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Growth Picks in ADI’s Communications Infrastructure Segment

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Nov. 20 2020, Updated 4:11 p.m. ET

Communications Infrastructure’s financial performance

In fiscal 3Q16, Analog Devices’ (ADI) Communications Infrastructure segment reported its first YoY (year-over-year) revenue growth in the past five quarters. During the quarter, the segment’s revenue grew by 22.4% YoY to $174.1 million, accounting for 20% of the company’s overall revenue.

This segment was hit by a slowdown in 2015 as LTE (long-term evolution) deployment in China (MCHI) came to a halt due to various regulatory and economic factors. Things started to normalize in 2016, and growth picked up in the communications infrastructure space.

Qualcomm (QCOM), which has high exposure to the communication market, reported its first YoY revenue growth in six quarters in fiscal 3Q16 (ended June 30, 2016). Meanwhile, Maxim Integrated (MXIM) reported a 6% YoY decline in the communications and data center market during the same quarter.

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On a sequential basis, ADI’s Communications Infrastructure segment’s revenue fell by 0.7% as strong growth in wireline infrastructure applications was offset by a decline in wireless infrastructure. Wireline infrastructure demand was driven by the continued deployment of metro and inter-data center network infrastructure for 100-GB (gigabyte) and 100-GB-plus optical networking.

Industry outlook

IC Insights expects strong demand in Asia-Pacific and the Americas to drive growth in the communication market, making it the largest semiconductor end-user market in 2016. The research firm expects communication to account for 39.3% of global semiconductor sales in 2016.

In the long term, the communications infrastructure market is expected to grow significantly with the roll out of 5G, and Verizon Communications (VZ), AT&T (T), and Qualcomm are at the forefront of the 5G revolution.

Continue to the next part for a look at ADI’s Industrial segment.

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