Logitech drops 5% as chip shortage hits holiday sales
Strong first-quarter results were overshadowed by a semiconductor supplier shutdown that will slash up to $200 million from Logitech's critical holiday quarter sales.
Logitech posted strong fiscal first-quarter results on Tuesday, but its shares fell 5% on Wednesday after an unexpected semiconductor supply disruption forced a severe revenue warning for the peak holiday season. A temporary shutdown at a key chip supplier will take a $20 million bite out of second-quarter sales and up to $200 million out of third-quarter revenue.
The warning overshadowed an otherwise robust quarter. Revenue rose 7% to $1.23 billion, while non-GAAP operating income jumped 44% to $290 million. Even excluding a one-time $61 million tariff refund, operating profit grew 14% year over year, easily surpassing Wall Street expectations.
Underlying demand for computer peripherals remains resilient despite broader consumer tech weakness. The Americas region accelerated to 11% growth, while the gaming segment grew 9% in constant currency terms. "Mice just continue to grow very, very strongly," CEO Hanneke Faber said, noting that video conferencing also performed well. Furthermore, businesses upgrading workstations for AI-powered tools are driving demand for Logitech's webcams, headsets, and keyboards.
The sudden supplier crisis directly threatens the most important period on Logitech's calendar. "It's an important semiconductor supplier of ours. However, it's a temporary issue … Their fab had a serious issue. It is temporarily closed," Faber explained. The timing is particularly damaging, as the third quarter encompasses the bulk of holiday shopping demand.
Rising memory chip prices have pressured the electronics sector, but Logitech has countered these costs through strict inventory management, pricing adjustments, and a premium product mix. While analysts are trimming near-term profit estimates, several are defending the stock. Citi analyst Asiya Merchant reiterated a Buy rating, citing "superior market positioning with competitive offerings, strong operational execution and ability to navigate demand volatility."
Faber expressed confidence that the company would recover quickly. "Our team really is an operations powerhouse that manages to get enough of everything to deliver on the demand. And you saw that in the quarter," she said. Investors must now decide whether the current disruption is a fleeting operational hurdle or a material risk to an AI-driven growth cycle.
