Analog Chip Dynamics: TI’S Outlook Is Slightly Discounted, ADI Continues To Optimize Production Capacity

TI: Performance exceeded expectations, but Q4 outlook is obviously cautious

• 25Q3 results
  • Revenue$4.742 billion, +14.2% year-on-year, +6.6% month-on-month, exceeding the guidance midpoint
  • Analog business +15.7% year-on-year, embedded processing +8.6%
  • Industrial +25% year-on-year, automotive high-single-digit growth,Data center +50% year-on-yearStrongest performance
  • Gross profit margin57.42%, year-on-year -2.18pct, month-on-month -0.47pct
  • Inventory days215 days, -16 days month-on-month, still at a high level
• Q4 outlook lowered
  • Estimated revenue $4.22–$4.58 billion, midpointMonth-on-month -7.2%
  • The recovery slope is weaker than historical cycles and current levels remain below the long-term trend
  • Taking the initiative to reduce production capacity utilization to control inventory, Q4 gross profit margin may hitTen-year low around 55%
• Structural highlights and hidden concerns
  • Mainland Industrial Q2 +40% year-on-year, but Q3 almost did not increase month-on-month, or it may be stocking up in advance
  • Growth slowed after cars returned to normal water levels
  • TI strategic shiftLong-term free cash flow first, short-term gross profit margin concessions
  • Continue to close 6-inch production lines and promote 12-inch production expansion to lay the foundation for long-term demand

ADI: Strip off packaging and testing, focus on front-end, and strive for high gross profit

• Major adjustment of production capacity strategy
  • Sold the packaging and testing plant in Penang, Malaysia to ASE and turned to long-term cooperation
  • Concentrate resources onWafer R&D and manufacturing, strengthen the barriers to high-performance simulation
  • Former Intel packaging executive brought in to helm $1 billion expansion of Beaverton fab
  • 180nm and above node production capacityDouble, focusing on high-end industries
• Financial and Channel Strategy
  • Q3 inventory increased by US$72 million, and inventory days were optimized to160 days
  • Channel inventories fell simultaneously, formingLow inventory in channels + high own stockingsecurity structure
• Strong performance outlook
  • Q4 industrial business quarter-on-quarter forecast+13%~15%
  • The share of industrial revenue is expected to increase from 45% in the previous quarter to49%
  • Gross profit margin targetBack to 70% range
• market positioning

  Deeply integrated with high-end industry and automotive electrification/intelligentization, its products have strong premium capabilities and its advantages continue to expand amid structural recovery.

Conclusion: The simulation track is completely differentiated

• TI stands for General/Mature Process Simulation: The recovery is moderate, suppressed by inventory and cycles, and will follow the cost and scale route.
• ADI stands for High-End/High-Performance Analog: The industry and automobile industry are booming, production capacity and product structure are continuously optimized, and the company is taking the route of value and high gross profit.