(Reuters) -Analog Devices forecast fourth-quarter revenue below Wall Street estimates on Wednesday, but said it was working to manage the supply glut to return to growth more quickly in the coming quarters.
Its shares reversed course and were up about 1%, having fallen more than 6% in premarket trading as the chipmaker also missed third-quarter revenue and profit estimates.
Shares of peers Texas Instruments (NASDAQ:TXN), ON Semiconductor and NXP Semiconductors (NASDAQ:NXPI) were up between 0.7% and 1.6%.
The semiconductor industry has been facing excess inventory issues, fueled by weak consumer demand amid challenging macroeconomic conditions.
Analog Devices (NASDAQ:ADI) said it shipped below end-market demand in the third quarter and expects to do the same in the fourth.
"This will help normalize our customers' inventory and position us to return to growth more quickly in the coming quarters," CEO Vincent Roche said.
The company said the consumer segment, which makes up 10% of its total revenue, is expected to bounce back after the lows in the second quarter.
"Management achieved the goal of trying to bring down lead times and work down unsupported backlog", Wells Fargo (NYSE:WFC) analysts wrote in a note.
U.S.-based Analog Devices projected fourth-quarter revenue of $2.70 billion, plus or minus $100 million, compared with analysts' average estimate of $3.01 billion, according to Refinitiv data.
Rival Texas Instruments also forecast third-quarter revenue below market estimates.
Analog Devices also forecast fourth-quarter adjusted earnings of $2 per share, plus or minus 10 cents, below analysts' estimate of $2.39.
Third-quarter revenue fell about 1% to $3.08 billion compared with a year earlier.
Excluding items, Analog earned $2.49 per share in the three months to July 29, compared with expectations of $2.52.