Analog Devices, Inc.

Legal name

ANALOG DEVICES INC

Headquarters

WILMINGTON, MA

Incorporated in

Massachusetts

Fiscal year end

10/31

Exchange & ticker

NASDAQ: ADI

Industry

Semiconductors

CIK

6281

Website

https://www.analog.com/ ↗

IR page

https://investor.analog.com/ ↗

Source: Form 10-K (FY2025) cover page and business description

Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.

• Products

  Analog and mixed-signal ICs

  Examples: General-purpose and application-specific analog and mixed-signal ICs

  The foundation of the business for six decades; the company says it is one of the world's largest suppliers of high-performance analog ICs.

• Products

  Power management

  Examples: Power management ICs

  Linear Technology (2017) added high-performance power management to the portfolio.

• Products

  RF, microwave, and sensors

  Examples: RF and microwave ICs, edge processors and sensors

  Expanded by the Hittite Microwave acquisition (fiscal 2014).

Product categories are from the FY2025 Form 10-K's Item 1 (more than 75,000 SKUs) and acquisition history from the FY2021 10-K.

The 10-K says customers typically do not make long-term product purchase commitments, so orders can be reduced, cancelled, or delayed, and revenue depends on forecasting demand. About 56% of revenue goes through independent distributors, which also carry other companies' product lines.

• Spot / one-off transaction

  Sales through distributors

  About 56% of FY2025 revenue

  Typical term: Ongoing distributor relationships; one distributor was 24% of revenue

  The 10-K says distributors could reduce their sales of Analog Devices' products in favor of other suppliers.

• Spot / one-off transaction

  Direct sales to OEMs

  About 44% of FY2025 revenue

  Typical term: Orders without long-term purchase commitments

  Some products are application-specific designs developed with customers.

Source: Form 10-K (FY2025) — Item 1A and Note on revenue

ADI's 10-K says it competes with a number of semiconductor companies, emerging companies with specialized products, and non-U.S. companies, including entities tied to foreign governments' efforts to build domestic chip industries. No company is named.

Company names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.

Analog Devices has grown through a series of large analog chip acquisitions — Hittite Microwave (fiscal 2014), Linear Technology (2017), and Maxim Integrated (2021) — which the 10-K describes as part of its strategy to complement R&D.

Cash spent on acquisitions, FY2021–FY2025: −$2.4B

1. Aug 2021 (FY2021)

   Maxim Integrated Products

   About $28.0B in Analog Devices stock

   Older deal, core to today's business

   An independent manufacturer of analog and mixed-signal products and technologies.

   Stated purpose (company)

   "Strengthens our position as a high-performance analog semiconductor company."

   Since then: Revenue rose from $7.3B (FY2021) to $12.0B (FY2022), the first full year including Maxim. Amortization of acquired intangibles remains about $1.6B a year.

   Source: Form 10-K (FY2021) — Item 1 and acquisition note

2. Mar 2017 (FY2017)

   Linear Technology

   About $15.8B ($11.1B cash + $4.6B stock + $0.1B replacement awards)

   Older deal, core to today's business

   A designer, manufacturer, and marketer of high-performance analog integrated circuits.

   Stated purpose (company)

   "Added high-performance power management and additional precision signal processing to our portfolio, expanding and diversifying our offerings to deliver more complete solutions."

   Since then: Power management is one of the company's core product areas.

   Source: Form 10-K (FY2017) — acquisition of Linear · Form 10-K (FY2021) — Item 1

Deal dates are closing dates; ADI's fiscal year ends on the Saturday closest to October 31.

Inputs (FY2025): free cash flow $4.28B (operating CF − capex); enterprise value $121.79B = market cap $116.41B + debt $9.04B − cash and short-term investments $3.65B; r = WACC of 11.1% using this page’s default assumptions (β 1.41, risk-free 4.0%, market premium 5.5%).

A simplified model for seeing what the market price assumes, not a forecast or a target price. It treats free cash flow as growing at one constant rate forever; the result swings widely with small changes in r and g, and is undefined when g reaches r. Free cash flow here is operating cash flow minus capex, which is after interest — a full DCF of enterprise value would use cash flow before interest. Market cap and enterprise value use the fiscal year-end price, not today’s.

• ✓

  Operating CF ÷ net income: averages 1.91x

  Profit is backed by cash coming in.

• ✓

  Accrual ratio (latest): -5.3%

  A small share of profit rests on accounting estimates.

• ✓

  Core-earnings share (operating income ÷ pretax income): 108%

  Most profit comes from core operations.

• ✓

  Days sales outstanding: 73 → 48 days

  No major slowdown in collecting on sales.

1. 1. Recovering from a cyclical trough

   After a 23% revenue decline in FY2024, revenue grew 17% and gross margin rose from 57.1% to 61.5% in FY2025, with growth in all four end markets.

   What has to hold

   Industrial and automotive demand keeps recovering.

   The other side

   The 10-K stresses that semiconductor markets are cyclical, and customers don't commit to long-term purchases, so a recovery can reverse.

   Evidence: Form 10-K (FY2025) MD&A and Item 1A

2. 2. Growing dividend backed by cash flow

   Dividends per share rose from $2.69 (FY2021) to $3.89 (FY2025); free cash flow (operating cash flow minus capex) was $4.3B in FY2025 against $1.9B of dividends.

   What has to hold

   Cash flow stays near FY2025 levels through future downturns.

   The other side

   Dividends paid were about 85% of GAAP net income in FY2025 ($1.9B vs. $2.3B), though GAAP earnings are reduced by non-cash amortization.

   Evidence: SEC EDGAR XBRL

3. 3. Earnings understated by acquisition accounting

   About $1.6B a year of amortization of acquired intangibles reduces GAAP net income, which is why the P/E at FY2025 year-end (about 51x) looks high relative to cash flow.

   What has to hold

   The acquired Maxim and Linear businesses keep generating cash.

   The other side

   Amortization reflects real past purchase prices (about $28B for Maxim and $16B for Linear), paid largely in stock.

   Evidence: Form 10-K (FY2025) cash flow statement; FY2021 and FY2017 10-Ks

Dividend yield, payout ratio, P/E, and FCF yield above use the fiscal year-end share price, not today's price.

1. 1Geopolitical

   Tariffs, trade restrictions, and China

   Company disclosure (summarized from the 10-K)

   The 10-K lists recently announced and future tariffs and trade restrictions, and global political and economic uncertainty, as risks. China was 26% of FY2025 revenue (by customer location).

   Company’s stated mitigation

   Not stated in the 10-K.

   This site’s assessment

   Impact High / Likelihood Med

2. 2Demand & macro

   The semiconductor cycle

   Company disclosure (summarized from the 10-K)

   The 10-K says semiconductor markets are cyclical, increased production may lead to overcapacity and lower prices, and customers typically don't make long-term purchase commitments.

   Company’s stated mitigation

   Not stated in the 10-K.

   This site’s assessment

   Impact High / Likelihood Med

3. 3Supply chain

   Reliance on foundries and other third parties

   Company disclosure (summarized from the 10-K)

   More than half of wafers come from outside foundries such as TSMC, and the 10-K says it generally cannot control the availability of third-party wafers, assembly and test services, materials, and transportation.

   Company’s stated mitigation

   A hybrid model with internal fabs in the U.S. and Ireland.

   This site’s assessment

   Impact Med / Likelihood Med

4. 4Supply chain

   Distributor performance

   Company disclosure (summarized from the 10-K)

   About 56% of revenue goes through independent distributors that also sell competitors' products; the largest accounted for 24% of revenue.

   Company’s stated mitigation

   Not stated in the 10-K.

   This site’s assessment

   Impact Med / Likelihood Low

5. 5Competition & technology shift

   Competition and innovation

   Company disclosure (summarized from the 10-K)

   The 10-K lists the ability to compete in semiconductor markets and to keep innovating and entering new markets as risks.

   Company’s stated mitigation

   R&D of $1.77B in FY2025 and about 13,000 engineers.

   This site’s assessment

   Impact Med / Likelihood Med

6. 6Governance & quality

   Products diverted from authorized channels

   Company disclosure (summarized from the 10-K)

   The 10-K says the industry faces challenges with products diverted from authorized distribution channels, which could harm its reputation and business.

   Company’s stated mitigation

   Not stated in the 10-K.

   This site’s assessment

   Impact Low / Likelihood Med