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.
A typical precision operational amplifier (op amp) may have a 1 MHz gain bandwidth product. Theoretically, you might expect RF signals that are in gigahertz to be attenuated to very small levels because they are far outside the amplifiers bandwidth.
There are 150 engineering schools in the state of Kerala with graduates leaving India for the allure of companies elsewhere in the world. The state of Kerala wants to keep these engineers right there in this region where they have graduated and is trying to create a “Silicon Valley” in India.
For decades, electronics product innovation has been incremental in nature, relying largely on the next generation of semiconductors to deliver performance improvement. For almost 50 years Moore’s Law has delivered 2x performance (power or cost) improvement in semiconductors every 18 months, outpacing any product or system level innovation cycle that could be achieved by even the most ambitious hardware teams. What has evolved is a “sit & wait” approach, to product innovation. However it is now clear that Moore’s law is broken, and the implications are profound for hardware designers.
You’re in a small company that needs to turn a product quick. Nobody in the company has any power supply design experience yet you need to drive LEDs from a universal (US and European) wall input voltage. What do you do?