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Core Portfolio Insight

May 21, 2021

Analog Devices, Inc. (ADI) and the global chip shortage


The well documented global chip shortage continues to impact a broad range of manufacturers.  Some components are considerably more bottlenecked than others.  As technology has advanced, semiconductor chips have spread from computers and mobile phones to cars, aerospace, healthcare, industrial tools and equipment, home appliances and smart homes to name a few.  Chips are increasingly critical components in all sorts of products.

GPM believes that broad-based chip demand is being driven by six technology megatrends:

  1. 5G infrastructure rollout
  2. Internet of things/IOT proliferation
  3. Everything cloud and data centers
  4. Electric vehicles
  5. Autonomous and driver assisted vehicles
  6. Artificial intelligence and machine learning 

So how is the chip shortage impacting leading manufacturers like Analog Devices, Inc. (ADI)?   

According to the company, Analog Devices, Inc. is a leading global semiconductor company dedicated to solving the toughest engineering challenges.  We enable our customers to interpret the world around us by intelligently bridging the physical and digital with unmatched technologies that sense, measure, power, connect and interpret.  In reporting results for their latest quarter ended May 1, 2021, the company said the following:   

ADI delivered record quarterly results that exceeded the high end of our outlook, reflecting the insatiable demand for our products and disciplined operational execution. Revenue increased 26% and gross and operating margins continued to expand, leading to earnings growth of 43%,” said Vincent Roche, President and CEO. “The economic recovery has materialized faster and stronger than initially anticipated, increasing pressure across supply chains globally. Our decision to strategically invest in additional capacity ahead of this demand inflection has enabled us to move with speed and agility to better serve our customers. These investments combined with continued momentum in bookings give us confidence that our second half will be stronger than the first half.” Roche added, “Semiconductors are the bedrock of the modern digital economy and their importance to accelerating digitalization across all industries has never been more apparent. Our cadre of talented employees continues to push the edge of what is possible and deliver maximum customer impact. I am more optimistic than ever about ADI’s position in this reordered world as we create long-term value for all stakeholders.” 

ADI is one of three chipmakers currently owned as core holdings in GPM managed stock portfolios.  Click here to learn more. 

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