Analog Devices (NASDAQ:ADI) has projected second-quarter profit and revenue below estimates, citing uncertain demand from the industrial and automotive sectors. This announcement comes in the wake of a subdued forecast from Texas Instruments (NASDAQ:TXN) last month, highlighting the challenges confronting the chip industry as businesses grapple with excess inventory accumulated during the pandemic-induced demand surge.
CEO Vincent Roche noted, “Consistent with our prior view, we expect customer inventory rationalization to largely subside in our second quarter, and thus enter the second half in a more favorable business backdrop.”
The company anticipates second-quarter revenue to reach $2.10 billion, plus or minus $100 million, falling short of analysts’ average estimate of $2.36 billion. Similarly, adjusted profit for the quarter is forecasted to be $1.26 per share, plus or minus 10 cents, below the anticipated $1.56.
Analog Devices’ industrial unit, which contributes nearly 50% of its revenue, experienced a 31% decline in the first quarter due to the persisting supply glut. Additionally, growth in the automotive unit decelerated to a near two-year low of 9%, attributed to the auto industry scaling back on chip orders amid elevated interest rates impacting vehicle demand.
According to research firm Canalys, the growth rate in the global electric vehicle market is expected to decrease to 27.1% this year due to a reduction in state subsidies, dampening the appeal of new cars to buyers.
Despite these challenges, Analog Devices reported first-quarter revenue of $2.51 billion, slightly exceeding analysts’ expectations of $2.50 billion.
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Author Faith Yakubu 
