncements |
In November 2024, the FASB issued ASU 2024-03 “Income Statement: Reporting Comprehensive Income Expense Disaggregation Disclosures,” The standard requires more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation, amortization, and depletion) included in certain expense captions presented on the face of the income statement, as well as disclosures about selling expenses. The standard is effective for fiscal years beginning after December 15, 2026, and interim periods within years beginning after December 15, 2027. The Company is currently evaluating the impact of ASU 2024-03 on its consolidated financial statements.
F - 9
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
The Company's investment in marketable securities as of December 31, 2025 and June 30, 2026 are classified as “held-to-maturity” and consist of the following:
|
Amortized cost basis** |
Gross unrealized holding gains |
Gross unrealized holding (losses) |
Aggregate fair value* |
|||||||||||||
| US$ thousands | ||||||||||||||||
| At June 30, 2026 | ||||||||||||||||
| Held to maturity: | ||||||||||||||||
| Corporate debt securities and | ||||||||||||||||
| government debt securities | ||||||||||||||||
| Current | ( |
) | ||||||||||||||
| Non-Current (1 to 4 years) | ( |
) | ||||||||||||||
| ( |
) | |||||||||||||||
| At December 31, 2025 | ||||||||||||||||
| Held to maturity: | ||||||||||||||||
| Corporate debt securities and | ||||||||||||||||
| government debt securities | ||||||||||||||||
| Current | ( |
) | ||||||||||||||
| Non-Current (1 to 4 years) | ( |
) | ||||||||||||||
| ( |
) | |||||||||||||||
| * | Fair value is being determined using Level 2 inputs. |
| ** |
Including accrued interest in the amount of US$ The accrued interest is presented as part of other receivables on the balance sheet. |
Activity in marketable securities during the six-month period ended June 30, 2026 was as follows:
| US$ thousands | ||||
| Balance at January 1, 2026 | ||||
| Purchases of marketable securities | ||||
| Amortization of discount on marketable securities | ||||
| Proceeds from maturity of marketable securities | ( |
) | ||
| Balance at June 30, 2026 | ||||
F - 10
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 3 - Marketable Securities (Cont’d)
The following table summarizes the gross unrealized losses or gains on investment securities and the fair value of those securities, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss or gain position, at June 30, 2026:
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
| Held to maturity | Unrealized Losses | Fair value | Unrealized Losses | Fair value | Unrealized Losses | Fair value | ||||||||||||||||||
| Corporate debt securities and government debt securities | ( |
) | ( |
) | ( |
) | ||||||||||||||||||
| Less than 12 months | 12 months or more | Total | ||||||||||||||||||||||
| Held to maturity | Unrealized Gains | Fair value | Unrealized Gains | Fair value | Unrealized Gains | Fair value | ||||||||||||||||||
| Corporate debt securities and government debt securities | ||||||||||||||||||||||||
The unrealized losses or gains on the investments were caused by changes in interest rate. The Company has the ability and intent to hold these investments until maturity and it is more likely than not that the Company will not be required to sell any of the securities before recovery.
| June 30, | December 31, | |||||||
| 2026 | 2025 | |||||||
| US$ thousands | ||||||||
| Raw materials and components | ||||||||
| Products in process | ||||||||
| Finished products | ||||||||
In the year ended December 31, 2025 and the six months ended June 30, 2026, the Company recorded inventory write-downs in the amount of US$
F - 11
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
A. The components of operating lease costs for the six months period ended in June 30, 2026 and June 30, 2025 were as follows:
| Six-month period ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| US$ thousands | ||||||||
| Operating lease costs (mainly plant and offices) | ||||||||
| Variable lease payments not included in the lease liability | ||||||||
| Short-term lease cost | ||||||||
| Total operating lease cost | ||||||||
B. Supplemental cash flow information related to operating leases was as follows:
| Six-month period ended June 30 | ||||||||
| 2026 | 2025 | |||||||
| US$ thousands | ||||||||
| Cash paid for amounts included in the measurement of lease liabilities: | ||||||||
| Operating cash flows from operating leases | ||||||||
| Right-of-use assets obtained in exchange for lease liabilities (non-cash): | ||||||||
| Additions of operating leases | ||||||||
| Termination of operating leases | ( |
) | ( |
) | ||||
In February 2026, the Company extended the lease agreement for its existing offices in Virginia. As a result, the Company recognized a right-of-use asset and a lease liability of US$
C. Supplemental balance sheet information related to operating leases was as follows:
| June 30, 2026 |
December 31, 2025 |
|||||||
| US$ thousands | ||||||||
| Operating leases: | ||||||||
| Operating leases right-of-use | ||||||||
| Current operating lease liabilities | ||||||||
| Non current operating lease liabilities | ||||||||
| Total operating lease liabilities | ||||||||
F - 12
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 5 – Leases (cont’d)
D. Supplemental balance sheet information related to operating leases was as follows:
|
June 30, 2026 |
December 31, 2025 |
|||||||
|
US$ thousands |
||||||||
| Weighted average remaining lease term (years) | ||||||||
| Weighted average discount rate | % | % | ||||||
E. Future lease payments under non-cancellable leases as of June 30, 2026 were as follows:
| June 30, 2026 | ||||
| US$ thousands | ||||
| 2026 | ||||
| 2027 | ||||
| 2028 | ||||
| 2029 | ||||
| 2030 | ||||
| After 2030 | ||||
| Total operating lease payments | ||||
| Less: imputed interest | ( |
) | ||
| Present value of lease liabilities | ||||
F - 13
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 6 - Share based compensation
| A. | On January 29, 2026, the Company granted |
| 1. |
| 2. | The fair value of RSUs is estimated based on the market value of the Company’s stock on the date of grant, less an estimate of dividends that will not accrue to RSUs holders prior to vesting. |
| 3. | The Company recognizes compensation expenses on these RSUs based on estimated grant date fair value, assuming that no dividend yield is expected in any of the years. |
| B. | On January 29, 2026, the Company allotted |
| 1. |
| 2. | The fair value of RSUs is estimated based on the market value of the Company’s stock on the date of grant, less an estimate of dividends that will not accrue to RSUs holders prior to vesting. |
| 3. | The Company recognizes compensation expenses on these RSUs based on estimated grant date fair value, assuming that no dividend yield is expected in any of the years. |
F - 14
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
| A. | Information on sales by geographic distribution: |
Sales are attributed to geographic distribution based on the location of the ultimate customer:
|
Six-month period ended June 30, |
||||||||
|
2026 |
2025 |
|||||||
| US$ thousands | ||||||||
| USA | ||||||||
| North America - other | ||||||||
| Israel | ||||||||
| Switzerland | ||||||||
| Europe | ||||||||
| Asia-Pacific | ||||||||
| B. | Sales to single ultimate customers exceeding 10% of sales (US$ thousands):
|
| Six-month period ended June 30, | ||||||||
| 2026 | 2025 | |||||||
| US$ thousands | ||||||||
| Customer "A" | ||||||||
| Customer "B" | ||||||||
| Customer "C" | ||||||||
F - 15
Silicom Ltd. and its Subsidiaries
Notes to the Consolidated Financial Statements
Note 7 - Segment Reporting (cont’d)
| C. | Segment information: |
Operating segments are defined as components of an entity for which separate financial information is available and that is regularly reviewed by the Chief Operating Decision Maker (“CODM”). The Company has
The Company’s operations are managed and reported to its Chief Executive Officer (“CEO”), the Company’s chief operating decision maker ("CODM").
The CODM uses operating and net income or loss to allocate resources during the Company’s annual planning process and throughout the year, as well as to assess the performance of the Company’s operations. Operating income serves as a key financial metric used by the CODM to evaluate operating results and support strategic and operational decision making.
The following table provides the significant expense (income) categories and amounts align with the segment-level information that is regularly provided to the CODM:
|
Six-month period ended June 30, |
||||||||
|
2026 |
2025 |
|||||||
| US$ thousands | ||||||||
| Sales | ||||||||
| Raw material and subcontracted manufacturing costs | ( |
) | ( |
) | ||||
| Write-down of obsolete inventory | ( |
) | ( |
) | ||||
| Payroll & related expenses | ( |
) | ( |
) | ||||
| Share-based compensation expenses | ( |
) | ( |
) | ||||
| Subcontractor work | ( |
) | ( |
) | ||||
| Depreciation costs | ( |
) | ( |
) | ||||
| Rent | ( |
) | ( |
) | ||||
| Other segment items * | ( |
) | ( |
) | ||||
| Amortization expense | ( |
) | ( |
) | ||||
| Operating loss | ( |
) | ( |
) | ||||
| Financial income, net | ||||||||
| Income taxes | ( |
) | ( |
) | ||||
| Segment net loss | ( |
) | ( |
) | ||||
| * | Other segment items included in Segment net loss includes professional services, consulting and other outside services expenses, travel expenses, insurance, facilities, and other overhead items. |
F-16
Exhibit 99.2
OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The information contained in this section should be read in conjunction with (1) our unaudited condensed interim consolidated financial statements as of June 30, 2026 and for the six months then ended and related notes included in this report and (2) our audited consolidated financial statements and related notes included in our Annual Report on Form 20-F for the year ended December 31, 2025 and the other information contained in such annual report.
The following discussion includes certain “forward-looking” statements within the meaning of Section 21E of the Securities Exchange Act of 1934. The use of the words “believes” “projects,” “expects,” “may,” “plans” or “intends”, or words of similar import, identifies a statement as “forward-looking.” There can be no assurance, however, that actual results will not differ materially from our expectations or projections. Factors that could cause actual results to differ from our expectations or projections include the risks and uncertainties relating to our business described in our Annual Report on Form 20-F under the heading “Risk Factors.”
Results of Operations
The following table sets forth certain statement of operations data as a percentage of total sales for the periods indicated.
| Six Months Ended | ||||||||
| June 30, | ||||||||
| 2025 | 2026 | |||||||
| Sales | 100 | % | 100 | % | ||||
| Cost of sales | 69.4 | 70.1 | ||||||
| Gross profit | 30.6 | 29.9 | ||||||
| Research and development expenses | 34.1 | 25.7 | ||||||
| Sales and marketing expenses | 10.2 | 9.0 | ||||||
| General and administrative expenses | 7.9 | 6.4 | ||||||
| Operating loss | (21.7 | ) | (11.2 | ) | ||||
| Financial income, net | 2.8 | 1.3 | ||||||
| loss before income taxes | (18.9 | ) | (9.9 | ) | ||||
| Income tax expenses | 2.0 | 0.5 | ||||||
| Net loss | (20.9 | ) | (10.4 | ) | ||||
|
Sales in the six months ended June 30, 2026 increased by 45.9% to $42,904 thousand compared to $29,404 thousand in the six months ended June 30, 2025. This growth primarily reflects strong demand for our products, driven by the ramp-up of design wins secured in previous years. |
| Gross profit in the six months ended June 30, 2026 was $12,812 thousand, compared to $8,990 thousand in the six months ended June 30, 2025. Gross profit as a percentage of sales in the six months ended June 30, 2026 was 29.9%, compared to 30.6% in the six months ended June 30, 2025. The decrease in the gross profit percentage in the six months ended June 30, 2026 compared to the six months ended June 30, 2025 was mainly attributed to changes in the mix of products sold, on which our gross profit is largely dependent. |
| Research and development expenses in the six months ended June 30, 2026 increased by 9.7% to $11,012 thousand compared to $10,035 thousand in the six months ended June 30, 2025. This increase was mainly attributed to an increase in payroll and related expenses as well as to a weakening of the US Dollar against the New Israeli Shekel and the Danish Krone (since a significant portion of our research and development expenses are incurred in New Israeli Shekels and Danish Krone). |
| Sales and marketing expenses in the six months ended June 30, 2026 increased by 28.5% to $3,861 thousand compared to $3,005 thousand in the six months ended June 30, 2025. This increase was mainly attributed to an increase in payroll and related expenses as well as to a weakening of the US Dollar against the New Israeli Shekel and the Danish Krone (since a significant portion of our sales and marketing expenses are incurred in New Israeli Shekels and Danish Krone). |
| General and administrative expenses in the six months ended June 30, 2026 increased by 18.1% to $2,740 thousand compared to $2,321 thousand in the six months ended June 30, 2025. This increase was mainly attributed to an increase in payroll and related expenses as well as to a weakening of the US Dollar against the New Israeli Shekel and the Danish Krone (since a significant portion of our general and administrative expenses are incurred in New Israeli Shekels and Danish Krone). |
| Net financial income in the six months ended June 30, 2026 decreased by 32.4% to $558 thousand compared to $826 thousand in the six months ended June 30, 2025. This decrease was mainly attributed to a decrease in interest income on cash equivalents, resulting from a decrease in funds available for investment. |
| In the six months ended June 30, 2026 we recorded current income tax expenses of $373 thousand and deferred income tax benefit of $162 thousand compared to current income tax expenses of $364 thousand and deferred income tax expenses of $234 thousand in the six months ended June 30, 2025. The change in deferred income taxes was mainly attributed to changes in the tax benefits related to tax loss carryforwards. |
| In the six months ended June 30, 2026 we recorded net loss of $4,454 thousand compared to net loss of $6,143 thousand in the six months ended June 30, 2025. The decrease in net loss was mainly attributed to a decrease in our operating loss as well as to a decrease in our tax expenses. |
Impact of Inflation and Currency Fluctuations on Results of Operations, Liabilities and Assets
Since the majority of our revenues are denominated and paid in U.S. Dollars, we believe that inflation in Israel, Denmark and the United States and fluctuations in the U.S. dollar exchange rates do not have any material effect on our revenue. Inflation in Israel, Denmark or the United States and the Israeli and Danish currency as well as U.S. dollar exchange rate fluctuations, may however, have an effect on our expenses and, as a result, on our net income/loss. The cost of our Israeli and Danish operations, as expressed in U.S. Dollars, is influenced by the extent to which any change in the rates of inflation in Israel or Denmark are not offset (or are offset on a lagging basis) by a change in valuation of the NIS or DKK in relation to the U.S. dollar.
We do not presently engage in any hedging or other transactions intended to manage the risks relating to foreign currency exchange rate or interest rate fluctuations. However, we may in the future undertake such transactions, if management determines that it is necessary to offset such risks.
| B. Liquidity and Capital Resources |
| As of June 30, 2026, we had working capital of $83,191 thousand and our current ratio (current assets to current liabilities) was 3.06. Cash and cash equivalents as of June 30, 2026 decreased by $10,010 thousand to $25,146 thousand, compared to $35,156 thousand as of December 31, 2025. Short-term bank deposits as of June 30, 2026 decreased by $6,000 thousand to $0 thousand, compared to $6,000 thousand as of December 31, 2025. Short-term marketable securities decreased by $767 thousand to $6,191 thousand, compared to $6,958 thousand as of December 31, 2025, and long-term marketable securities decreased by $1,919 thousand to $23,599 thousand, compared to $25,518 thousand as of December 31, 2025. The net decrease of $18,696 thousand in these four balance sheet items in the six months ended June 30, 2026 was mainly attributed to cash used in operating activities. |
| Trade receivables increased to $16,394 thousand as of June 30, 2026, compared to $9,194 thousand as of December 31, 2025. This increase was mainly attributed to the increase in sales in the three months period ended June 30, 2026, compared to sales in the three months period ended December 31, 2025. Other receivables increased to $5,087 thousand as of June 30, 2026, compared to $3,155 thousand as of December 31, 2025. |
| Trade payables increased to $25,218 thousand as of June 30, 2026, compared to $11,116 thousand as of December 31, 2025. This increase was mainly attributed to the increase in our purchasing of inventory. Other payables and accrued liabilities decreased to $13,071 thousand as of June 30, 2026, compared to $14,116 thousand as of December 31, 2025. |
| Inventories increased to $70,725 thousand as of June 30, 2026, compared to $52,650 thousand as of December 31, 2025. This increase was mainly attributed to an increase in our inventory level needed to support our customers' orders, including mitigating the impacts of memory chips supply chain issues. |
| Cash used in operating activities in the six months ended June 30, 2026 amounted to $16,197 thousand compared to cash provided by operating activities in the amount of $3,497 thousand in the six months ended June 30, 2025. The cash used in operating activities in the six months ended June 30, 2026 was mainly attributed to an increase in our inventory. |
| Capital expenditures on property and equipment for the six months ended June 30, 2026 were $1,018 thousand, compared to $681 thousand as of June 30, 2025. |
| We have cash and cash equivalents that we believe are sufficient for our present requirements. Furthermore, our cash resources are sufficient to fund our operating needs for at least the next twelve months. |