Chipmaker Analog Devices’ weak forecast sparks share selloff

(Reuters) -Analog Devices Inc said on Wednesday that a turbulent economy would weigh on its third-quarter results, sending the chipmaker’s shares down nearly 8%.

The company forecast third-quarter revenue of $3.10 billion, plus or minus $100 million, the midpoint of which was lower than analysts’ estimates of $3.16 billion, according to Refinitiv data.

Analog Devices (NASDAQ:) also said it expects current-quarter adjusted profit of $2.52 per share, plus or minus 10 cents, below estimates of $2.65 per share.

The dour forecast mirrors the weakness seen at peer Texas Instruments (NASDAQ:) Inc last month, with the chip industry struggling to shake off a slump that has led to a pile-up of inventory.

“Looking to the second half, we expect revenue to moderate given the continued economic uncertainty and normalizing supply chains,” Analog Devices Chief Executive Vincent Roche said on Wednesday.

Resilient demand from the industrial and automotive sectors helped the company’s second-quarter revenue rise 10% to $3.26 billion, beating estimates.

Revenue at the company’s industrial segment, which accounts for more than half of Analog Devices’ revenue, rose 16%, while the automotive segment’s revenue increased 24%.

The company earlier in May said that it would invest 630 million euros ($678.8 million) in a new research and development and manufacturing plant in Ireland, as it looks to boost its production capacity in Europe.

Analog Devices said last week Prashanth Mahendra-Rajah would step down as finance chief at the end of the fiscal year.

The company’s shares were down 7.9% at $173.04 on Wednesday.

($1 = 0.9281 euro)