Analog Devices, On Semi provide 'reassuring' investor updates at CES
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Analog Devices (NASDAQ:ADI) and On Semiconductor (NASDAQ:ON) provided "reassuring" investor updates at the Consumer Electronics Show, with both companies providing bullish outlooks, Bank of America said in a research note.
Analyst Vivek Arya noted that commentary from Analog (ADI) and On Semi (ON) countered some investor concerns, many of whom became wary of a cyclical downturn after a record growth in 2021, which saw the industry grow at 22% year-over-year, roughly three times the rate of GDP.

In their comments, Arya said both Analog and ON noted that "demand continues to outpace supply," and there is "broad-based strength across all end markets."
Additionally, their customers are signing long-term agreements, particularly On Semi (ON), which are stretching beyond 2022, a fact that was confirmed by Global Foundries (NASDAQ:GFS) in another presentation.
There have been no cancellations of orders or deferrals, suggesting that the cycle is not peaking anytime soon, with both companies noting that "escalations continue to be significant portion of requests," Arya pointed out, while adding that lead times are still elevated, but have stabilized, at least according to Analog, which gives customers more visibility on when they will receive their products.
Lastly, channel inventory is light and with bottlenecks expected to last throughout the year, demand is likely to continue outpacing supply.
Analog Devices (ADI) shares are flat in Thursday trading at $172.84, while ON (ON) was slightly lower at $67.33.
"[Analog Devices] believes it is well positioned to benefit from burgeoning EV demand which grew 34% YoY in CY21, against flatlining autos growth," Arya added, with management identifying new wins in Europe and a third wireless win with a fourth potentially coming later this year.
Analog Devices (ADI) is also likely to benefit from growth in healthcare, specifically testing and instrumentation, as well as communications, despite concerns over delays in the U.S. and China.
On Semiconductor (ON) is well-positioned due to its strength in electric vehicle charging infrastructure, but could also see strength from communications as well.
Last month, investment firm Jefferies said the semiconductor supply shortage is getting better, but noted the recovery is unven, noting that Analog Devices (ADI) had raised prices multiple times in 2021.