Vishay's Q4 2024: Unpacking Contradictions in Inventory, AI Revenue, and Automotive Demand

These are the key contradictions discussed in Vishay Intertechnology's latest 2024 Q4 earnings call, specifically including: Inventory Levels at Distribution, AI Revenue Expectations, AI Opportunity Expectations, and Automotive Demand:



Revenue and Market Dynamics:
- Vishay's revenue for Q4 was $714.7 million, although it decreased slightly from the previous quarter. For the full year, revenue was $2.9 billion, which fell below the previous year.
- The decline was attributed to prolonged inventory digestion by customers and weakened macroeconomic conditions in Europe.

Book-to-Bill and Order Intake:
- Vishay's book-to-bill ratio improved to 1.01 in Q4, compared to 0.88 in Q3, with a positive book-to-bill in semiconductors and passives.
- The improvement was due to increased orders for smart grid infrastructure, AI server power, and military defense projects, indicating a normalization of inventory levels.

Capacity Expansion and Product Portfolio:
- Vishay continued its capacity expansion, increasing annualized capacity by 23% since 2023, with a focus on semiconductors and passives.
- This expansion was driven by the need to support the megatrends of e-mobility and sustainability, and to ensure reliable supply for customers in the event of a market upturn.

Financial Performance and Guidance:
- Vishay's gross margin decreased to 19.9% in Q4, with a negative impact from Newport and higher depreciation expenses.
- For Q1 2025, Vishay expects revenue to be $710 million, with a gross margin guidance of 19.0%.
- The decreased margins were attributed to lower average selling prices, increased depreciation, and the ongoing challenges related to the Newport acquisition.