Due to oversupply of chips, ADI predicts weak performance in the second quarter
Chip manufacturer Analog Devices (ADI, Adno) predicts lower than expected profits and revenue for the second quarter of 2024 as the company is addressing uncertain demand in the industrial and automotive industries.
Texas Instruments released a weak performance forecast in January this year, highlighting the challenges faced by the chip industry as companies across various industries are clearing excess inventory accumulated due to the fading demand boom driven by the pandemic.
ADI CEO Vincent Roche said, "Consistent with our previous views, we expect customer inventory to significantly decrease in the second quarter, allowing us to enter the second half of the year in a more favorable business context."
According to LSEG data, the company expects a second quarter revenue of $2.1 billion, with a fluctuation of $100 million, lower than the average analyst expectation of $2.36 billion.
ADI's second quarter adjusted profit is expected to be $1.26 per share, with a fluctuation of 10 cents, which is also lower than the expected $1.56.
The company accounts for nearly 50% of its revenue in the industrial sector, and due to sustained oversupply, revenue decreased by 31% in the first quarter of 2024 (as of February 3, 2024).
The growth of the automotive sector has also slowed to a nearly two-year low of 9%. Due to high interest rates affecting automotive demand, the automotive industry has reduced chip orders in recent months.
Research firm Canalys estimates that the global electric vehicle market growth will slow to 27.1% this year due to the decrease in national subsidies leading to a decrease in the attractiveness of new cars to buyers.
ADI's revenue for the first quarter of 2024 was $2.51 billion, higher than analyst expectations of $2.5 billion.
ADI CEO Vincent Roche said, "Consistent with our previous views, we expect customer inventory to significantly decrease in the second quarter, allowing us to enter the second half of the year in a more favorable business context."
According to LSEG data, the company expects a second quarter revenue of $2.1 billion, with a fluctuation of $100 million, lower than the average analyst expectation of $2.36 billion.
ADI's second quarter adjusted profit is expected to be $1.26 per share, with a fluctuation of 10 cents, which is also lower than the expected $1.56.
The company accounts for nearly 50% of its revenue in the industrial sector, and due to sustained oversupply, revenue decreased by 31% in the first quarter of 2024 (as of February 3, 2024).
The growth of the automotive sector has also slowed to a nearly two-year low of 9%. Due to high interest rates affecting automotive demand, the automotive industry has reduced chip orders in recent months.
Research firm Canalys estimates that the global electric vehicle market growth will slow to 27.1% this year due to the decrease in national subsidies leading to a decrease in the attractiveness of new cars to buyers.
ADI's revenue for the first quarter of 2024 was $2.51 billion, higher than analyst expectations of $2.5 billion.