MICROCHIP TECHNOLOGY (MCHP) Company Report

Microchip is leveraging the AI tailwind in data centers with its 3 nm PCIe Gen 6 switch, upcoming Gen 6 retimers, and ChipLink software platform, alongside timing and secure-boot products, aiming for significant growth over the next five years.
On the edge, the AI/ML group offers a model zoo for microcontrollers handling sensor tasks without accelerators, while FPGA accelerators serve vision systems; wired Ethernet (T1/T1S) connectivity is rapidly being adopted in robotics and Industry 4.0.
Automotive and industrial inventory correction is nearing completion, evidenced by 199 days of inventory and short lead times; broad-based booking strength supports expectations for the March quarter to outpace the typical flat-to-up 1–2% seasonal trend.
Data center & compute and aerospace & defense accounted for 19% and 18% of revenue last year; A&D growth is driven by hypersonics, satellites, and a next-generation octal RISC-V space computer under NASA contract, sampling in mid-2026.
With 37% in-house wafer fab capacity (400 M undepreciated equipment), underutilization and inventory reserve run-offs are poised to boost gross margin toward the 65% target; free cash flow now covers the dividend, and the focus is on balance-sheet deleveraging before buybacks.

Dec 11, 2025, 9:20 PM

Transcript

Microchip outlines AI data center and edge strategies and inventory correction outlook

MCHP

Guidance Update

Product Launch

Microchip is ramping its 3 nm PCIe Gen 6 switch and will introduce matching Gen 6 retimers next quarter, supported by its ChipLink software platform to accelerate Gen 6/Gen 7 deployments in AI data centers.
On the edge, the newly formed AI/ML group provides a “Model Zoo” for microcontrollers and FPGAs—training and porting models for vibration, sound and battery management—with accelerators reserved for vision and optical inspection systems.
Management sees broad-based booking strength across end markets and expects the March quarter to perform meaningfully above the typical 1–2 % seasonal growth rate, driven by backlog build.
Inventory correction is underway: distribution inventories are lean, customer inventories are normalizing, and reducing inventory reserves should yield a $50 M quarterly benefit to gross margin over the next 3–4 quarters.

Dec 11, 2025, 9:20 PM

Transcript

Microchip Technology outlines AI, data center products and market outlook at Barclays conference

MCHP

Product Launch

Guidance Update

Launched a 3nm PCIe Gen6 switch with matching Gen6 retimers next quarter and expanded ChipLink software platform for AI data center applications.
AI/ML group developed a Model Zoo for edge microcontrollers, enabling customers to deploy vibration, sound, and battery-management models without accelerators; FPGA products use accelerators for vision systems.
Inventory correction nearing completion with broad-based booking strength in automotive and industrial end markets; March quarter expected to meaningfully exceed typical flat-to-2% seasonal growth due to strong backlog build.
Financial initiatives include a $50 million quarterly gross margin benefit from declining inventory reserves over the next 3–4 quarters and free cash flow now covering the dividend; no share buybacks until leverage improves.
Secular growth driven by data center & compute (19% of revenue) and aerospace & defense (18%), alongside communications and a new high-performance octal RISC-V space computer for NASA sampling mid-2026.

Dec 11, 2025, 9:20 PM

Transcript

Microchip raises guidance and highlights data center inflection at UBS 2025 AI conference

MCHP

Guidance Update

Product Launch

Revenue Acceleration/Inflection

Microchip lifted its December-quarter guidance to the high end of the range after phenomenal bookings in November and widespread customer pull-ins, offsetting typical seasonal weakness.
November represented the strongest bookings month in over three years, underpinned by a distributor inventory correction in its “ninth inning” and OEM customers restocking to match consumption.
Management outlined a multi-pillar growth strategy: core microcontroller/analog recovery plus accelerated growth in network/connectivity, high-performance compute, and edge AI—led by data center solutions.
The company launched the world’s first 3 nm PCIe Gen 6 switch, emphasizing industry-leading power efficiency and built-in multicast capabilities for AI workloads.
Microchip aims for a 65% long-term product gross margin, guiding to the high-50s in Q1 FY 2026 as higher-margin data center and licensing revenues ramp.

Dec 3, 2025, 7:55 PM

Transcript

Microchip raises Q4 guidance at UBS 2025 Technology Conference

MCHP

Guidance Update

Product Launch

Revenue Acceleration/Inflection

Microchip raised its December quarter guidance to the high-end of its prior range after record bookings in November, driven by strong customer pull-ins and low backlog.
Management reported broad-based recovery across all end markets—data center, aerospace & defense, industrial, automotive, communications, and consumer.
The data center solutions unit launched the world’s first 3nm PCIe Gen 6 switch featuring market-leading power efficiency and multicast capability; the PCIe switch and retimer market is projected to reach $12 billion by 2030.
Q3 product gross margin was 67.4%, offset by 10.8 pp of inventory write-offs and underutilization charges, yielding a reported margin of 56.7%; Microchip expects >58% in the March quarter and targets 65% long-term.

Dec 3, 2025, 7:55 PM

Transcript

Microchip raises Q4 guidance and outlines data center growth strategy

MCHP

Guidance Update

Product Launch

Revenue Acceleration/Inflection

Microchip guided its December quarter revenue to the high end of its range, expecting only a 1% sequential decline versus the usual 3-5% seasonal drop, driven by strong November bookings and customer pull-ins.
Management sees broad-based recovery across all end markets—including data center, aerospace & defense, industrial, automotive, communications, and consumer—with March and June quarters also shaping up strongly.
Inventory destocking is nearing completion, with distributor cuts in the “ninth inning” and OEM inventory in the “eighth inning,” while renewed design activity in 2024-25 is driving demand.
The company introduced the world’s first 3nm PCIe Gen6 switch featuring high power efficiency and multicast support, targeting a PCIe switch market forecasted to reach $12 billion by 2030.
Q1 gross margin is expected to exceed 58%, recovering from a 10.8% headwind from underutilization and inventory charges, on the way to a long-term target of 65%.

Dec 3, 2025, 7:55 PM

Transcript

Microchip discusses demand trends and margin outlook at Wells Fargo TMT Summit

MCHP

Guidance Update

Bookings in July were the highest in three years, with September and October surpassing July and November remaining strong; Q1 is guided to be down 1% at midpoint but above seasonal, and the March quarter is expected to also exceed seasonal.
Inventory days stand at 199 (vs. 130–150 target) after closing a wafer fab, leading to $50 million of underutilization charges in the September quarter; capacity ramp begins this quarter with further underutilization charge reductions through 2026.
Gross margin is forecast to improve to 58.2% in Q1 (from 56.7% in Q4), driven by normalized inventory reserve charges and lower underutilization costs, with a goal of reaching 60% by the March quarter.
Free cash flow is expected to cover the dividend this quarter, enabling repayment of the $300–$350 million borrowed for prior dividend payments; dividend increases and share buybacks are deferred until leverage improves from >4×.

Nov 18, 2025, 8:45 PM

Transcript

Microchip provides demand, margin, inventory, and cash‐flow update at Wells Fargo TMT Summit

MCHP

Guidance Update

New Projects/Investments

Revenue Acceleration/Inflection

Microchip reported strong bookings over the last four months, with a September-quarter book-to-bill of 1.06, and guided its December quarter revenue to down 1% at midpoint, while citing a growing backlog that supports confidence for an above-seasonal March quarter.
The company expects to improve gross margin from 56.7% in the September quarter to 58.2% in the December quarter and is targeting 60% gross margin as early as the March quarter, driven by declining inventory reserve and underutilization charges.
Inventory stood at 199 days at quarter end, with underutilization charges of $50 million and inventory reserve charges of $72 million in the September quarter; both are expected to decline steadily into 2026 as factory utilization ramps and reserves normalize.
Free cash flow is forecast to cover the dividend in the current quarter, enabling excess cash to be directed to debt reduction; the dividend will remain unchanged until leverage targets are met.
The company is investing in data center and PCIe Gen 6 switch solutions—sampling its first 3 nm Gen 6 product—and its aerospace & defense segment continues to deliver steady growth.

Nov 18, 2025, 8:45 PM

Transcript

Microchip outlines demand and margin outlook at Wells Fargo TMT Summit

MCHP

Guidance Update

In the September quarter, bookings rose 10% QoQ with a 1.06 book-to-bill, and backlog is building into the March quarter supporting an above-seasonal outlook.
For the December quarter, Microchip guides revenue down 1% sequentially at the midpoint but still above seasonal expectations due to bookings aging further out.
November bookings have remained strong with minimal push-outs (more pull-ins), and backlog momentum underpins confidence for early-’26 demand.
Gross margin is guided to 58.2% in the December quarter (up from 56.7%), driven by lower inventory reserve and underutilization charges, with a 60% margin target as early as the March quarter.

Nov 18, 2025, 8:45 PM

Transcript

Microchip reports Q2 FY2026 results

MCHP

Earnings

Guidance Update

Product Launch

6% sequential sales growth to $1,140.4 M, driven by 9.7% MCU and 1.7% analog growth; non-GAAP gross margin 56.7% after $122.8 M in inventory write-offs and underutilization charges (10.8 ppt impact).
Data center segment saw a rebound in Gen 4/5 product sales and introduced the industry’s first 3 nm PCIe Gen 6 switch now sampling with hyperscalers.
Inventory reduced by $73.8 M QoQ (199 days on hand) and $261 M YTD, though underutilization and write-off charges remain elevated.
Agreed to sell Fab 2 in Tempe as part of wafer fab restructuring, targeting $90 M in annual cash savings and removing underutilized capacity.
Q3 guidance calls for a seasonally weakest quarter, down low-mid single digits; bookings were 10% higher QoQ with a book-to-bill of 1.06 as distributors and customers replenish inventories.

Nov 6, 2025, 10:00 PM

Transcript

Earnings Transcripts

Quarterly earnings call transcripts for MICROCHIP TECHNOLOGY.

Q2 2026

Nov 6, 2025

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Q1 2026

Aug 7, 2025

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Q4 2025

May 8, 2025

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MICROCHIP TECHNOLOGY (MCHP)

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