Nvidia gets most of the attention when it comes to AI chips, but there's another business making money every time those chips become harder to manufacture.
Qnity Electronics, which spun off from DuPont in October 2025, supplies the polishing materials and specialty chemicals chipmakers need throughout production. Its products are used repeatedly, demand is growing, and Wall Street has barely caught up.
The business behind advanced chips
Qnity operates two businesses, both benefiting from increasingly complex semiconductor manufacturing. Semiconductor Technologies generated $744M in second-quarter sales, while Interconnect Solutions revenue jumped 30% to $685M.
Chipmakers use specialized polishing pads, slurries, and cleaning chemicals during production, and once those materials are approved for a manufacturing process, switching suppliers can require costly revalidation.
The opportunity is getting bigger as manufacturers stack chips and adopt more advanced packaging techniques. These processes require additional polishing steps, which means more materials consumed for every chip produced.
Qnity already has evidence of that demand. CEO Jon Kemp said its chemical mechanical planarization business grew 20% in 2026, helped by the industry's move toward more sophisticated manufacturing processes.
Growth comes with risks
That opportunity also leaves Qnity dependent on the companies spending heavily on advanced chips. Taiwan Semiconductor Manufacturing is among its largest customers, creating exposure to both semiconductor spending cycles and manufacturing concentration in Taiwan.
Competition adds another challenge. Entegris is a major rival in semiconductor materials, while Amkor Technology ($AMKR) competes in advanced packaging.
Growth may also slow in the near term. Interim CFO Michael Goss expects third-quarter sales to increase only in the low single digits sequentially, prompting questions about the company's fourth-quarter outlook.
Kemp attributed the moderation to seasonal consumer electronics demand and customers managing inventory toward year-end. Those fluctuations are manageable, although a sustained slowdown in AI investment would present a bigger challenge.
Qnity is continuing to expand its manufacturing footprint regardless. Its 385K-square-foot Delaware facility is operational, with another site in Taiwan expected to come online in early 2027, bringing production closer to major customers.
Why Wall Street may be overlooking it
Despite its position in advanced chipmaking, Qnity trades at roughly 24x expected earnings over the next 12 months, compared with about 33x for Entegris. Both have similar growth expectations, raising the question of why investors are paying considerably more for its rival.
Qnity vs peers on valuation and growth (as of Oct. 14, 2026)
| Company | Forward P/E (next 12 months) | Expected EBITDA growth (3-yr annual) | Analyst coverage |
|---|---|---|---|
| Qnity Electronics ($Q) | ~24x | ~8% per year | 10 analysts |
| Entegris ($ENTG) | ~33x | ~10% per year | n/a |
| DuPont ($DD) | ~17x | n/a | n/a |
| S&P 500 average | n/a | n/a | 25 analysts |
Fermium Research analyst Frank Mitsch believes limited Wall Street coverage helps explain the gap. Qnity has only been trading independently for about a year, leaving it relatively unfamiliar to investors despite its established operations.
Its results have given analysts reasons to pay attention. Qnity has beaten sales and earnings expectations in all three quarters since the spinoff, with earnings per share growing at least 33% year over year each time.
Second-quarter revenue climbed 22% to $1.4B, with adjusted operating EBITDA reaching $431M. Management subsequently raised its 2026 outlook to $5.55B to $5.65B in sales and adjusted earnings of $4.40 to $4.60 per share.
Analysts have also increased their expectations for 2027 EBITDA to approximately $2B, compared with $1.6B around the time of the spinoff. With net debt near $3B, or less than twice expected 2026 EBITDA, Qnity has some flexibility to pursue acquisitions alongside its existing expansion plans.
The discount isn't guaranteed to disappear, particularly if semiconductor demand weakens or the company struggles to maintain its growth. But Qnity has something many AI-related businesses are still working toward: an established customer base, recurring demand, and earnings that are already growing.
As chipmaking becomes more complicated, manufacturers need more of the materials Qnity sells. If the company keeps delivering on its forecasts, investors may find it harder to justify paying a substantially higher multiple for its closest rival.
