Chipmaker Analog Devices' forecasts held back by inventory corrections

(Reuters) - Chipmaker Analog Devices projected first-quarter revenue and profit below market estimates on Tuesday, as it grapples with the ongoing supply glut in the semiconductor industry.

Shares of the firm, whose chips are used in the automotive and telecom industries, fell 3.7% in premarket trading.

Inflation-hit customers have refrained from placing new orders for chips, leading to excess supply at companies such as Analog Devices after a pandemic-driven buying spree fizzled out.

"We expect customer inventory digestion to persist into the first half of the year," said CEO Vincent Roche.

The company expects revenue for the three months ending January to be $2.50 billion, plus or minus $100 million, which was below analysts' average estimates of $2.68 billion according to LSEG data.

First-quarter adjusted earnings are expected to be $1.70 per share, plus or minus 10 cents, below analysts' average estimates of $1.90.

Rival Texas Instruments also gave a dour forecast last month, as demand from its industrial clients slowed down.

Cautious spending by automakers fearing a slowdown in their electric-vehicle businesses has also weighed on orders at Analog Devices. Its automotive sales, which comprised more than a quarter of the total, grew just 14% - its slowest pace in at least two years.

Overall, revenue fell 16% to $2.72 billion, but beat estimates. The company's industrial segment, which made up half of its revenue, saw a 20% drop as demand for products like its factory automation technology wavered.

Excluding items, Analog earned $2.01 per share, which was largely in line with expectations.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Tasim Zahid)