Analog Devices
ADI commands 4x industry pricing through signal processing expertise across 75,000 niche products with decade-long lifecycles.
Analog Devices sells signal processing chips at 4x the industry average price while maintaining 68% gross margins—the highest among analog peers. This isn't price gouging; it's costly signaling through technical differentiation. When you're converting physical phenomena (temperature, pressure, sound, light) into electrical signals for industrial automation or medical devices, precision matters more than cost. ADI's 125,000+ customers and 75,000+ products demonstrate niche specialization at scale: 80% of revenue comes from products each contributing 0.1% or less individually.
The biological parallel is resource partitioning: avoiding direct competition by occupying micro-niches competitors can't profitably serve. While Texas Instruments optimizes for manufacturing scale, ADI optimizes for application-specific performance. Half of ADI's revenue comes from products launched over a decade ago—this is K-selection's ultimate expression, where initial R&D investment generates recurring returns across product lifecycles measured in decades. The company achieved $11 billion revenue in 2025 (up 17% from 2024's cyclical trough) while maintaining 40%+ operating margins through inventory corrections.
ADI's partnership with Flagship Pioneering to "digitize biology" reveals strategic foresight: when an established niche matures, expand into adjacent territories before competition intensifies. The company targets 87% B2B revenue mix (46% industrial, 30% automotive, 11% communications) with 25% in high-growth markets. But here's the vulnerability: premium pricing only holds if customers can't substitute cheaper alternatives. ADI's moat is technical expertise, not scale. If signal processing commoditizes through integration or software, those 4x price premiums compress rapidly. Specialization creates defensibility until it creates obsolescence.