Investment firm KeyBanc Capital Markets has indicated that analog chip companies, including Texas Instruments (TXN.US) and Analog Devices (ADI.US), are experiencing a "substantial improvement" in market demand, driven by factors extending well beyond artificial intelligence. Several elements are contributing to this trend: first, delivery lead times have lengthened in some markets due to tightening supply; second, customers in sectors such as PCs and smartphones are building inventory in advance to counter rising memory prices, leading to robust front-end demand. Additionally, Taiwan Semiconductor Manufacturing Company (TSM.US) is reducing support for older process technologies to reallocate resources toward increasing the supply of chip-on-wafer-on-substrate (CoWoS) packaging. Finally, competition for resources between the AI and non-AI analog chip markets is intensifying, particularly in power management, where each generation of Nvidia (NVDA.US) GPUs requires an average of 40% more power. KeyBanc analyst John Vinh stated in a client report, "This is driving broad-based price increases across the semiconductor industry, with multiple power analog suppliers—including onsemi, Infineon, MPS, Renesas, and AOSL—already announcing price hikes, especially in power management." As a result, companies across the analog chip sector stand to benefit, including Texas Instruments, Analog Devices, Microchip Technology (MCHP.US), NXP Semiconductors (NXPI.US), and onsemi (ON.US). Vinh further noted that the positive impact is evident in two key areas: first, channel booking trends are showing substantial improvement as lead times extend and supply tightens; second, supply constraints driven by stronger-than-expected AI demand are triggering industry-wide price increases, particularly in analog power chips.
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