As the Q1 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the analog semiconductors industry, including Microchip Technology (NASDAQ:MCHP) and its peers.
Demand for analog chips is generally linked to the overall level of economic growth, as analog chips serve as the building blocks of most electronic goods and equipment. Unlike digital chip designers, analog chip makers tend to produce the majority of their own chips, as analog chip production does not require expensive leading edge nodes. Less dependent on major secular growth drivers, analog product cycles are much longer, often 5-7 years.
The 15 analog semiconductors stocks we track reported a slower Q1; on average, revenues beat analyst consensus estimates by 1.9%. while next quarter's revenue guidance was in line with consensus. Inflation progressed towards the Fed's 2% goal at the end of 2023, leading to strong stock market performance. The start of 2024 has been a bumpier ride, as the market switches between optimism and pessimism around rate cuts due to mixed inflation data, but analog semiconductors stocks have shown resilience, with share prices up 9.8% on average since the previous earnings results.
Weakest Q1: Microchip Technology (NASDAQ:MCHP) Spun out from General Instrument in 1987, Microchip Technology (NASDAQ: MCHP) is a leading provider of microcontrollers and integrated circuits used mainly in the automotive world, especially in electric vehicles and their charging devices.
Microchip Technology reported revenues of $1.33 billion, down 40.6% year on year, falling short of analysts' expectations by 1.2%. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its operating margin.
"We experienced a major inventory correction in fiscal 2024, leading to a 9.5% decline in revenue to $7.6 billion. Despite this, our resilient operating model and rapid adjustment to the adverse business environment enabled us to navigate these challenges to achieve a non-GAAP operating margin of 43.9%," said Ganesh Moorthy, President and Chief Executive Officer.
Microchip Technology delivered the weakest performance against analyst estimates and slowest revenue growth of the whole group. The stock is down 3.4% since the results and currently trades at $90.62.
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Best Q1: Impinj (NASDAQ:PI) Founded by Caltech professor Carver Mead and one of his students Chris Diorio, Impinj (NASDAQ:PI) is a maker of radio-frequency identification (RFID) hardware and software.
Impinj reported revenues of $76.83 million, down 10.6% year on year, outperforming analysts' expectations by 4.4%. It was a very strong quarter for the company, with a significant improvement in its inventory levels and an impressive beat of analysts' EPS estimates.
The stock is up 24.2% since the results and currently trades at $150.
Skyworks Solutions (NASDAQ:SWKS) Result of a merger of Alpha Industries and the wireless communications division of Conexant, Skyworks Solutions (NASDAQ: SWKS) is a designer and manufacturer of chips used in smartphones, autos, and industrial applications to amplify, filter, and process wireless signals.
Skyworks Solutions reported revenues of $1.05 billion, down 9.3% year on year, inline with analysts' expectations. It was a weak quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its operating margin.
The stock is down 2.3% since the results and currently trades at $104.11.
Magnachip (NYSE:MX) With its technology found in common consumer electronics such as TVs and smartphones, Magnachip Semiconductor (NYSE:MX) is a provider of analog and mixed-signal semiconductors.
Magnachip reported revenues of $49.07 million, down 13.9% year on year, in line with analysts' expectations. It was a weaker quarter for the company, with underwhelming revenue guidance for the next quarter and a decline in its gross margin.
The stock is down 1.4% since the results and currently trades at $4.86.
MACOM (NASDAQ:MTSI) Founded in the 1950s as Microwave Associates, a communications supplier to the US Army Signal Corp, today MACOM Technology Solutions (NASDAQ: NASDAQ:MTSI) is a provider of analog chips used in optical, wireless, and satellite networks.
MACOM reported revenues of $181.2 million, up 7% year on year, in line with analysts' expectations. It was a weaker quarter for the company, with a decline in its operating margin.
The stock is up 5.3% since the results and currently trades at $104.24.
