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Chipmaker Analog Devices forecast second-quarter profit and revenue below estimates on Wednesday, as it grapples with uncertain demand from the industrial and automotive sectors.
The earnings follow a weak forecast from Texas Instruments last month and underscore the challenges facing the chip industry as businesses across sectors clear excess inventory that piled up with the pandemic-driven demand boom fading.
“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” Analog Devices CEO Vincent Roche said.
The company expects $2.10 billion in second-quarter revenue, plus or minus 100 million, below analysts’ average estimate of $2.36 billion, according to LSEG data.
Adjusted profit for the quarter is expected to be $1.26 per share, plus or minus 10 cents, also below estimates of $1.56.
The company’s industrial unit, which accounts for nearly 50 per cent of its revenue, reported a 31 per cent decline in the first quarter due to the ongoing supply glut.
Growth in the automotive unit also slowed to a near-two year low of 9 per cent. The auto industry has pulled back on chip orders in recent months as high interest rates affect demand for vehicles.
Research firm Canalys estimate growth in the global electric-vehicle market is set to slow to 27.1 per cent this year as a reduction in state subsidies makes new cars less appealing to buyers.
Analog Devices’ first-quarter revenue stood at $2.51 billion, above analysts’ expectations of $2.50 billion.
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