Broadline-semiconductor maker Analog Devices
First of all, Analog has a sprawling customer base -- the largest single customer last year accounted for just 3% of revenues, and that was the U.S. government. So when Nintendo (OTC BB: NTDOY.PK) sells a gazillion Wii systems with Analog motion sensors in every controller, that's great, but it doesn't really move the needle very far here.
That said, Analog's broad customer base makes it a fine barometer for keeping tabs on the state of electronics in general. Right now, many of the company's customers are shifting order volumes into consumer devices, and chips geared for that market now make up 20% of Analog's revenues. That's up from 17% last year, and gross margins for these items tend to be lower than those of industrial-grade products. On the flip side, Analog outsources a lot of the manufacturing of low-end chips to foundries like Taiwan Semiconductor
CEO Jerald Fishman reinforced this positive consumer trend. In the conference call, he said that "this business is doing great in the consumer sector; the base station business is strong. There's evidence that's probably going to continue." But he also told us that it's hard to make any serious predictions about the near future, as "the overall environment is a little uncertain, and there are a lot of external factors going on out there that cause us to be cautious. I think it's prudent for us to be cautious, to try to run the business cautiously until we really see how all these external factors are going to play out."
Bottom line, the company held steady while at archrival Texas Instruments
Fool contributor Anders Bylund owns shares in Taiwan Semi but holds no other position in any of the companies discussed here. You can check out Anders' holdings if you like, and Foolish disclosure always knows whence the wind blows.