Shares of Analog Devices Inc rose Wednesday after the chipmaker forecast third-quarter sales and profits above Wall Street expectations and as the company's chief executive said it had boosted spending on suppliers and its own factories to mitigate the effects of a chip shortage.
ADI gave a fiscal third-quarter forecast with midpoints of $1.7 billion in sales and adjusted earnings of $1.61 per share, above estimates of $1.65 billion and $1.54 per share, according to IBES data from Refinitiv.
Shares were up 3.8% at around 12:45 p.m. Eastern Time after the before-market-open results were released.
For the fiscal second quarter, ADI reported sales of $1.66 billion and adjusted earnings of $1.54 per share versus analyst estimates of $1.61 billion and $1.45 per share, according to Refinitiv data.
ADI makes some of its chips in its own factories and also sources some of them from outside factories. Chief Executive Officer Vincent Roche on Wednesday told Reuters the company has boosted capital expenditures with both to supply as many chips as possible and take advantage of growth opportunities.
One emerging market for ADI is chips that manage the battery systems in electric vehicles. During the fiscal second quarter, the company signed Volvo as a customer for the chips, as well as what it described as a major European luxury automaker and two Asian brands.
"In the quarter that's just gone, we had an all-time record for shipments into the electric vehicle segment, particularly on the battery side," Roche said. "We're represented in well over 50% of OEM battery systems."