Analog Devices at Morgan Stanley Conference: Optimistic Growth Outlook

On Tuesday, 04 March 2025, Analog Devices (NASDAQ: ADI) presented at the Morgan Stanley Technology, Media & Telecom Conference. CEO Vincent Roche shared a strategic overview, highlighting the company’s recovery in demand across most segments and its focus on organic growth, despite challenges in the healthcare sector. The discussion underscored ADI’s commitment to leveraging its technology stack and maintaining strong customer partnerships.

Key Takeaways

• ADI anticipates double-digit growth by 2025.
• The Maxim acquisition is on track to generate an additional $1 billion in business by 2027.
• Healthcare sector faces inventory challenges, while other sectors show robust performance.
• ADI aims to return 100% of free cash flow to shareholders through dividends and buybacks.
• The company is expanding its dual sourcing strategy, targeting 95% of products by 2027.

Financial Results

• Expected double-digit growth for 2025.
• $1 billion in new business projected by 2027 from Maxim acquisition.
• Maintained 30% operating margins during downturns.
• Committed to returning all free cash flow to shareholders.
• Gross margins remain in the high 60s.

Operational Updates

• Demand recovery noted across most sectors except healthcare.
• Centralized supply chain management implemented since 2020.
• Enhanced system engineering capabilities to engage early with customers.
• Internal foundry capacity doubled in Europe and the U.S.
• Plans for dual sourcing 95% of products by 2027.

Future Outlook

• Confident in achieving double-digit growth by 2025.
• Aerospace and defense expected to see double-digit growth over the next decade.
• Opportunities identified in AI systems and digital biology.
• Focus on capturing more value per application through innovative solutions.

Q&A Highlights

• Healthcare sector impacted by over-inventory, slowing recovery.
• Strong performance in aerospace and defense with a robust pipeline.
• Automotive sector benefits from gains in cabin electronics and EV propulsion systems.
• Tariffs may lead to overbilling, but are generally well-controlled.
• Operating expenses linked to growth and profitability bonus structure.
• Increased internal capacity and dual sourcing plans by 2027.

Readers are invited to refer to the full transcript for a detailed account of the conference call.

Full transcript - Morgan Stanley Technology, Media & Telecom Conference:

Joe Moore, Analyst, Morgan Stanley: Yes. Everyone, welcome back. I’m Joe Moore, Morgan Stanley and other team. Very happy to have with us today Vincent Roche, the CEO of Analog Devices. So thank you very much for coming.

Vincent Roche, CEO, Analog Devices: Great to be here, Joe. Thank you.

Joe Moore, Analyst, Morgan Stanley: So maybe we could just start with an overview of the business environment. You just reported, talked about the business improving and you’ve seen improvement really now for four quarters. Can you just talk about the general tariff of analog still seems like you’re under shipping in demand, but definitely feeling the benefits of getting past doors?

Vincent Roche, CEO, Analog Devices: Yes. So I think we’ve been suffering for almost the last five years, this equilibrium between supply demand and inventory. I think the last eighteen, twenty four months really been about inventory digestion, some demand as well. But what we’ve seen is, I mean as a company, we use the signal that we use to run the manufacturing systems in the company POS. We pay rapt attention to what our customers are doing with inventory on their balance sheets.

And so we use POS as the signal to drive the utilizations of our factories and we centralized the distribution of our inventory pretty much from 2020 till now. So what we see now is demand is recovering. I think inventories are down with one exception. I think healthcare is still suffering somewhat from an over inventory situation, But the rest of our businesses industrial, automotive, the wired part of communications and consumer, they’re all in pretty good shape. We’re seeing sequential and year over year increases in backlog bookings.

So we feel good. We’re in our second quarter now and we think for 2025, we’ll grow double digits. So we’ve maintained that for a while, but our confidence grows with each passing month and

Joe Moore, Analyst, Morgan Stanley: quarter. And maybe could you talk a little bit about the cyclical environment? I mean, for me, I’ve done this thirty years. The shortages that we saw two years ago were as intense as I’ve seen. You guys weren’t the biggest offender, not close, but it was very difficult for everybody to meet customer demand.

And I cover companies on the equipment side that couldn’t ship $10,000,000 capital equipment systems because they couldn’t get a $2 part. So everybody insisted that behavior will be different, we’ll accumulate safety stock, we’ll never have this again. And And it seems like through the downturn, this has been maybe there was some of that in the early stage and that’s how the inventory got so high. But it seems like we’re just doing normal stuff. We’re taking inventory down to low levels.

Do you think the customer’s view of their supply chain for products and analog has changed?

Vincent Roche, CEO, Analog Devices: Well, I think I’m actually seeing kind of a normalization of behavior. The old patterns that kind of predated the pandemic are back. Customers are inclined to hold lessons into the balance sheet. They expect faster lead times, shorter lead times. So, but I do think one thing that has changed is the psychology of who has been picked as a partner, who was reliable during the last five years.

And I think as a company, we’ve been gaining we gained, I think a tremendous amount of respect for the even handedness that we used with big customers and small customers during the pandemic. And we did our best to move supply. We made a decision early on in the pandemic that we would give all our customers something irrespective of sight. So I think that’s helped us. It’s helped boost the reputation and the desire of our customers to build a closer partnership with ADI as a trustworthy partner on technology as well as supply chain.

Joe Moore, Analyst, Morgan Stanley: Yes. Okay. And did you as you’ve moved through this, I think there’s much more awareness now of these things and people do we’ve seen automotive OEMs doing deals with foundries to ensure supply. Like I don’t think they knew who the foundry suppliers were two years ago. So it does seem like it’s different.

I mean, do you think that means that if we tighten up that people will hold more of a safety inventory environment or do you think it’ll

Vincent Roche, CEO, Analog Devices: I think so. We’re holding a lot more inventory on our balance sheet as well. Yes. Because we as I said, we centralized supply during the pandemic and that worked very well for ADI. We’ve kept channel inventories very lean.

We didn’t force our customers into any kind of unnatural agreements around you order as you own it. Yes. So I think all of that is kind of coming back into a normal pattern. But I think more than anything, our customers are taking a longer term view to who their suppliers are, who they can work with on the technology side, but also who they can trust on the supply chain side.

Joe Moore, Analyst, Morgan Stanley: And that’s a great point. I mean, you guys didn’t attempt to hold people to pricing agreement, long term supply pricing agreements. You didn’t force people to take inventory that they didn’t want and that’s certainly shown through in terms of your numbers. Yes. Maybe we could talk a little bit about analog seems to be more first in, first out relative to microcontrollers, DSPs, power discretes.

Can you just any sense of why analog kind of saw these issues first and where we are in that? The analog sector. Analog sector, yes, not analog to come up.

Vincent Roche, CEO, Analog Devices: Well, I suppose perhaps because we collect signals from many, many places. I mean, the spectrum of market coverage that we have is end to end. Yeah. From consumer to industrial, everything in between. So I guess the signals that we’ve had to gauge demand supply, they’re more plentiful and they’re probably stronger.

Joe Moore, Analyst, Morgan Stanley: Great. So as CEO, if you think about your business priorities, for a while, you guys were doing large acquisitions in each cycle. You’ve done a great job of integrating that Linear Tech, Maxim, others. How are your priorities now? Are you focused on organic growth and how do you sort of think about the next two or three years in terms of the importance that you’re putting on different characteristics?

Vincent Roche, CEO, Analog Devices: Yes. So look, I think we’re what three, three point five years beyond the acquisition of Maxim. We’re still integrating that and we’re focused fairly and squarely, I would say, on squeezing organic growth. We announced when we acquired Maxim that we thought we could generate $1,000,000,000 worth of additional business, new business by 2027 and we’re on track to do that. So that’s where we’re focused fairly and squarely.

When it comes to our technology stack, I think when it comes to the analog base of that stack, we’re doing more software these days, we’re doing more digital, but everything is in service of the analog stack. I think making sure that we take everything from nanowatts to kilowatts, sensor to cloud and microwave to bits, we have a great stack and we’re making that stick in more and more places, more and more geographies, more customers. So I think the story for ADI is about leveraging the breadth and the depth and the quality of our high performance technology stack to squeeze more growth, capture more value per application essentially.

Joe Moore, Analyst, Morgan Stanley: Yes. And how do you do that? I mean, you guys have sort of talked about the solutions approach to these markets. Your biggest competitor tends to have much more of a catalog approach to these markets with TI, not anything’s wrong with either one, but how do you guys do behave differently? How do you approach the customer differently?

Because your products are so fragmented, it seems hard to have a strategy like that. Like how does that work in progress?

Vincent Roche, CEO, Analog Devices: Well, I think first and foremost, Joe, we care about being the first. Building the stuff that nobody else can do, formulating products in applications where we have a differentiation on the raw technology front. For the last decade or so, we’ve also been building a strong system engineering capability in the company. So we want to engage early with our customers in their application, work on the architecture, the efficient architecture and partitioning of the analog and digital technologies. And we take I think in the aggregate, we take more risk than anybody else.

I think risk and reward are very, very proportional. We’re more ambitious in terms of pushing the edge of what analog means, whether it’s a radio system or a control system or an automotive system. And over time we capture more, we build and capture more and more of the value. But so in other words, we’ve built I think a good balance between an application focused view of product development with the broad franchise view. So we’re able to build the anchor products, if you like, for an application and then pull the more fragmented products like power management into the application.

Joe Moore, Analyst, Morgan Stanley: I don’t know if people know like how pervasive that thought process is. I know industrial, it’s sort of obvious where how you could do vertical applications in automotive or comm infrastructure, but industrial is so fragmented and you guys have healthcare teams and test equipment teams and things like that that are approaching that at a more

Vincent Roche, CEO, Analog Devices: of a systems level. Is that right? Exactly. Yes. So AT is a good example of that.

That is very much it’s a business that plays right on the edge of what your technology can deliver. So that requires a lot of application knowledge and there’s a tremendous amount of tacit knowledge that you’ve got to provide as well in the analog space. A lot of what we do is in the minds and the routines of the engineers.

Joe Moore, Analyst, Morgan Stanley: Can you characterize the industrial market now? I mean, because it seems like there’s I know you divided into several sub segments, you’re seeing strength in some as you mentioned, test equipment as well, but you’re seeing weakness in healthcare. Like just how do you think about how many of eight cylinders are you hitting on in the industrial business at this point?

Vincent Roche, CEO, Analog Devices: Yes. Well, look, I think we’ve said this publicly, our aerospace and defense business, our ATE business doing very, very well, strong demand. And our pipeline of opportunities also stronger in those areas than it’s ever been. Automation beginning to see a more normalized pattern of growth in that area as well. And then if you look at healthcare, you have to think of it in kind of two segments.

One is the big iron. It’s the x-ray systems for example. I think the inventories in healthcare from a component or electronic standpoint, I think it’ll be slow for the year. I think 25%. I think healthcare maybe it was an overbuild in inventory during the pandemic.

And I think a lot of care in terms of spending capital. So I think that business will be slow for the rest of the year with one exception, it’s the wearables part, the wellness focused parts of the healthcare business are doing particularly well. So focused most of healthcare of course is focused on the sickness and clinical health, but I think healthcare is beginning to shift more towards digitalization, more sensing and a wellness focus. So, but I think that part of the business is doing well, but I think healthcare will be the slowest to recover in that industrial sector as we describe it.

Joe Moore, Analyst, Morgan Stanley: Yes. Okay, great. And then shifting to automotive, every company seems to be at a slightly different place in terms of working their way through the inventory there. You guys have had a couple of strong quarters. I know you have a lot of exposure to areas like battery powered EVs and exposure to the China geography.

Can you just talk about why your business has been something of an outlier there?

Vincent Roche, CEO, Analog Devices: Well, look, as a company, even pre pandemic, we were getting about 5% to 10% more content gain per year in the automotive business in cabin electronics. We’ve had a long heritage of building solutions for areas like media, audio, video processing. We’ve been able to add road noise cancellation to that. Then there are bus structures that we’ve built basically where data bandwidth is high and we’ve been building the electronic media structures, the connection structures to be able to handle that with keeping I would say sophisticated electronics and keeping the cabling as simple as possible. So that’s been a great business for us.

A2B in the ADAS sector, Level two ADAS systems use level one, level two, level three, use our bus structures again, GMSL for example, the multi bit serial link technology. So we have a lot of new modalities and obviously in the electric vehicle, we have a lot of content in the propulsion system. So they’re the areas that and of course we’ve got power, we functionally save power, power goes with everything that we do. So I think we’ve a rich portfolio. Again, we’re focused on solving the high end problems, very much applications back in to improve the fidelity of the information, help reduce cost and energy in the cars as well.

And one of

Joe Moore, Analyst, Morgan Stanley: the really interesting elements of automotive is how much of the innovation is happening in China at this point and which is and we’ve got into kind of a geo fenced market because of the tariff situation, things like that. But you guys have done very well there. And I think there’s push for local content, but you’ve continued to thrive. Can you talk about that dynamic and when there’s so much of the innovation there, but maybe if there’s a local supplier that can do it, they might win. How do you stay ahead of those competitors?

Vincent Roche, CEO, Analog Devices: Well, Joe, I mean, the thesis we’ve had as a company over the last number of years in this world of tariffs and sanctions, we’ve always believed that as long as there’s a high performance market in China, we’ll supply that market. We play on the edge. Our technologies are very, very well respected there. So that’s the game we’re playing. But our automotive game is, I would say geographically very diverse Japan, China, Europe, America, we’ve good presence in all those regions.

And but it’s the same game we play in China that we play everywhere else. It’s performance driven. And we actually do some design in China for China as well. We customize products and we build a tighter connection from a local kind of standpoint. Okay,

Joe Moore, Analyst, Morgan Stanley: great. So maybe on that note, thinking about the geopolitics of everything right now, I guess first we’ve been asking everyone the more shorter term question. Do you think you’re being impacted by the tariff conversations that are happening in America, that are happening with Asia? Do you think anybody’s buying ahead of that changing purchasing behavior, moving footprints, anything like that?

Vincent Roche, CEO, Analog Devices: I’ve got to believe that there is some of that thinking in play. But what I can tell you is that, again, we pay rapt attention what we build, the signals that we build to. So my sense is there’s good flow through for the products that we’re shipping into the various markets that are affected by tariffs and so on. I think there’s good ship through. But yes, is there concern?

Is there some overbilling? There may be. Yes. But I think generally speaking that is well under control. I mean, look at the end of the day, will tariffs affect the business?

It certainly hurts trade and if it hurts trade, it’s not good for anybody who’s trading.

Joe Moore, Analyst, Morgan Stanley: Yes. Okay. And how do you think about the geography of manufacturing? Your competitor TI is going to put a lot of emphasis on having a lot of domestic capacity and lower alliance on foundries. How do you counter that?

Vincent Roche, CEO, Analog Devices: Well, we have a hybrid manufacturing system. We are very clear on the things that we want to build inside the company. And the analog business is characterized by the need for many, many types of recipes. I mean from five nanometers, our most advanced designs right now are being built on five nanometer technology. Right up to lithographies that are insensitive to lithography, if you like.

So that is the nature of the analog business with 80,000 products used and we develop pretty much hundreds of new products a year. So what we have done is where it has made sense for us to bring the technologies inside, we license from our biggest partner. And so kind of if you think of it this way, five nanometers up to multi micrometers, we’ve decided that the place for us to be more independent using internal foundries is 180 nanometers. Below that we have long term partnerships with the big players out there. So and during the pandemic, we’ve more than doubled the internal capacity of our foundries in Europe, as well as The U.

S. Here to make sure that we can meet our growth needs. We went through a three year capital cycle. We’re done with that now. So by early twenty twenty seven, we will have dual sourcing for virtually the entire portfolio of the company.

Okay. Right across the globe, Japan, Taiwan, Europe, as well as America. So 95% of our products by ’27 will be multi sourced, at least dual sourced, irrespective of the process lithography. So that’s the front end. The back end, so to speak, where we do the assembly and test that has always been Asia and always been generally multi source.

Joe Moore, Analyst, Morgan Stanley: I feel like a lot of what drives behavior in the next five years is what happened in the last five. And you guys were actually one of the most reliable suppliers during a time of supply chain tension. So how did you achieve that? And I mean, I think that reputation has stayed with you. I think people you can promise people that your manufacturing is in one region, but it kind of comes down to did you deliver everything you said the last cycle and you guys really did that.

How did you get through the shortage period and kind of without making people I know people were a little bit angry, but not as angry as they were.

Vincent Roche, CEO, Analog Devices: Nobody was totally pleased or satisfied. Look, I think we’ve had long term partnerships with the big foundry players out there. TSMC would be our largest supplier from the foundry perspective. So having that kind of swing capacity, we’ve been able to replicate a lot of what our partners have done. We license technologies as I’ve just stated over time, but I think it was having the flexibility that partners gave us to be able to manufacture.

Typically, they would have dual source in their supply chains and being able to when the market, if you when demand crashed, we were able to keep the utilization rates inside our own factories up. So really it is having a pool of supply that is dual sourced both inside and outside of ADI or even outside having dual source as well. So partnership was the essence of great partnerships that go back decades. We’ve always believed that it’s better for us to build long term partnerships and work through problems and work on costs and quality together over the long term. So I’m very pleased with where we are from a supply chain standpoint right now.

Joe Moore, Analyst, Morgan Stanley: And in the China market, do you have to think about China for China or do you have to have a supply chain that’s aligned to their goals there?

Vincent Roche, CEO, Analog Devices: We have a little, we have a little, but most of what we’re supplying into China comes from outside of China from a I mean the most sensitive part of the supply chain is the silicon manufacturing itself, but a lot of that flows into China through our Asia operations.

Joe Moore, Analyst, Morgan Stanley: And it really helps that you do things that other people can’t do. Exactly. Exactly. In that part of the world. Okay, great.

And then thinking about manufacturing input costs, when we had an upturn and foundry prices went up, most companies in the industry were able to pass that through. Now there’s some sense of foundry price stabilizing, maybe even coming down. Does that change the pricing dynamic at all? You guys have described more of a normal pricing dynamic versus what we saw two years ago. Is there any chance it turns into worse than normal at some point?

Vincent Roche, CEO, Analog Devices: I don’t think so. Again, if you’re playing a game on the high end of innovation, customers care far more about supply than eking out the next cent. I think if we were a commodity company, we would have a very, very different dynamic to be dealing with. So that’s my sense. And our pricing is very stable right now.

We are we continue to raise the ASP of our products relative to our competitors with each new generation of product that we’re building. So compared to our closest competitors, we’re four kind of a little over four or five, five x in terms of the ASP that we garner versus the average of our closest competitor. So that speaks clearly to the innovation premium that we produce as a company.

Joe Moore, Analyst, Morgan Stanley: Yes, that makes a lot of sense. Okay. Can you talk about the financials a little bit? I mean, one of the most impressive things to me is the operating margin at the low point. I mean, you obviously when things were good, you put up great margins.

Yes. But you actually called out at the peak, we’ll be able to hold 30% operating margins at the low, which you did. There was one quarter drop level for the year you did. And I mean, this was one of the toughest downturns that I’ve ever experienced and you were able to do that. So can you maybe talk about the mindset of like how you think about in the upturn protecting that margin in the downturn?

And there aren’t very many companies in the S and P 500 that can deliver 29% operating margin at a low point of a tough cycle?

Vincent Roche, CEO, Analog Devices: Well, I think first and foremost, as a company being able to get an innovation premium helps a lot. ASPs are stable. Our gross margins, we’ve been able to manage by virtue of the swing capacity of being able to increase utilizations on the internal factories when demand went down. We have also a large portion of our OpEx is variable because of the bonus structure that we have. We have a particular bonus structure which scales with growth and profitability.

So all those things we kept our discipline. We’ve been able to invest in all the things that matter to driving the success of the company in future on R and D, customer engagement. And so it was all those things, no single thing, but it starts at the very top of the P and L, but I think discipline as well as this kind of shock absorption that we’ve got built into the operating system.

Joe Moore, Analyst, Morgan Stanley: I mean looking forward that compensation probably limiting leverage a little bit and you guys have signaled that now for two quarters of you have to start paying your people the normal levels again. Again. Can you talk about when we kind of get back to normality when you might start to see more operating leverage around the model?

Vincent Roche, CEO, Analog Devices: Well, a big one of the levers, our bonus system has its profitability, that’s a rate.

Joe Moore, Analyst, Morgan Stanley: Yes.

Vincent Roche, CEO, Analog Devices: And then the rest is growth. It’s actually revenue growth. As growth normalizes, so to speak, there’s a catch up period, but as growth normalizes, I would imagine by the kind of the end of this year, we’ll start to see less modulation, if you like, on the operating profit based on the variable. That’s my sense.

Joe Moore, Analyst, Morgan Stanley: Okay. Makes sense. And then gross margin, you’re in the high 60s again, you’ve done a great job of preserving gross profit. What’s the path back above 70? What do you have to do from a revenue side to get back there?

Vincent Roche, CEO, Analog Devices: Well, a certain amount is mix. The industrial business tends to attract a higher margin than the rest of the portfolio. So that will be a big piece of it, I think. And continuing to reduce costs, drive share, but also make sure that with each new generation of product that we’re bringing to market that we’re also capturing the innovation premium there. So yes, I think it will be very mix driven this year in particular.

In the shorter term, when we start to see the industrial business recover at a faster rate, then the margins will be commensurately higher. Great.

Joe Moore, Analyst, Morgan Stanley: So I’ll have one more question and then I’ll turn it to the audience. Can you talk about capital allocation? For several years, you guys were acquisitive, a lot of the cash went towards acquiring some of your highest quality competitors in the industry. Looking forward, do you still see those types of opportunities? Is the focus more cash return?

Just how do you think about the free cash generation of the business and where that will go?

Vincent Roche, CEO, Analog Devices: Yes. We’re always looking for ways inorganically to strengthen the offering of the company, right? I care far more about how the acquisitions that we do will impact the customers innovation systems over a five or ten year period. But as I said earlier, Joe, right now we’re happy with where we are. I mean, we’re squeezing the value out of the big assets that we acquired over the last seven years or so, LTC and Maxim.

And last year, the cash return was a little lower, but we’ve been clear that this year we expect to return 100% of our free cash flow as a mix of both dividend, which we’ve just increased again for the twenty first year, twenty first consecutive year. And so we stick with that. We’ll continue to buy back stock and pay the dividend and stick with our promise of 100% free cash flow return. Yes. Okay.

That’s great.

Joe Moore, Analyst, Morgan Stanley: Let me see if we have any questions for the audience.

Vincent Roche, CEO, Analog Devices: Thank you. Thank you. Shorter question for OpEx.

Joe Moore, Analyst, Morgan Stanley: It came up in the last quarter and is expected to come up again because of compensation for April. Can you comment on July as well? Some analysts are talking about another 4% increase in OpEx sequential for July, which will compound in, I think, it’s around 15% in three quarters. Is that the correct way to look at it, Arid?

Vincent Roche, CEO, Analog Devices: Well, whatever about the absolute number or the relative number, look, as I said earlier, the modulation on our OpEx in the short term is going to be the bonus structure. It’s the variable part. Our fixed expenses are pretty well set.

Joe Moore, Analyst, Morgan Stanley: Any other questions? When you think about all of the end markets you play in, how does aerospace and defense stack up against the rest in terms of where you want to be bigger, where you’re most excited about?

Vincent Roche, CEO, Analog Devices: Yeah. Well, I mean aerospace and defense is really, it’s space, space systems, defense systems, and both of those are expected to grow. We think by between now and the end of the decade. I mean, I would be very disappointed if that business couldn’t produce double digit growth between now actually over the next decade. It’s a pretty sizable business for ADI.

It’s getting up towards $1,000,000,000 very, very profitable business. It’s highly diversified. So I think in space communications, the digitalization of a lot of the old communication systems in the defense sector. Europe announced this morning around $1,000,000,000,000 worth of additional spend on defense. So I think the prognosis for that business is really, really strong just given the geopolitical dynamics and the kind of indigenization of the defense systems across the globe.

Obviously, the space part of the business has been growing very well for the company double digits over the last several years. So I think that business, as I said, I’d be very disappointed if we couldn’t eke out double digit percentage growth in that business over the next decade.

Joe Moore, Analyst, Morgan Stanley: On the defense electronics portion, does that change the sort of geo matching of the manufacturing? Are people sensitive about buying defense electronics that’s built in Taiwan, for example, or how should we think about that?

Vincent Roche, CEO, Analog Devices: I think as I’ve seen it, as long as for example, we do build space products at our Irish facility. Okay. But as long as the facilities are in friendly environments, the environments of the allies, it’s not an issue. But there is we are seeing requests to particularly in the area of firmware to be able to customize our products for different regions. So there’s some regionality, but generally speaking, it is it’s very clear.

It’s the Western sphere and the allies and that’s clearly where our business is centered.

Joe Moore, Analyst, Morgan Stanley: Any other questions? Right. And I guess in summary, I mean, you’ve done a great job through the downturn, managing to a good margin structure, you’re coming out of it nicely. Any misconceptions you think people have about ADI or versus the competition or the cyclicality of the business? Well, I

Vincent Roche, CEO, Analog Devices: will say Joe, I mean, we in January ADI, we celebrated our sixtieth anniversary. And I’ve been in the business a long time. I was an intern with ADI in 1981 and then straight over to Silicon Valley for a period of time. But I must say, I’ve never been more optimistic about the sector, the semiconductor sector, ADI is positioned within it, because our customers are asking us to do more and more and more for them to take on more of their hardware job at that intersection, that very nuanced intersection between the world of the physical and the world of the digital. And there are new modalities as well.

I think we’ll benefit increasingly from the deployment of AI systems. AI is going to move towards the edge, the inferencing side of things. That’s good for ADI. But we also see opportunities in digital biology, for example. I think that will be a whole new sector that intersection of semiconductors with biological systems.

It will take a while, but I think over the next decade we’re going to see some really significant new modalities for diagnostics and therapies in that area, particularly in healthcare. So I’ve never been more I think our best days are ahead of us as a company.

Joe Moore, Analyst, Morgan Stanley: Okay. Good to hear. Well, thank you so much for your time. Appreciate it.

Vincent Roche, CEO, Analog Devices: Thank you, Joe.

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