Distributors Who Stock the AlternativesNarrow moat

Analog Devices (ADI) — moat facet

Distributors sell 56% of ADI's parts and also stock competing ones, including parts for which ADI is only the second source.

ADI's biggest sales channel doubles as a shop window for its competitors. Distributors took 56% of fiscal 2025 revenue1 and 58% in the third quarter of fiscal 20262. The 10-K explains what they are: "These distributors typically maintain an inventory of our products. Some of them also sell products that compete with our products, including those for which we are an alternate source."3

Analog Devices revenue by channel, Q3 FY2026 ($M)Distributors 2,327 — 58%Direct customers 1,589 — 39%Other 106 — 3%Analog Devices Form 10-Q Q3 FY2026, revenue by sales channel
More than half of sales go through a channel that also sells rivals.

That last clause matters. For some parts, ADI is not the designer's first choice but the second source, and the distributor holds both. A distributor earns its own margin, not ADI's, and will offer whichever part the customer can get fastest or cheapest. In a shortage that helps whoever has stock; in a glut it helps whoever cuts price.

ADI manages the relationship with incentives. It allows "certain distributors to receive price adjustment credits and to return qualifying products for credit"4. It also watches for leakage: its forward-looking statements warn that "products may be diverted from our authorized distribution channels"5. And it keeps the option to go direct, moving customers "to a direct support or fulfillment model as we deem appropriate"6.

The balance between channels has swung. The distributor share peaked at 63% in fiscal 20217, fell to 56% in fiscal 20258 as more business went direct, and rose again to 58% in the latest quarter9. Direct sales were $4,719.0 million in fiscal 2025, 43%10.

This relationship is neither rival nor customer but both. The number that would show it turning against ADI is the gross margin on distributor sales, which ADI does not disclose; the visible proxy is the channel share. If distributors take more than 60% of revenue while ADI's adjusted gross margin falls, the channel will be selling on price at ADI's expense.

Moat trajectory: Holding steady

Distributors 56% of FY2025 revenue, 58% in Q3 FY2026.

The number that tests this moat
Reported
Distributor share of revenue, latest quarter
58% (Q3 FY2026: $2,327.1M of $4,021.9M), from 55% a year earlier

How much ADI depends on a channel that also sells rivals; above 60% with a falling margin would say the channel is winning.

Source: Analog Devices Form 10-Q, Q3 FY2026 ↗
References
  1. ReportedDistributors took 56% of fiscal 2025 revenue and 58% in the third quarter of fiscal 2026.
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - revenue by end market, sales channel and geography, and significant distributors. — FY2025 · publ. 25 November 2025 · source ↗
  2. ReportedDistributors took 56% of fiscal 2025 revenue and 58% in the third quarter of fiscal 2026.
    Analog Devices Form 10-Q for the quarter ended 1 August 2026 - end-market and channel revenue, the Empower acquisition, the Penang sale, the buyback authorisation and the chief operating decision maker. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  3. ReportedSome of them also sell products that compete with our products, including those for which we are an alternate source."
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - Item 1A risk factors: foundries, Taiwan, distributors, trade, state-backed competitors and variable consideration. — FY2025 · publ. 25 November 2025 · source ↗
  4. ReportedIt allows "certain distributors to receive price adjustment credits and to return qualifying products for credit".
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - Item 1A risk factors: foundries, Taiwan, distributors, trade, state-backed competitors and variable consideration. — FY2025 · publ. 25 November 2025 · source ↗
  5. ReportedIt also watches for leakage: its forward-looking statements warn that "products may be diverted from our authorized distribution channels".
    Analog Devices third-quarter fiscal 2026 results release, Form 8-K exhibit 99.1 - revenue by end market, margins, EPS, cash flow, balance sheet and fourth-quarter guidance - highlights, income statement, adjusted measures and fourth-quarter guidance. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  6. ReportedAnd it keeps the option to go direct, moving customers "to a direct support or fulfillment model as we deem appropriate".
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - Item 1 business: products, customers, engineers, competition and strategy. — FY2025 · publ. 25 November 2025 · source ↗
  7. ReportedThe distributor share peaked at 63% in fiscal 2021, fell to 56% in fiscal 2025 as more business went direct, and rose again to 58% in the latest quarter.
    Analog Devices Form 10-K for fiscal 2022 (year ended 29 October 2022) - end-market, channel and geographic revenue for 2020-2022 and the acquisition history. — FY2022 · publ. November 2022 · source ↗
  8. ReportedThe distributor share peaked at 63% in fiscal 2021, fell to 56% in fiscal 2025 as more business went direct, and rose again to 58% in the latest quarter.
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - revenue by end market, sales channel and geography, and significant distributors. — FY2025 · publ. 25 November 2025 · source ↗
  9. ReportedThe distributor share peaked at 63% in fiscal 2021, fell to 56% in fiscal 2025 as more business went direct, and rose again to 58% in the latest quarter.
    Analog Devices Form 10-Q for the quarter ended 1 August 2026 - end-market and channel revenue, the Empower acquisition, the Penang sale, the buyback authorisation and the chief operating decision maker. — Q3 FY2026 · publ. 19 August 2026 · source ↗
  10. ReportedDirect sales were $4,719.0 million in fiscal 2025, 43%.
    Analog Devices Form 10-K for fiscal 2025 (year ended 1 November 2025) - Item 1 business: products, customers, engineers, competition and strategy. — FY2025 · publ. 25 November 2025 · source ↗
Sources
Generated September 29, 2026