Since the start of the year, both Texas Instruments (TI) have experienced a steady recovery in revenue and profit, Analog Devices (ADI) saw a particularly sharp rebound starting in Q2. This growth, driven by a range of positive factors, has also led to new developments in their automotive and industrial markets.
Sustained Growth in Performance, High Inventory Levels
In H1 2025, global analog leaders TI and ADI reported revenues of $8.517 billion and $5.063 billion, respectively, marking year-on-year growth of 13.82% and 8.38%. Both results significantly outpaced industry expectations. TI noted that orders had returned to expected post-recovery levels, with Q3 revenue projected to range between $4.45 billion and $4.8 billion, and full-year revenue expected to exceed $20 billion.
In Q2 2025, TI and ADI reported revenues of $4.448 billion and $2.64 billion, respectively, with net profits of $1.295 billion and $570 million, showing solid increases in both revenue and profit compared to the previous quarter.
Judging from the growth trajectory, both companies began their recovery in Q2 2024. TI returned to growth in Q1 2025, and ADI completed its adjustment in Q2, signaling that the analog industry entered an upward cycle starting in Q2.
Despite being in a low point of the cycle, TI and ADI both maintained gross margins in the 55%-61% range, benefiting from high technical barriers and strong value-added offerings that strengthen their market leadership.
However, it’s worth noting that TI’s inventory remains relatively high, while ADI has effectively managed inventory digestion. Although TI emphasized that inventory levels have minimal impact on orders and revenue, the current situation brings some uncertainty regarding future growth.
Overall, both companies pointed to a clear recovery in industrial markets, with the Chinese automotive sector showing particularly rapid growth. However, in terms of specific growth, there are also some points worth noting.
Key Trends to Watch
1、Tariffs Drive Preemptive Orders, Intensifying Competition in China
According to earnings reports, tariff changes and policy shifts were among the main drivers behind the sharp rise in analog orders in Q2, with China’s growth being particularly strong. However, the competitive pressure in the Chinese market is also increasing.
TI mentioned that the significant increase in Q2 orders was mainly driven by preemptive purchasing due to tariff concerns, but by Q3, orders had returned to the expected recovery levels. ADI also noted that purchasing behavior had become more volatile due to tariffs.
Regionally, TI saw its revenue in China grow by over 32% year-on-year, indicating robust performance. However, it remains cautious about Q3 forecasts, with the company’s revenue from China accounting for about 20% of its total (Q1). Increased competition from domestic players is impacting TI’s market share, particularly with the rise of local alternatives.
In the Chinese analog chip market last year, TI held around 8.4% market share, while leading local companies such as Silergy, SGMC, southchip, and Novosense have been growing rapidly.
2、Automotive Market Still in Recovery Mode, Growth Uncertainty Looms
In the automotive sector, tariffs and weak overseas demand have significantly impacted orders, leading to considerable uncertainty about future growth.
TI’s earnings report noted that, excluding the Chinese automotive market, all other sectors were showing improvement.
For ADI, automotive revenue (accounting for 32% of total revenue) grew 24% year-on-year and 16% quarter-on-quarter in Q2, with the increase driven largely by pre-purchasing before tariff adjustments. ADI also pointed out strong growth in the Chinese automotive market but expects automotive SAR demand to weaken in the second half of the year.
Similarly, NXP, a leader in the automotive sector, reported in its Q2 earnings that its automotive business had ended five consecutive quarters of year-on-year declines, showing signs of stabilization. Due to the impact of U.S. automotive tariffs and weak electric vehicle demand in Europe,end users are facing greater price pressure, which is affecting their ordering decisions.
3、Industrial Market Showing Strong Recovery, Optimistic Outlook for Growth
The industrial market showed clear signs of improvement in Q2, and both TI and ADI are optimistic about growth moving forward.
TI’s latest earnings report highlighted a broad recovery in industrial demand across various industries and regions. Customer inventories are at low levels, and after seven consecutive quarters of decline starting in Q1 2025, the industrial market showed a strong rebound with high single-digit quarter-on-quarter growth.
For ADI, industrial revenue (which accounts for 44% of total revenue) grew 17% year-on-year and 8% quarter-on-quarter in Q2, with recovery across all sub-sectors and regions. The industrial automation sector, in particular, continued to show strong growth, and the order-to-shipment ratio exceeded 1. This growth momentum is expected to carry into Q3. Despite the uncertainties surrounding tariffs, both bookings and revenue growth remain positive.
Conclusion
The recovery in the global and Chinese analog chip markets is becoming increasingly evident, with inventories at low levels for most end customers. However, the spot market has seen a pullback, and prices are currently low due to inventory effects. Additionally, global conditions remain highly uncertain, with tariffs and policy changes having a significant impact on the supply chain, which warrants continued monitoring of their effects on industry demand.