Author: Jiu Lin
Recently, the four major analog IC giants released their financial reports.
onsemi reported revenue of $1.604 billion, up 9% year-over-year (YoY) and 6% quarter-over-quarter (QoQ). Texas Instruments (TI) posted revenue of $5.463 billion, up 23% YoY and 13% QoQ; among this, its analog business, accounting for nearly 80% of the company's revenue, grew by 26%. STMicroelectronics reported revenue of $3.487 billion, up 26% YoY and 12.7% QoQ. NXP Semiconductors posted revenue of $3.496 billion, up 19% YoY and 10% QoQ. The Q3 guidance provided by all four companies still points to QoQ growth.
Beyond financial performance, several operational metrics shifted at the same time. STMicroelectronics' book-to-bill ratio approached 2, and the company has seen tightening supply for some products; TI's backlog continued to increase in Q2, with lead times extending by several weeks from below 13 weeks; NXP's channel inventory fell back to 11 weeks.
By mid-2026, the analog IC market has finally begun to enter an upward cycle.
01. Industry Leads, Automotive Follows
The industrial market is the first to recover. At the beginning of the earnings call, TI President and CEO Haviv Ilan disclosed that Q2 industrial revenue grew by approximately 30% YoY and 10% QoQ, while data center revenue doubled YoY and grew by about 20% QoQ; the automotive market, which had previously shown little sign of improvement, also began to rebound, with a YoY increase of over ten percentage points and a QoQ growth approaching double digits.
Source: NXP
NXP's revenue structure shows similar changes. According to the financial report disclosed by NXP, the industrial and IoT (Internet of Things) business grew by 38% YoY and 20% QoQ, the automotive business grew by 12% YoY and 9% QoQ, and the communications infrastructure and other business grew by 41% YoY. The mobile business declined by 10% QoQ, and consumer electronics remains a relatively weak segment.
Source: STMicroelectronics
STMicroelectronics' industrial revenue grew by 34% YoY, automotive by 16%, and communications equipment and computer peripherals by 50%. Revenue from the analog, MEMS, and sensors business grew by 26%, driven by the incremental contribution from the acquisition of NXP's MEMS business, as well as the recovery in industrial and automotive demand.
Source: onsemi
onsemi's recovery pace has been relatively moderate. Automotive revenue was $781 million, down 2% QoQ; industrial revenue was $423 million, up 1% QoQ; revenue from other markets, including AI (Artificial Intelligence) data centers, was $400 million, up 34% QoQ. By business segment, power solutions revenue grew by 19% YoY, the analog and mixed-signal business declined by 2% YoY, and the intelligent sensing business grew by 7%. Different product lines within the same company are already showing a clear divergence in performance.
Judging from the financial reports of the four giants, revenue growth is no longer supported by a single market. Industry leads, data centers follow closely, and automotive clearly caught up in Q2. On the earnings call, TI CEO Haviv Ilan judged: a broad-based upward cycle may have just begun.
However, "broad-based" does not mean all products are improving simultaneously. According to the financial data, STMicroelectronics' power and discrete revenue grew by only 3.7% YoY, and its operating margin remained negative at 21.4%; NXP's mobile business also failed to rebound with the broader market. Demand has expanded from isolated bright spots to multiple markets, yet the performance divergence among products remains significant.
The Real Turning Point Lies in Inventory
This divergence must be understood from the perspective of inventory positioning.
Demand for analog ICs is fragmented, and product lifecycles are long. A leading manufacturer has tens of thousands of part numbers, serving a massive customer base across automotive, industrial equipment, home appliances, and communications. Many products can be sold continuously for over a decade or even longer. Compared to digital chips, which have concentrated customers and faster iteration speeds, analog IC inventory is hidden in a longer and more complex supply chain.
Chip manufacturers hold finished goods, distributors keep spot inventory, automotive Tier 1s and equipment manufacturers stock components, and end customers may still be holding onto equipment and finished products. During an upcycle, duplicate ordering amplifies along the chain layer by layer; when demand weakens, inventory can only be digested level by level. A drop in OEM inventory does not necessarily mean the channel is cleared; a decline in channel inventory does not indicate that equipment manufacturers and end customers have resumed procurement.
Haviv Ilan mentioned on the earnings call that in the previous phase, customers accumulated not only chips but also equipment and manufactured goods. End markets need to digest this inventory first before new systems designed over the past four to five years translate into new semiconductor orders. This also explains why the adjustment in industrial analog ICs has lasted so long: inventory digestion is not confined to chip warehouses but has been transmitted all the way from OEMs to channels, Tier 1s, and end equipment manufacturers.
Looking at Q2 this year, inventory at different levels has begun to return to normal ranges simultaneously. STMicroelectronics' days of inventory decreased from 166 days in the same period last year to 126 days, and distributor inventory has already fallen below the company's set normal target. NXP's channel inventory dropped to 11 weeks, returning to its long-term target. On the earnings call, TI CFO Rafael Lizardi stated that TI's inventory value decreased by $90 million QoQ, and days of inventory dropped by 13 days. Haviv Ilan's judgment on the downstream was more direct: inventory digestion for industrial customers has basically ended, and automotive customers' inventory has even fallen to unsustainably low levels.
onsemi provides another sample. According to the company's financial report, Q2 inventory was $2.0475 billion, showing almost no change QoQ; Executive Vice President and CFO Thad Trent stated on the earnings call that days of inventory decreased by 9 days QoQ to 192 days, and the company is still digesting the strategic inventory previously prepared for long-term customer demand. The flat inventory value and improved turnover rate indicate that the recovery in shipments is absorbing existing inventory, rather than simply relying on production cuts to lower inventory.
The inventory cycle of analog ICs is crossing three nodes: inventory digestion → inventory normalization → re-transmission of new orders.
02. Restocking Kicks Off, End-Market Demand Takes the Baton
After inventory falls to low levels, customers need to resume procurement, but not all new orders come from end-market demand. In Q2, the automotive, industrial, and data center markets were driven simultaneously by restocking and genuine demand.
The restocking characteristics in the automotive market are the most obvious. TI noted that automotive demand strengthened month by month within Q2, with the increment mainly coming from NEVs (New Energy Vehicles) and hybrid vehicles in the Chinese market. Meanwhile, automotive customers had previously kept their inventory very low. With a slight increase in terminal sales, the supply chain needs to replenish safety stock simultaneously. Therefore, automotive orders comprise two parts: growth in sales volume and semiconductor content per vehicle, as well as previously delayed procurement.
The industrial market is closer to the recovery of end-market demand. All of TI's industrial sub-sectors and regions achieved YoY and QoQ growth, with contributions from energy infrastructure, aerospace, robotics, and industrial automation. The company attributed the growth to the mass production of new equipment introduced over the past few years and the increased number of chips required for new-generation equipment, rather than price hikes. Haviv Ilan later added that new systems designed over the past four to five years are now releasing demand.
The order structure is also changing. On the earnings call, STMicroelectronics CEO Jean-Marc Chery stated that the book-to-bill ratio in all end markets in Q2 was above 1, approaching 2 overall; communications equipment and computer peripherals were significantly above 2, mainly driven by optical connectivity and silicon photonics businesses. TI's backlog saw simultaneous increases in both immediate delivery and forward delivery demands.
Immediate orders typically correspond to low inventory and urgent restocking, while forward orders reflect customers' grasp of future production plans. The simultaneous increase in both types of orders indicates that this rebound has gone beyond the scope of mere channel restocking. Restocking pushed orders out of the trough, but end-market demand will determine the length of the upward cycle.
03. Price Hike Notices Do Not Equal Widespread Shortages
After orders rebounded, the channel became most sensitive to prices. Since the beginning of this year, news of price adjustments for some products by manufacturers such as TI, STMicroelectronics, and Infineon has frequently emerged, and the quoted price increases for some products have been quite striking. However, the transaction prices in the financial reports have been much flatter.
From TI's perspective, Haviv Ilan believes that TI's overall prices in the first half of 2026 remained basically flat. The long-term prices of analog ICs usually decline slightly every year, and the halt in the decline itself already indicates an improvement in the supply-demand relationship. TI is also pushing forward with a new round of price adjustments, but due to the large number of customers and varying contract cycles, price hikes need to be negotiated on a customer-by-customer basis: some take effect in Q3, some in Q4, and others will be left for next year's price negotiations. TI expects that Q3 revenue growth will still mainly come from shipment volumes, with the price contribution being "almost negligible." Price hike notices indicate that manufacturers are beginning to regain some pricing power, but they do not mean that quoted prices have been widely translated into revenue.
The signals conveyed by lead times are similar. TI's lead times in Q2 remained below 13 weeks, but have recently been extended by several weeks. The company still has cleanroom space that can be further equipped and ramped up, and maintains inventory for rapid supply. Although STMicroelectronics has seen tightening in some categories, it still incurred $37 million in idle capacity costs in Q2, and its Q3 gross margin guidance also includes an impact of about 70 basis points from idle capacity.
Domestic chip design companies feel the tightness more acutely. When asked about 8-inch foundry capacity, 3PEAK stated that as downstream demand is released, upstream foundry capacity is becoming generally tight, and the company is fighting for more capacity from core suppliers. Joulwatt believes that the tightness in wafer and packaging may be related to AI demand crowding out capacity and the transfer of overseas orders. Awinic stated that the rise in foundry prices for mature nodes has already put pressure on gross margins.
The difference stems from business models. IDM manufacturers like TI and STMicroelectronics have their own wafer fabrication capabilities; unused cleanrooms and idle capacity constitute a supply buffer. Most domestic analog IC companies rely on external foundries and are more likely to feel the structural tightness of 8-inch production lines first. Tightness can occur first at the foundry level and has not yet been transmitted into shortages of all end products.
The WSTS Spring 2026 forecast further illustrates the performance divergence among different segments. WSTS predicts that the global semiconductor market will grow by 90% in 2026, reaching $1.51 trillion. This is mainly driven by an approximately 250% increase in memory chips; analog ICs are expected to grow by about 10%, discrete components by 8%, and sensors and optoelectronic devices by about 3%. Analog ICs have entered an upward range, but they are not the hottest segment in this round of the semiconductor market.
Currently, tight products are concentrated in automotive analog, PMICs (Power Management ICs), AI server power chains, optical module analog front-ends, and some sensors. General-purpose components, consumer electronics, and some power and discrete components are still engaged in price competition.
04. AI Brings Analog ICs into the Main Narrative
Market attention on AI hardware has long been focused on GPUs, HBM, advanced process nodes, and high-speed interconnects. As the power and density of computing clusters rise rapidly, power conversion, thermal management, and signal transmission are beginning to become system constraints, and analog ICs have moved from peripheral components to the core bill of materials.
Cloud AI has brought the first incremental path: data center power, optical modules, energy infrastructure, as well as cooling and environmental monitoring. An AI data center needs to step down the AC power from the grid into various voltages required by GPUs, CPUs, memory, and networking chips, while continuously monitoring current, temperature, energy consumption, and faults. From AC-DC conversion, intermediate bus, board-level power to point-of-load (POL) supply, every layer utilizes PMICs, power devices, current sensing, isolation, hot-swap, temperature sensing, and control chips. The higher the computing power per rack, the more complex the power system, and the BOM value of analog ICs per machine increases accordingly.
Optical modules require transimpedance amplifiers, drivers, clocks, data conversion, and PMICs. Domestic manufacturers have already generated revenue along this chain. Novosense stated that its AI server power business covers multiple leading customers, and its related digital power revenue in Q1 grew rapidly both YoY and QoQ. The company's products have entered primary and secondary power supplies, covering digital isolation, drivers, interfaces, sampling, and current sensors. Among them, high-voltage GaN driver chips have been shipped in mass production, and medium- and low-voltage GaN co-packaged products have completed sampling and testing.
Bright Power Semiconductor's digital multi-phase controllers, DrMOS, POL, and electronic fuses (eFuse) have also entered the stage of mass production and scaled sales. In 2025, the company's high-performance computing power chip revenue reached 96 million RMB, a YoY increase of 122.26%; new-generation graphics card customers have begun large-scale shipments. 3PEAK has achieved scaled delivery of multiple optical module chips, and the analog front-end (AFE) required for high-speed optical modules has achieved stable supply; SG Micro stated that its optical module-related revenue is growing rapidly.
The other path comes from Physical AI, which refers to AI entering automotive, robotics, and industrial equipment. Robots need to perceive the environment, control motors, manage batteries, and ensure operational safety; automobiles require radar, sensors, battery management, body control, and powertrains; industrial equipment relies on real-time control, predictive maintenance, and edge computing. Processors handle the computation, while sensors, analog front-ends, isolators, motor drivers, and PMICs are responsible for connecting the computation to the real world.
On these two paths, international leaders have provided their expectations: STMicroelectronics raised its 2026 data center revenue target to over $1 billion and expects it to exceed $2 billion in 2027; TI's Q2 data center revenue doubled YoY; NXP has listed data centers and Physical AI as new growth engines alongside automotive and industrial.
onsemi President and CEO Hassane El-Khoury stated in the financial report that AI data centers have become the company's fastest-growing business, with 2026 revenue expected to more than double YoY. The company also disclosed that it has expanded its power supply business in the NVIDIA MGX ecosystem and secured design wins for EliteSiC, silicon MOSFETs, and controllers in the AI data center platform of Great Wall, a Chinese cloud infrastructure power supplier.
The scope of benefits brought by AI has clear boundaries. It increases the value of analog ICs in scenarios requiring high power density, high reliability, and high-speed signals, making it difficult for general consumer products to benefit to the same extent. Manufacturers involved in this have gained a new growth curve that does not rely on the traditional consumer electronics cycle, and the divergence in products and profits will deepen accordingly.
In recent years, domestic analog IC companies have generally expanded their product lines, increased R&D investment, and extended into markets such as automotive, industrial, communications, and high-performance power.
SG Micro's product platform already covers multiple high-growth directions. At the earnings briefing at the end of July, the company stated that orders in the second half are higher than in the first half, the supply of most products is normal, and lead times for some products have been extended due to rapid demand growth. Its broad product and customer structure enables it to capture the recovery in industrial, computing, and automotive markets simultaneously.
Novosense measures product expansion by the semiconductor content per vehicle. Currently, the content per vehicle covered by its mass-produced automotive chips is about 1,700 RMB, approaching 2,000 RMB when including products under sampling and validation; the company's long-term target is 3,000 to 4,000 RMB. Its products already cover the three-electric system, body control and lighting, intelligent driving and cockpit, and chassis and safety.
3PEAK's modular analog front-end has currently moved from R&D to stable delivery; its automotive audio bus chips are being supplied stably to some automakers, the power battery BMS AFE has completed customer technical validation, and customized LiDAR products are still in the R&D and delivery stages.
05. After Inventory Hits Bottom
Domestic analog IC companies still face a time lag between costs and selling prices. Novosense has issued price hike notices and is negotiating with customers; Joulwatt stated that it will only adjust prices when cost pass-through is truly necessary; Awinic adjusted the pricing of some products in Q1 to maintain market share while bearing the price increase of mature-node wafers, putting pressure on its overall gross margin. The improvement path provided by Awinic is to increase the proportion of its industrial and automotive businesses, which have relatively higher gross margins. Market recovery first translates into revenue; whether it translates into profit depends on the speed of price hikes, product structure, and cost control.
This round of analog IC adjustments has sequentially squeezed out inventory from OEMs, channels, Tier 1s, and end equipment manufacturers. In Q2, industrial, automotive, and data center markets recovered simultaneously, inventory levels returned to normal ranges, and orders began transmitting back to OEMs. Some automotive analog, PMIC, and optical communication products have already shown signals of extended lead times and price hikes, while general-purpose products and some power devices still face supply pressure.
At present, the bottom of the analog inventory cycle has become apparent.