Q1 2025 Analog Devices Inc Earnings Call
And, that's all there is to see! Please subscribe to my YouTube channel to watch the full video of how to get this guitar over for your shopping line.
Thank you for watching!
Speaker Change: Good morning, and welcome to the Analog Devices First Quarter Fiscal Year 2025 Earnings Conference Call, which is being audio webcast via telephone and over the web.
Speaker Change: I'd now like to introduce your host for today's call, Mr. Michael Lucarelli, Vice President of Investor Relations and Division Controller of Data Center Energy and Power. Sir, the floor is yours.
Speaker Change: Thank you, Daniel, and good morning, everybody. Thanks for joining our first quarter Fiscal 2025 conference call. We'll be on the call today are ADI CEO and Chair Vincent Roche and ADI CFO Richard Puccio.
Speaker Change: For anyone who missed the release, you can find it and related financial schedules at Investor.Analog.com. On to the disclosures.
Speaker Change: Information we're about to discuss includes forward-looking statements, which are subject to certain risks and uncertainties as further described in Ernie's release, and other periodic reports and other materials following the SEC.
Speaker Change: After results could differ materially from the forward-looking information, as these statements reflect our expectations only at the date of this call. We undertake no obligation to update these statements except as required by law.
Speaker Change: References to gross margin, operating and non-operating expenses, operating margin, tax rate, EPS, and free cash flow in our comments today will be on a non-GAAP basis.
Speaker Change: These excluded special items. When comparing a result to historical performance, special items are also excluded from prior periods. Reconciliations, all these non-GAAP measures to the most directly comparable GAAP measures, and additional information about our non-GAAP measures are included in today's earnings release.
Speaker Change: All references to earnings per share on a fully diluted basis. And with that, I'll turn it over to ADIC own chair, Vincent Roche.
Vincent Roche: Thanks very much, Mike, and a very good morning to you all. Well, first quarter revenue, profitability and earnings per share all finished above the midpoint of our outlook. And while we continue to operate in a challenging macro and geopolitical environment,
Vincent Roche: Our first quarter results and outlook for double-digit, year-over-year growth in our second quarter builds my confidence that 2025 will be a year of growth.
Our track record of resilience and profitability through psychos.
Vincent Roche: combined with our strong balance sheet supports our long-standing robust capital return program.
Vincent Roche: I'm delighted to share that we've increased our dividend for the 21st consecutive year and that over just the past five years, we have returned more than $16 billion, or roughly 15% of our current market cap.
to shareholders through dividends and share repurchases.
Thank you.
Vincent Roche: Turning now to our operating environment, the magnitude and duration of this most recent semiconductor cycle has surprised many of us.
Vincent Roche: Well, we believe ADI has entered and is well positioned for sustained recovery.
Vincent Roche: Throughout the cycle, we invested diligently to enhance and leverage our hybrid manufacturing model to support the dynamic needs of our customers, both big and small.
Vincent Roche: We work closely with our customers to be responsive to their evolving business needs and map factory starts to true end demand.
Vincent Roche: As a result, inventory levels have largely normalized and our partnership approach with our customers throughout the volatility of the past several years has enabled us to balance supply and real demand.
Vincent Roche: While the macro backdrop will continue to influence the pace of our recovery, the signals we monitor, from lean channel inventories to gradual bookings improvements over the past 18 months, support our view that we've passed the cyclical trough and the tide has turned in our favour.
Vincent Roche: Throughout the cycle, we've been busily deepening our customer engagements and accelerating our pipeline growth and conversion.
Vincent Roche: Many of the design wins I've shared on recent calls are now contributing to growth and let me give you some examples.
Vincent Roche: For example, in industrial automation, the shift towards decentralized intelligence to enable modular manufacturing is driving significant growth in software-defined connectivity solutions.
Vincent Roche: Our software configurable I.O. products that double channel density and reduce power consumption by 40% have been installed across all major automation suppliers.
Vincent Roche: Revenue from these wins has begun ramping as the automation market begins to recover and will provide a durable revenue stream over the next decade.
Vincent Roche: Within the growing surgical robotics segment, increasing levels of content from across our portfolio, and in particular our high precision solutions, are being deployed in next generation surgical systems.
Vincent Roche: And additionally in healthcare, the growing interest in a data-driven approach to health and wellness is creating a convergence of the clinical and consumer markets and driving demand for higher performance vital signs monitoring in consumer wearables.
Vincent Roche: Our suite of high-performance sensors, signal chains, and efficient power solutions, and wins at leaders in these markets, position us for double-digit growth this year.
Vincent Roche: Within the automatic test equipment market, the growth of AI has significantly increased our signal chain and power content.
Vincent Roche: In some cases, by up to 300% across memory test systems.
Vincent Roche: Customers are leveraging our solutions to increase channel density and throughput while reducing power demands by up to 30% per system.
Vincent Roche: In light of increased hyperscalar CAPEX, we expect our 2025 memory and high performance compute test revenue to achieve strong growth.
Vincent Roche: In our broad aerospace and defense portfolio, our modules, which support ASPs often into the hundreds of thousands of dollars, are expected to lead double-digit growth in this industrial subsector in 2025.
Vincent Roche: In addition, we're anticipating growth this year from newer design wins in orifice and power in the military and commercial satellite sectors.
In automotive.
Vincent Roche: The convergence of trends ranging from autonomy to electrification to immersive in-cabin experiences continue to drive robust demand for many of our solutions.
Vincent Roche: For example, our GMSL portfolio is outpacing the growth of advanced driver assistance systems.
Vincent Roche: and is positioned to reach yet another record-breaking year in 2025.
Vincent Roche: Since acquiring this video connectivity technology in 2021, our revenue has nearly tripled.
Vincent Roche: We're also anticipating continued record-setting revenue from our A to B and functionally safe power franchises, which share similar growth trajectories.
Vincent Roche: Lastly, in electric vehicles, BMS is poised to return to growth in 2025 after a challenging prior year.
Vincent Roche: Part of this growth is coming from our higher content wireless solution lens with key OEMs ramping in America and Europe.
Vincent Roche: In communications, our growth is predominantly being driven by robust CAPEX investments to support AI infrastructure build-outs.
Vincent Roche: Our high-precision electro-optical controller is now shipping in a 1.6 terabit optical module for AI systems based on industry-leading GPUs.
On the power side of the data center,
Vincent Roche: We're delivering high-voltage power path protection systems, which are on a strong growth trajectory, and we'll begin shipping our vertical power solutions later in this year.
Vincent Roche: Finally in consumer, design wins secured in recent years at multiple customers across numerous applications, including premium handsets, hearables, wearables, and gaming systems.
Vincent Roche: began to drive robust diversified growth in the second half of fiscal 24.
Vincent Roche: With even more content in upcoming launches, we expect a strong year ahead and beyond in consumer.
Vincent Roche: Collectively we anticipate these combined cyclical and idiosyncratic trends to return us to a solid growth path this year.
So in closing...
Vincent Roche: The relatively favourable position in which we find ourselves, coming out of one of the worst downturns the industry has ever experienced, is not by chance.
Vincent Roche: but rather a reflection of our fiscal and operational discipline, commitment to the success of our customers, and our investments for the long term.
Vincent Roche: And while I'm excited about our prospects for 2025, I'm even more excited about the longer-term opportunities across numerous concurrent secular growth areas,
Vincent Roche: including automation, digital healthcare, electrification, automotive data center and many many more.
Vincent Roche: A common request from our customers across our many diversified applications is that we help them tame the increasing complexity by bringing more complete solutions to them.
Vincent Roche: a reflection of a robust technology stack and stellar customer reputation.
Vincent Roche: In stepping up to our customers' challenge, we continue to push the edges by investing vigorously in our world-class analog, mixed-signal, and power portfolios.
Vincent Roche: and integrate higher levels of supporting digital and software into our solutions to meet our customers at the application layer.
Vincent Roche: And so with that, I'd like to pass the call over to Rich. Thank you, Vince. And let me add my welcome to our first quarter earnings call. First quarter revenue of 2.42 billion came in above the midpoint of our outlook for a 1% sequential decrease and a 4% decline year over year.
Vincent Roche: Adjusting for the extra week in our fiscal Q1 2024, however, our Q1 2025 performance represents a 4% increase in our first year-over-year growth since Q2 of 2023.
Vincent Roche: Industrial represented 44% of our first quarter revenue, finishing up 1% sequentially. The improved customer inventory backdrop is benefiting each of our industries. In addition, we are seeing stronger demand in our automatic test and aerospace and defensive businesses, each of which were up year over year.
Vincent Roche: Automotive represented 30% of quarterly revenue, finishing up 2% sequentially. Our leading connectivity and functionally safe power solutions were each up double digits year over year once again, reflecting secular content growth and greater share position.
Vincent Roche: Communications represented 12% of quarterly revenue, finishing up 6% sequentially. Wireline, which makes up roughly two-thirds of our total communications business, was up double digits sequentially and year over year, driven by data center infrastructure build-outs fueled by AI demand.
Conversely, our wireless revenue continues to see demand challenges.
Vincent Roche: And lastly, consumer represented 13% of quarterly revenue, finishing down 15% sequentially, reflecting seasonal weakness. Our second consecutive quarter of robust year-over-year growth reflects our
Vincent Roche: Now on to the rest of the P&L. First quarter gross margin was 68.8% up 90 basis points sequentially driven by favorable product mix.
Vincent Roche: OPEX in the quarter was $687 million, up $32 million sequentially, resulting in an operating margin of 40.5%.
Vincent Roche: All told, non-operating expenses finished at $58 million and the tax rate for the quarter was 11.8%. All told, adjusted EPS was $1.63 at the high end of our guided range.
Vincent Roche: Now I'd like to highlight a few items from our balance sheet and cash flow statements.
Vincent Roche: Cash and short-term investments finished a quarter at 2.7 billion dollars and our net leverage ratio decreased to 1.1.
Vincent Roche: Inventory increased $27 million sequentially as we replenished the die bank of our fastest-turning products. Days of inventory increased to 176 while channel weeks moved lower and remained below our target of seven to eight weeks.
Vincent Roche: Over the trailing 12 months operating cash flow in CapEx were $3.8 billion and $656 million respectively. We continue to expect CapEx for fiscal 25 to decrease from 24 and fall within our long-term model of 4-6% of revenue.
Vincent Roche: Free cash flow over the trailing 12 months was $3.2 billion, or 34% of revenue. And during the same time period, we have returned more than $2.4 billion to shareholders through dividends and share repurchases.
Vincent Roche: As a reminder, we target 100% free cash flow return over the long term, using 40-60% for our dividend, with the remainder used for share count reduction.
Vincent Roche: As Vince mentioned, we announced an 8% increase to our quarterly dividend to $0.99 from $0.92. In addition, our board has authorized an incremental $10 billion for share repurchases, resulting in roughly $11.5 billion of remaining buyback potential under our current program.
Vincent Roche: Now moving on to guidance. Second quarter revenue is expected to be $2.5 billion plus or minus $100 million. On a sequential basis at the midpoint, we expect industrial to lead our growth and automotive to grow while communications and consumer decline.
Vincent Roche: Operating margin is expected to be 40.5% plus or minus 100 basis points flat sequentially due to a notable uptick in variable compensation.
Vincent Roche: Our tax rate is expected to be 11 to 13 percent and based on these inputs adjusted EPS is expected to be $1.68 plus or minus 10 cents
Speaker Change: Before passing it back to Mike to begin our Q&A session, I'd like to address the near-term backdrop. Overall, our business continues to improve off our Q2-24 trough in what continues to be an uncertain macro environment.
Vincent Roche: We saw further order improvement and a positive book-to-bill during Q1. Importantly, booking strength was driven by industrial and automotive, our two largest end markets.
Vincent Roche: Given this trend and the exciting product cycles Vince described, I'm confident we will return to long-term model growth in 2025 and believe we are well positioned to capture additional upside should macro conditions improve.
Vincent Roche: Over to you, Mike. Thanks, Rich. Let's get to the Q&A session. We ask that you limit yourself to one question in order to allow for additional participants on the call this morning. If you have a follow-up question, please re-queue and we'll take your question if time allows.
Vincent Roche: For those participating, by telephone dial-in, if you have a question, please press star 1 1 on your phone to enter the queue. If your question has been answered and you wish to be removed from the queue, please press star 1 1 again.
Vincent Roche: If you are listening on a speakerphone, please pick up the handset when asking your question. We'll pause for just a moment to compile the Q&A roster.
Thank you.
Speaker Change: Our first question comes from Joseph Moore with Morgan Stanley. Your line is open.
Joseph Moore: Great, thank you. I wanted you to talk about the puts and takes in the auto market. You know, China seems to be the strongest region. Can you talk about how that affects you guys if there is an ongoing shift in the center of gravity towards China? Does that have any impact on pricing margin or potential for you guys?
Joseph Moore: Sure, Joe, I'll take that one. This is Rich. So let me give you a little color on what we're seeing in auto. Starting with Q1, you know, revenue came in better than expected, driven by Asia, which we've talked about, you know, continued strength in China.
Joseph Moore: As we've talked about in our recent calls, we have flagged that we have stronger share and content position at major Chinese EV OEMs with multiple products, again, including our audio and video connectivity solutions, functionally safe power, and BMS.
Joseph Moore: And this is coming through in the results, and we expect it should continue into Q2. As for the, you know, the...
Joseph Moore: The impact of a change in center, you know, we continue to see strong results right from a, you know, three straight quarters of double-digit growth in China being led by auto. In addition, we can talk about this, we've seen growth in the other parts of the China business, but the auto is continuing to lead.
Joseph Moore: Yeah, I've maintained for a long time, Joe, that as long as there is a market for high-performance technologies,
Joseph Moore: that ADI technologies would continue to be relevant and that is the case. We see it in automotive, we see it in the industrial sector, the cloud communications.
Joseph Moore: And, you know, we're getting well paid for the quality of the technologies that we're bringing. So, you know, it's clearly a competitive market, particularly at the kind of middle low ends, with indigenous suppliers coming on stream.
Joseph Moore: But given the high-performance thrust in our portfolio, we're getting rewarded for the capabilities that we bring at the system level for our customers.
Thanks, Joe. Great, thank you.
Speaker Change: Thank you. Our next question comes from Vivek Arya with Bank of America Security. So your line is open.
Vivek Arya: Thanks for taking my question. Just to clarify, what is that long-term model growth that you expect to return to this year? And then Vince, my question is for you. You mentioned that the inventory levels have largely normalized.
Vivek Arya: Is that at distributors? Is that at OEMs also? Does it apply to all end markets or mostly to industrial? Basically, how does that inform us about how ADI can feel about demand, visibility, and growth over the next handful of quarters?
Vincent Roche: Thank you. Yeah, maybe I can take the second part of the question first, Vivek. So, we are seeing the normalization across the direct as well as distribution channels.
Vivek Arya: and in pretty much every part of our business, including, we were very, very encouraged.
Vivek Arya: by the recovery in industrial bookings and that's a very very important part of ADI's business.
Speaker Change: Yeah, let's peak, it was 50, a little over 50% of the total ADI revenue stream. So we're seeing, we monitor also, by the way, customer inventories, our top customers.
Speaker Change: So, we've seen normalization across segments, across customers, both big and small. We've also, by the way, kind of a bellwether for the general
Speaker Change: base of customers, you know, outside of the top few hundreds, would be our mass market or a broad market. We've also started to see recovery there.
Speaker Change: Yeah, and Vivek, when I talk about the long-term model, I'm talking about the published range at seven to ten percent, although I think as we've talked about as the macros turn, I think there's opportunity for us to capture even more growth than that.
Speaker Change: I think in your one-part, three-part question, Vivek, you talked about what we think from here, a kind of growth back half of this year. I think what you mean by that is...
Speaker Change: How do we think about seasonality as you get to 3Q and 4Q? Again, this is not guidance for 3Q, but I'll give you kind of what we see as trends typically over the last 10 years for our third quarter. In our third quarter, industrial, auto, and comms are usually flat, plus or minus little, depending on where you are in the cycle. Given what Mitch was saying about
Speaker Change: I think on the higher end of what normal seasonality is for those businesses. On the consumer side...
Speaker Change: until you start your holiday build, which means you start growing 5-10% in 3Q. Now, there's obviously a lot of macro cross-currents, really a cocktail of uncertainty out there on the macro side, which could be the second half. So we'll update you in 90 days what we really think about 3Q.
Thank you.
Our next question, please.
Thank you. Our next question comes from
Speaker Change: Yes, thank you. I had a question for you, Vince. You know, ADI has a pretty unique position because of your hybrid manufacturing model, and I was just wondering, you know, given all the political turmoil, the geopolitical turmoil that's going on right now, how are you thinking strategically about, you know, that hybrid model? Because obviously, you know, you're working with a very important partner in Asia, but that obviously also does some of your own internal manufacturing. So, yeah, how are you thinking about how this is going to
for the next few years.
Thanks, sorry. Well, I thank you.
in Times of Great Turbulence.
Speaker Change: Diversity is a great benefit. Diversity of markets, diversity of products, diversity of customers and geographies.
Speaker Change: So I think, you know, I feel good in terms of our ability with that diversity to solve two problems essentially. One is diversity gives us optionality.
but it also gives us resiliency.
Speaker Change: And, you know, by the kind of end of 26 and early 27, we will have secured
Speaker Change: At least you sourcing for the entire product chain of ADI.
Speaker Change: So about 95% of the products, you know, will have at least dual sources and, you know, we've obviously desensitized geographic centricity over the last years. We've invested in our fabs internally in America, in Europe.
Speaker Change: And we've worked with our partners as well to get at least two geographical sources for the products that we procure from our partners externally. So I think, you know, we're in a good position as a company to make sure that, you know, overall we've...
Speaker Change: We have internally got twice the capacity we had at the start of the pandemic.
Speaker Change: and as I said we've secured also additional supply in new sources, new fabs with existing partners. So I think we're in a very very good position.
to whether or whatever turbulence might come our direction.
That's great, Colin. Thank you, Vince.
Speaker Change: Thanks, Torrey. Thank you. Our next question comes from Chris Dainley with Citi. Your line is open.
Chris Dainley: Hey, thanks guys. I guess just to dig into the industrial strength, can you just talk about where that's coming from? Is this mostly inventory replenishment? Is it mostly improved demand? Is it...
Speaker Change: both, and then, you know, how did bookings trend during the quarter? Was the linearity pretty steady, or was there a spike, or just a little more color there would be great. Thanks.
Speaker Change: Sure, Chris, I'll jump in on that. So on the industrial, if we take a step back, you know, we've grown this business now sequentially for three straight quarters, you know, off of what we said was our trough in Q2.
Speaker Change: And then as for Q2, we actually expect industrial to be the fastest-growing market. So we feel pretty good that our recovery is taking shape and really could accelerate if the macro improved.
Speaker Change: For Q1 specifically, and we've talked about this in a couple quarters, we saw continued strength in ADEP and in the automatic test equipment.
Speaker Change: and then what we started to see from a piloted perspective is stabilization across
across automation, healthcare, and energy.
which I think has been important.
Speaker Change: And then in Q1, one of the things that we've talked a bunch about on prior calls is watching for the pickup in the broad market. We've started to see some of that. In fact,
Speaker Change: You know, we took a significant amount of inventory out of the channel during 2024, about 300 million. Most of that impacted the industrial market. So as we look at our growth trajectory, shipping more to sell through into the channel will be a tailwind for industrial as well.
Yeah, as you know, the industrial...
Speaker Change: sector is largely served through the distribution channels, so you know with leanness there, demand recovering, I think both of those two concurrent streams are tailwinds for the company.
Speaker Change: On the booking side, bookings have improved industrial in 1Q versus 4Q, pretty much across all the areas, with the biggest strength obviously in AT and ADAP as we talked about, and we think industrial will be our fastest growth market in 2Q, and that's supported by the bookings. Thanks, Chris.
Thank you.
Speaker Change: Thank you. Our next question comes from Joshua Buckhalter with TD Cowan. Your line is open.
Speaker Change: Hey guys, thank you for taking my question. I wanted to follow up on the previous one. I think you mentioned the prepared remarks, inventory levels in the channel moved down and I think they entered the quarter already below your seven to eight weeks target.
Speaker Change: Does either the April quarter guidance or the fiscal 2025 initial outlook of being in your target range include any sort of channel refill, and I guess, what signals do you guys need to see before you would want to more clearly get back into that seven to eight week range? Thank you.
Speaker Change: So, the current guide for Q2 has us shipping to sell-through, so not adding into the channel. And I'll tell you, for me, for the benchmark, and we talk to our distribution partners pretty regularly, is if we're fulfilling customer requirements and we're not getting any escalations,
Speaker Change: We're feeling pretty comfortable right now operating below the seven to eight weeks we've had historically. You know, to balance that out, we're carrying a bit more inventory on our own books, which gives us some flexibility, particularly given the amount of the inventory we're carrying in Dibank.
Speaker Change: which allows us to be quicker to respond. So near to medium term, I don't expect that we would be adding back to the channel, but we certainly do not want to go any lower.
Speaker Change: Yeah, I think just to add a bit of color to what Richard said as well, the centralization of inventory management, I think, has served our customers.
Speaker Change: very well, customers of all sizes, over the past what is essentially now five years of this of the old cycle so
Speaker Change: Very helpful, Collar. Thank you and congrats on the results in the Cocktail of Uncertainty. Thank you.
Thank you.
Speaker Change: Our next question comes from Christopher Rollin with Susquehanna. Your line is open.
Hey guys, thank you for the question.
Speaker Change: Mine is around two very specific opportunities that you've talked about in the past.
Speaker Change: One is optical connectivity and then the other is AI power.
Speaker Change: If you have any developments in those products or markets, we'd love to know those, or maybe it's just playing out like you thought it would. But we'd love to know how interest, orders, etc. are going for those products.
Speaker Change: Yeah, thank you. Well, I'd say, first and foremost, our opportunity pipeline has been growing steadily in this
Speaker Change: AI-driven infrastructure world and you know we've been a long-term player in this electro-optical interface category you know where
Speaker Change: We provide these very precise high compute throughput control systems for stabilizing the electro-optical modems.
Speaker Change: And, you know, we've just introduced our 1.6 terabit, which is very much the benchmark.
Speaker Change: for throughput in these systems today. Of course, those speeds will continue to increase. The sophistication of what we build will continue to grow as well.
Speaker Change: So that's been a very good business, a high growth business for Indiana for many, many years, and it predates the AI build-out, the build-out of AI infrastructure. Our power technologies really straddle two different areas.
if you like the
Speaker Change: the power control systems that are important for the overall health of a data center, at kind of the board level, the server level.
Speaker Change: And the other is, and a good example, by the way, of that power control would be these hot swapping and reset generators and so on. These very, very tough analog problems that need to be solved. The second part of the power story is the...
Speaker Change: the delivery of energy to the GPUs, the chip systems themselves. And we're going to production in the second half of this year with a vertical power technique with one of the big hyperscalers.
Speaker Change: and we have other designs in train that will come on stream as well I believe in the 26th period.
Speaker Change: Fantastic color there. Thank you so much. And maybe just kind of playing into these kind of new products that are emerging here. Are there any other new products to call out, new customers, new end markets?
Speaker Change: any of these kind of free options, as I like to call them, that are emerging for your company and anything you can point to, anything new that maybe you haven't had before, any new opportunities.
Speaker Change: That depends on, you know, how far into the future he wants to go, but you know, let me
Speaker Change: give you a couple of real-time examples here. I mentioned in the prepared remarks the convergence of wellness-based healthcare solutions with the consumer sector. We see that the
The interest
Speaker Change: in building those systems out is becoming, I would say, very, very active. We're well positioned as a company because we've been building the sensory and signal processing technologies for a long, long time.
Speaker Change: So I would call that out as an area with a good spectrum of customers.
Speaker Change: across many geographies and many many different types of healthcare modalities that need to be need to be measured at the clinical grade level incidentally areas like continuous glucose monitoring being able to do that in a closed-loop system.
Speaker Change: about the input and the output. So I think that is an area that we're excited about but we've a lot of good technologies that are being deployed at faster rates into that area.
Speaker Change: And if you want to go really into the future, there is life beginning to appear in the whole quantum computing world. We're at the early stages of building...
Speaker Change: control systems, if you like, precision control systems for these very, very complex computing elements.
Thank you for watching!
Very cool. Thank you so much.
Speaker Change: As a reminder, if there are any additional questions from people who have asked questions, please recue. We have some extra time. Otherwise, we'll go to our next question.
Speaker Change: Thank you. Our next question comes from Harsh Kumar with Piper Stanley. Your line is open.
Harsh Kumar: Yeah, hey guys, I just wanted to hit upon the quote-unquote call for the bottom. I guess you're calling that, I guess what is the confidence level that this is not a head fake? I know you're talking about increased orders and normalization of inventory, but there's a lot of geopolitical movement, there's a lot of tariffs.
Speaker Change: help us understand why the confidence level is so high that we've reached the bottom and this isn't just some kind of head fake. Thank you. Well, I think you know first and foremost
We...
Speaker Change: have a lot of conversations with a lot of customers, you know, we've tens of thousands of customers in our portfolio. We pay attention
to the signal that matters to us most is sell-through.
Speaker Change: So POS is how we, that's where we focus and that POS signal is how we plan our supply at ADI, how we run our business and run our supply system.
So that's first and foremost.
you know we are we are seeing the
Speaker Change: The stabilization in the business and growth in certain areas right across the spectrum.
Speaker Change: And then there is, geographically, there is a diversity of progress as well. I'd say Japan...
Speaker Change: is most muted. America and China are strongest. I would say Asia-Pacific is strong and Europe is somewhere between.
Speaker Change: you know, between where Japan is and where the rest are. So...
Speaker Change: But that's essentially how we view the world. As we said in the prepared remarks, what's
Speaker Change: Incalculable here in our thinking is the effect of any potential geopolitical turmoil.
Speaker Change: trade war and so on and so forth. So that I think will be the governor ultimately.
Speaker Change: during this year as to the rate of recovery, but I have a strong conviction that we're in a new cycle in the semi sector and certainly in ADI's business.
Thank you for the color. Thanks.
Speaker Change: Thanks, Harsh. I'm going to go to our last question, please.
Thank you.
Our next question comes from.
Tori Svonberg, Liz Stiefel, your line is open.
Speaker Change: Yeah, I just had a follow up on the, you know, conviction and growth there, you know, typically when we go through these cycles, I think customers, they sort of
Speaker Change: hold they hold off buying new products until sort of the older products have cleared out and I'm just wondering if there's some some of that going on I mean I guess that really relates to your design win conversion rate so you know any any comments you can make on on that conversion rate really starting to play out would be really helpful thank you
Well, for example, Tori, the strength we're seeing in.
in ATE markets, in the automotive market, for example.
in areas like new data center modalities.
Speaker Change: Those areas are largely driven by a lot of new products. So I would say there's three examples of where new products are making a huge difference. In fact, they're also, with each new generation, we're capturing more ASP.
Speaker Change: So, you know, we've often shared with you our famous vintage chart, which shows.
Speaker Change: the age of the portfolio. We measure very, very carefully within that vintage chart, the contribution of newer products within a three and 10-year period.
Speaker Change: as to what's going on. But I can tell you the conversion rate, the introduction of new parts and the capturing of opportunity with new parts is strong, new products and new solutions. And obviously we've got also a very strong franchise, our legacy products.
Speaker Change: tend to get pulled by these new anchor products that we're building. I'd say overall, I'm pleased with the effectiveness of our R&D spans and how we're capturing and creating new markets and new applications and opportunities.
Really helpful, thank you.
Speaker Change: Thanks, Tori. We have one more question from Joe Moore, I believe.
Thank you.
I'm showing no further questions at this time.
Speaker Change: All right, no problem. I think we answered all the questions then. Thanks everyone for joining us this morning. A copy of the transcript will be available on our website. Thanks for joining, and you can continue to interest analog devices.
Speaker Change: This concludes today's Analog Devices Conference Call. You may now disconnect.
Speaker Change: This video was made in Cooperation with the U.S. Embassy in the Philippines. No part of this recording may be reproduced without the permission of U.S. Embassy in the Philippines.
Music by Kevin MacLeod
Richard Puccio: Hi! My name is Richard Puccio and welcome to my channel. Today I will be sharing a work of artwork called Osinki, by Giusto Pope Theodore.
Thank you for watching!
www.tastyandeasy.it
Day 31