May 20, 2020 / 6:35 PM / 7 days ago

Analog Devices sales forecast beats expectations on 5G, factory orders

(Reuters) - Chipmaker Analog Devices Inc (ADI.O) on Wednesday forecast sales for the current quarter above Wall Street’s expectations, driven by sales of chips for 5G networking equipment, robotic upgrades for factories and medical devices.

For the current quarter, the Massachusetts company gave a revenue forecast with a midpoint of $1.32 billion versus analyst estimates of $1.31 billion, according to IBES data from Refinitiv. For the quarter ended May 2, Analog Devices reported revenue of $1.32 billion and adjusted earnings per share of $1.08, versus estimates of $1.32 billion and $1.03, according to Refinitiv data. Shares had risen 7.6% by early afternoon after the company reported results before markets opened.

In an interview, Chief Executive Vincent Roche said 5G network deployments remained on track, especially in China, where the government announced plans to inject capital into digital infrastructure earlier this year.

“Asia is more bullish on 5G right now, but 2021 is when we’re going to see uptake by America in particular, followed by Europe,” Roche said.

Roche said the company saw strong orders for chips for medical equipment due to the coronavirus pandemic, and also orders for chips for factory robots in some sectors.

“We’ve seen a surge in orders from different parts of the world, particularly in Europe, for factory automation equipment and process automation for food production.”

However, the automotive sector remained a weak point, with many factories shut down. Roche said sales of mid- to high-end infotainment systems could suffer, while progress in electrifying carmakers lineups seems steady.

“My sense is the demand over the next three to six months for infotainment will be weaker than the demand for electric vehicles,” he said. “But what is encouraging is the design activity that’s taking place” for 2021 and 2022 models, he said.

Reporting by Stephen Nellis in San Francisco; Editing by Steve Orlofsky

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