SAN FRANCISCO—Executives from Analog Devices Inc. (ADI) said Tuesday (Nov. 27) that the company's manufacturing capacity utilization rate has fallen to its lowest level since 2009 as cautious customers continue to reduce inventories amid macroeconomic sluggishness.
Jerald Fishman, ADI's CEO, told analysts following the company's fiscal fourth quarter financial report that the company began cutting capacity utilization during the quarter and plans to continue doing so in the current quarter. The company plans to cut capacity utilization to just over 50 percent, down from 67 percent last quarter, in order to avoid inventory buildup, Fishman said.
"While operating our factories well below capacity will certainly reduce our gross margins in the short term, it will provide significant upside leverage—as it has in the past—when revenue growth resumes," Fishman said.
ADI reported mixed results for the quarter—which closed Nov. 3—with sales largely below analysts' expectations. The company also provided a sales target for the current quarter that came up short of analysts' forecasts.
CJ Muse, an analyst with Barclays Capital Inc., said ADI's move to cut capacity utilization to stave off inventory build would position the company for a snapback in gross margins once demand recovers. ADI's gross margins fell to 62 percent in the fiscal fourth quarter, lower than consensus analysts' expectations of about 65 percent.
"We have been highlighting that while downstream tech inventories remain lean, semis inventory levels in general remain at more elevated levels," Muse said, in a note to clients circulated Wednesday.
Barclays maintains a rating of "equal rate" (equivalent to "hold") and a price target of $40 on ADI's stock. ADI's stock traded at just over $40 in afternoon trading Wednesday, down slightly from Tuesday's closing price.
Fortunately for circuit designers, a new tool is available that can simplify the process of identifying the ESD suppression device best suited to an application, which makes it far easier to incorporate circuit protection earlier in the board planning process. The Littelfuse iDesign™ Online Simulation and Product Selection Tool
. I received a very good reader question from my last blog post regarding the various parameters that are reported by the tool. Let’s take a look at an example and explore the parameters that are returned. In this example we will look at the AD9643-250.
Managing system thermal performance is critical in today’s electronic systems if you are to maximize performance and the user experience. As systems grow more powerful, and in many cases smaller in size, managing the thermal profile has become an ever-increasing challenge. Monitoring the current provides a leading indicator to potential thermal issues.
In blog number 3, we are going to divert a little from our normal trend of evaluating power supply design and simulation tools. Instead, we are going to look into power management tools that are online.