Analog Devices’ fourth-quarter forecasts disappoint as consumer demand weakens By Reuters

(Reuters) – Analog Devices (NASDAQ:) forecast fourth-quarter revenue below Wall Street targets on Wednesday, in a sign that the chip industry inventory glut, fueled by weak consumer demand, might prevent fresh orders from flowing in.

Its shares fell 6.6% to $165 in premarket trading, as the chipmaker also missed third-quarter revenue and profit estimates.

The semiconductor industry faced a downturn last year as inflation slammed the brakes on tech spending.

A gloomy economic outlook in China has only worsened the pain. According to market analysis firm Counterpoint Research, smartphone shipments in the world’s biggest market for semiconductors fell 8% in the June quarter.

“The customer inventory adjustments we mentioned last quarter have accelerated as economic conditions deteriorate…,” said CEO Vincent Roche.

U.S.-based Analog Devices projected fourth-quarter revenue of $2.70 billion, plus or minus $100 million, compared with analysts’ average estimate of $3.01 billion, according to Refinitiv data.

Rival Texas Instruments (NASDAQ:) also forecast third-quarter revenue below market estimates as weak consumer demand prompted electronics makers to be cautious about buying chips.

Shares of peers Texas Instruments, ON Semiconductor and NXP Semiconductors (NASDAQ:) fell between 2.5% and 3.1% before the bell.

Analog Devices also forecast fourth-quarter adjusted earnings of $2 per share, plus or minus 10 cents, below analysts’ estimate of $2.39 per share profit.

Its third-quarter revenue fell about 1% to $3.08 billion, missing estimates, weighed by the consumer sector.

A 21% and 23% decline in revenue in the consumer and communications segments, respectively, countered the robust demand at the company’s biggest segments — automotive and industrial.

Analog Devices posted adjusted earnings of $2.49 per share in the three months to July 29, compared with expectations of $2.52 per share.