Analog Devices Seeing Early 5G Adoption in Factory Automation, Says CEO
Analog Devices, Inc. (ADI) is seeing “promising evidence that a broad-based recovery is underway” from COVID-19, said CEO Vincent Roche on a fiscal Q3 earnings call Wednesday: “We recognize that the recovery is highly dependent on the future impacts of…
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the pandemic.” The quarter ended Aug. 1. As ADI progressed through the quarter, “we saw stronger than anticipated demand,” plus fewer cancellations and “higher than anticipated backlog conversion,” said Chief Financial Officer Prashanth Mahendra-Rajah. Business-to-business revenue in the quarter was up 11% sequentially from fiscal Q2, he said. Growth was flat year over year, “as strength across industrial and communications offset a sharp decline in automotive,” he said. Communications was 25% of quarterly revenue and was up 14% year over year, said Mahendra-Rajah. ADI had double-digit increases in its wireless and wireline “end markets,” he said: “This strength came from our leadership position in 5G wireless systems and our solid position in optical connectivity used in carrier networks and data centers.” Q3 automotive revenue fell 29% from the 2019 quarter, “with all applications declining due to global factory shutdowns and lower vehicle sales” during the pandemic, said Mahendra-Rajah. Though no company is “immune” from COVID-19, revenue from growing adoption of ADI’s automotive audio bus infotainment platform is up more than 70% “year to date, despite lower vehicle sales,” he said. Revenue in ADI’s consumer business was down 13% from a year earlier, said Mahendra-Rajah. “Relatively flat” revenue from sales of components in portable devices “was more than offset by double-digit declines in prosumer, due to the pandemic-related softness,” he said. “We continue to expect 2020 to be the bottom for our consumer business.” Roche has been in the communications business a long time, dating to the “inception of 2G,” said the CEO in Q&A. “The patterns we’re seeing in 5G are no different than what we saw in 2G, 3G or 4G,” he said. The story of 5G has been about “giving more bandwidth to the consumer,” said Roche. “The future is about B2B, more so, than the consumer. We’re beginning to see the early adoption of 5G in the factory automation area. In fact, I have verified that with some of our industrial automation customers.”