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Analog Devices forecasts second half slowdown

The Wilmington chipmaker says the Fed’s rate hikes are crimping demand.

Analog Devices said its business is softening as the Federal Reserve's interest rate hikes slow the economy.Steven Senne/Associated Press

Shares of Analog Devices dropped 8 percent on Wednesday, their sharpest loss in more than three years, after the Wilmington chipmaker said its business was softening.

The company, which supplies chips for everything from smartwatches and cars to ultrasound machines, said revenue for its upcoming fiscal third quarter would be around $3.1 billion, about the same sales as a year earlier and less than the average analyst estimate of $3.2 billion.

The company was already seeing weakness in its consumer and communications divisions. Now the slowdown is spreading to industrial and automotive customers, chief financial officer Prashanth Mahendra-Rajah told analysts Wednesday.


“We’ve been sort of rolling through this,” he said. “Now industrial, which is really the flagship, is starting to feel a little bit of the impact from the higher interest rate environment.”

Analog Devices said sales in its just completed fiscal second quarter increased 10 percent to $3.26 billion, slightly more than analysts expected. Revenue from industrial customers was up 16 percent from a year earlier and automotive sales gained 24 percent, while communications sales dropped 4 percent and consumer sales shrunk by 22 percent.

Shares of Analog devices closed at $173.20 on Wednesday, down 8 percent, the steepest one-day loss since March, 2020.

Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.