Analog Devices (ADI) Citi's 2024 Global TMT Conference summary

Business performance and market dynamics

• Lead times normalized to 13 weeks, enabling earlier inventory digestion and improved channel inventory management.

• Industrial and aerospace/defense segments show strong demand, while automotive experienced a broad-based softening, especially in Europe and North America.

• Automotive content growth (BMS, GMSL, A²B) remains positive, but production-based auto business is down over 20% year-over-year.

• China remains a growth market, with strong design win momentum, though local sourcing trends may temper future growth.

• Consumer segment is performing above seasonal trends, with double-digit sequential growth expected.

Inventory, pricing, and utilization

• Channel inventory reduced to target levels (seven to eight weeks), with internal inventory days elevated at 170–175 but expected to decline as revenue grows.

• Pricing is stable and managed to be gross margin neutral, with expectations for flat pricing into next year.

• Utilization rates have bottomed and are starting to rise, with gross and operating margins also rebounding.

• Inventory strategy favors holding more die bank internally for flexibility and risk mitigation.

Segment outlooks and growth drivers

• Industrial is expected to lead growth in 2025 after a period of digestion, with energy and automation as emerging drivers.

• Communications segment has shifted to a wired majority, with wireline growth outpacing wireless; AI-related demand is supporting this trend.

• Automotive recovery is anticipated in one to two quarters, with content-driven segments more resilient than production-based ones.

• Gross margin recovery depends on mix and utilization, with a return to peak margins requiring higher revenue and favorable industrial mix.