As the coronavirus pandemic continues to disrupt the global supply chain, many component manufacturers are unsure of what the future will look like. Factories and headquarters around the world are either shutting down or significantly decreasing production in an effort to keep employees safe from the virus.
While these actions are essential to stopping the spread of the coronavirus, they are also having a painful impact on the global economy. For Analog Devices, a chipmaker focusing on digital signal processing integrated circuits (ICs), the disruption has clouded its future outlook.
In response, the company recently announced that it is withdrawing its earnings outlook for the fiscal second quarter.
Analog Devices made the announcement on Thursday in a letter to its shareholders. The company cites supply chain disruptions caused by COVID-19 as the reason for withdrawing its FQ2 outlook.
Analog says that, due to these changes, it is increasingly difficult to forecast the impact that the coronavirus will have on its business. It also notes that more details will be provided in a second-quarter earnings call in May 2020.
CEO and President Vincent Roche says, “During this rapidly evolving situation, our top priority is the health and safety of our employees and the communities in which we operate. As an organization we are stepping up to combat the COVID-19 pandemic by partnering with our customers and world-class healthcare organizations to deploy our innovative healthcare diagnostics solutions.”
The company says that “it is prudent” to withdraw its FQ2 outlook due to the uncertainty it currently faces. Fortunately, Analog Devices’ customer demand has held steady during this quarter. Nonetheless, that could change in the coming weeks as the coronavirus continues to spread around the globe.
At the time of this writing, the company’s stock price has dropped by 2.2 percent on the day in response to the news. This year, the stock has plummeted by nearly 25 percent, much of the loss coming in the month of March.
Roche goes on to note that Analog will continue to support its customers, suppliers, and partners to the highest degree possible.
Although the coronavirus pandemic is an unprecedented global situation, Roche is confident that Analog Devices will persevere.
He says “Throughout ADI’s 55-year history, we have encountered several “Black Swan” events. I am confident we will successfully navigate this one as we have done before given the strength of our talent, technology, and customer and supplier relationships, in addition to our sound financial position.”
The CEO adds, “While our team is moving with speed and agility to embrace these short-term challenges, we remain focused on investing in ADI for the long-term and we will emerge from this pandemic stronger.”
As the tech world continues to grapple with the ramifications of COVID-19, it will be interesting to see if other companies follow Analog’s lead and withdraw their quarterly outlooks.