Analog IC


[News] Rumors Circulate on ADI Issuing Price Increase Notice – Up to 20% Increase Starting February Next Year

Semiconductor manufacturers, after more than a year of destocking, are experiencing a recovery from the bottom of the market, and recently, there have been signs of price increases. Market sources reveal that Analog Devices Inc. (ADI), a major analog IC manufacturer, has recently issued a price increase notice to its Chinese distributors. The notice indicates an estimated price increase of 10% to 20%, set to take effect in February of the coming year.

According to reports compiled by Liberty Times Net, ADI stated in the price increase letter that the company places a high value on the reliability of stable component production. Therefore, it will not arbitrarily stop the production of components within a controllable range. To maintain a guaranteed supply for customers, the company will increase prices for certain older product lines to offset the cost pressures of sustaining production. If customers object to the price increase, ADI is committed to providing the best possible component replacement solutions.

According to industry sources, ADI’s price increase reflects the company’s optimistic outlook on the recovery of industry demand. On one hand, by increasing the prices of older products, ADI is expected to encourage customers to transition to new products.

In terms of ADI’s operations, ADI CEO Vincent Roche has previously stated in the company’s 2023 Q4 Earnings Call that, “Weakness in the industrial sector broadened and hit all the various market segments with 1 exception, the aerospace and defense area.”

Last month’s financial report from ADI revealed that, influenced by the still-high semiconductor inventory, the company’s fourth-quarter revenue decreased by 16% to USD 2.7 billion.

Within this, only automotive revenue showed positive growth, increasing by 14% to USD 730 million year-on-year, representing 27% of the overall revenue. Industrial revenue, accounting for approximately 50%, is the largest source of revenue, but in the fourth quarter, it experienced a 20% year-on-year decline to USD 1.35 billion.

For the entire fiscal year of 2023, ADI’s revenue reached USD 12.3 billion, a 2% increase compared to the previous year. This growth is attributed to record-breaking performances in the industrial and automotive sectors. The company’s Gross Margin increased by 5% to USD 7.8 billion, with a Gross Margin Percentage of 64%. Operating Income significantly rose by 17% to $3.8 billion, and the Operating Margin reached 31.1%.

(Photo credit: ADI)

Please note that this article cites information from Liberty Times Net and ADI


Analog IC Revenue for 2021 Projected to Reach US$67.9 Billion Due to Strong Demand from End Markets

The analog IC industry is one with a long history of development and product adoption across various applications. Annual analog IC revenue reached US$53.9 billion in 2020. As the spread of the COVID-19 pandemic is gradually brought under control in China and the US this year, their domestic demand for telecom, automotive, industrial, and consumer electronics products has also kept growing, in turn generating strong demand for analog ICs. TrendForce therefore expects IC revenue for 2021 to reach US67.9 billion, a 22.1% YoY increase.

More specifically, analog IC demand from the automotive market is expected to undergo remarkable growth this year, primarily due to the recovery of the global automotive market and the continued trend towards automotive electrification as commercial opportunities from ADAS, EV, and automotive electronics enter a period of rapid growth. In response to demand from automakers and the auto market, various major IDMs have been placing a heavy emphasis on automotive analog IC development. Led by Infineon, NXP, Renesas, TI, and STM, the automotive IC market is expected to experience a 24.6% growth in 2021.

What is an analog IC?

The analog IC is an indispensable component in electronic devices. These chips can be divided into two categories according to their functions: general purpose analog IC and application specific analog IC. The former category encompasses amplifiers/comparators (signal conditioning), signal conversion, interface, and power management (general purpose). In sum, general purpose analog ICs are characterized by their low costs, single purpose, and universal compatibility.

Application specific analog ICs, on the other hand, encompass such use cases as consumer, computer, communications, automotive, and industrial/others. This product category refers to analog ICs that are designed and manufactured in accordance with electrical systems specified by the client. Compared to digital ICs, analog ICs are much more diverse in terms of product type, less costly, and more stable, while also having longer lifecycles.

The current state of the top three analog IC manufacturers

Almost all major analog IC suppliers are IDMs with long histories. In particular, longtime market leader Texas Instruments once against took pole position in the ranking of analog IC suppliers by revenue last year. With a range of analog ICs that includes more than 80,000 products, Texas Instruments possessed a 19% market share. The company is expected to maintain its dominance in 2021 thanks to its diverse product lines, high market acceptance, and high volume of client orders.

Infineon, which took second place on the ranking, registered a 19% YoY revenue growth on the back of its expansion into automotive and power management markets. Third-ranked STMicroelectronics benefitted from rising sales of its analog, MEMS, and sensor product portfolios. TrendForce expects Infineon and STMicroelectronics to continue their upward trajectories throughout 2021.

Whereas China is the largest market for analog ICs, the analog IC industry will see the highest growth in the US

China is expected to account for 42% of analog IC sales, the highest among all regions in 2021, with the consumer electronics segment comprising most of these transactions. However, the US is expected to undergo the highest growth in terms of analog IC sales with a US$10.6 billion revenue in 2021, a 25% YoY growth. This performance can mostly be attributed to the fact that the US economy has been recovering in the post-pandemic era owing to increasing purchases in the consumer electronics, telecom, and automotive markets.

Furthermore, the US government has been pushing for infrastructure developments with a focus on transportation, networking, and electricity generation, leading to expanded procurement of analog ICs used in these applications. As the markets welcomes the arrival of the traditional peak season for analog IC procurement in 2H21, growth in the US market will likely persist as well.

(Cover image source: Pixabay)

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