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Chipmaker Analog Devices on Wednesday forecast second-quarter revenue that fell short of analysts’ estimates, as the company accounted for a $70 million hit related to the coronavirus outbreak.
Analog Devices joins Apple and a host of other companies expecting potential damages from the rapidly spreading virus, which has killed over 2,000 in China, disrupting supply chains and delaying reopening of factories after the extended Lunar New Year holiday break.
The Norwood, Massachusetts-based company, which supplies some iPhone components, expects revenue of $1.35 billion for the current quarter, plus or minus $50 million, below estimates of $1.38 billion, according to IBES data from Refinitiv.
After several quarters of a global slowdown in chip demand, analysts view 2020 as a recovery year for semiconductors, driven by 5G spending for both smartphones and network upgrades.
“Demand across our end markets has stabilized and is beginning to show signs of improvement as we enter our fiscal second quarter,” Chief Executive Officer Vincent Roche said.
The comments from Roche reinforce expectations of a rebound in chip demand and has been echoed by chipmakers such as Nvidia and Intel.
“I believe the Street may already have anticipated a potential miss or a ‘risk’ to the outlook because of the coronavirus situation,” Stifel analyst Tore Svanberg said.
Analog Devices’ shares were up 5% at $124.5 in premarket trading.