(Reuters) -Analog Devices projected first-quarter revenue and profit below market estimates on Tuesday as the chipmaker grapples with an ongoing supply glut in the semiconductor industry.
Inflation-hit customers have refrained from placing new orders for chips, leading to excess supply at semiconductor companies after a pandemic-driven buying spree fizzled out.
"During the first half of this year, we do expect to get this overhang of inventory behind us and get back to a more normalized growth pattern in the second half," said CEO Vincent Roche.
Analog's efforts to reduce inventory by slowing its pace of capacity expansions are expected to help lower the company's capital expenditure by around $500 million this fiscal year.
"Inventory in the fourth quarter was down $70 million (quarter-on-quarter)," said interim finance chief Jim Mollica, adding that it should continue to fall in the second quarter.
The company expects first-quarter revenue of $2.50 billion, plus or minus $100 million, compared with estimates of $2.68 billion, according to LSEG data.
First-quarter adjusted earnings are expected to be $1.70 per share, plus or minus 10 cents, also below estimates of $1.90.
Cautious spending by automakers fearing a slowdown in their electric-vehicle businesses has also weighed on the company's orders.
Analog's automotive sales, which made up more than a quarter of the total, grew just 14% - its slowest pace in at least two years.
Overall, revenue fell 16% to $2.72 billion, but beat estimates. Its mainstay industrial business saw a 20% drop in sales.
"Weakness in the industrial sector broadened and hit all the various market segments with one exception, the aerospace and defense area," CEO Roche said.
Adjusted profit was $2.01 per share, largely in line with expectations.
Shares of the firm fell more than 1%.