Total Revenue

-42% " "

Driven by a significant drop in demand across industrial and automotive end markets, coupled with an ongoing inventory correction that began in late 2024. The previous year’s higher revenue base amplified the year-over-year decline.

Semiconductor Products

-43% " "

Impacted primarily by weak macroeconomic conditions and reduced orders from customers who were destocking their inventories. The segment also faced lower volumes in industrial and automotive segments, which had previously been strong contributors to revenue growth.

Mixed-signal Microcontrollers

-46% " "

Experienced a pronounced drop due to customer pushouts, shorter lead times reducing ordering urgency, and corrections of excess inventory built up in the prior year. Demand in industrial and automotive applications, key markets for microcontrollers, softened significantly.

Analog

-37% " "

Decline primarily attributed to broad-based weakness in key end markets, especially in Europe, and the resulting lower shipment volumes. Despite stable pricing, lower order bookings and elevated inventory levels at customers drove the year-over-year reduction.

Other

-35% " "

Reflects reduced orders for miscellaneous products not categorized under the main product lines, exacerbated by higher inventory on customers’ balance sheets. This decline follows a comparatively stronger prior-year quarter, making the negative swing more pronounced.

Technology Licensing

+28% " "

Benefited from the resolution of a legal matter and improved licensing agreements. The legal settlement released additional revenue that lifted licensing income above historical levels and offset some of the broader market headwinds.

Americas Revenue

-42% " "

Weakened due to persistent inflation, elevated interest rates, and tighter corporate spending. Many customers in North America also opted to reduce inventories following the high-demand cycle of 2021–2022, lowering the region’s overall bookings.

Europe Revenue

-56% " "

Significantly impacted by deteriorating industrial and automotive markets, which historically contributed a major share of European revenue. The region entered an economic slowdown 1–2 quarters behind the Americas, intensifying the year-over-year drop from a stronger base in the prior period.

Asia Revenue

-35% " "

Although Asia did not weaken as severely as Europe, it still suffered from broad economic softening and customers’ elevated inventory levels. The prior year’s base had been buoyed by stronger demand in Greater China, making the year-over-year comparison more challenging.

Operating Income (EBIT)

-94% " "

Significantly compressed by the steep revenue decline, higher underutilization costs, and increased operating expenses relative to sales. Despite efforts to reduce production, the overhead absorption was inadequate to maintain EBIT margins at prior-year levels.

Net Income

-113% " "

Swung to a loss primarily due to the drastic drop in revenue and the resulting impact on margins. Additional charges—such as those related to capacity underutilization—further eroded profitability when compared to the robust net income in the previous year’s quarter.

EPS (Diluted)

-113% " "

Mirroring the net income decline, EPS fell into negative territory. Lower revenue, coupled with one-time charges (e.g., cybersecurity-related costs) and reduced factory utilization, weighed heavily on diluted EPS relative to the strong results posted in the prior year.

High Inventory & Extended Correction

Discussed persistently in Q2/Q1/Q4 FY2025 calls; elevated inventory and prolonged correction; target 130–150 days but running significantly higher. " " " "

Still elevated; direct customers hold more inventory vs. distribution; aiming to reduce ~$250M by FY2026; no clear end date. " "

Continues to be a major concern

Demand Uncertainty & Visibility

Q2/Q1 FY2025: Noted backlog erosion, low visibility due to weak bookings and short lead times. " " "

Q3 FY2025: Bookings slightly improved but still low; visibility remains limited; backlog started lower for March quarter. " " "

Still uncertain; small improvement in bookings

Industrial & Auto Weakness

In Q2/Q1/Q4 FY2025 calls, industrial and automotive markets were substantially weaker due to inventory corrections and macro challenges. " " "

Q3 FY2025: Confirmed broad weakness, with industrial and auto affected most; no significant recovery reported. "

Ongoing weakness in these end markets

Pricing Dynamics

Q2/Q1/Q4 FY2025: Mostly stable but with mounting pressure on new designs; low single-digit declines expected longer-term. " " "

Q3 FY2025: Some short-term price reductions (low-to-mid single digits) acknowledged, differing from competitor strategies. "

Increasing pressure but still disciplined

Cost Measures & Fab Closures

Q2/Q1/Q4 FY2025: Lower utilization rates, pay cuts, paused capacity expansion; planned two-week shutdowns in major fabs. " " "

Q3 FY2025: Closing Tempe Fab (Fab 2), rotating time-off at other fabs; targeting reduced inventory and quicker manufacturing realignment. "

More aggressive capacity realignment

Design Wins & 64-bit MCUs

Q2/Q1/Q4 FY2025: Touted strong design momentum in 32/64-bit MCUs for secure intelligent edge and radiation-hardened markets. " " "

Q3 FY2025: Introduced new 64-bit RISC-V with AI features; strong interest but revenue impact not immediate. " "

Continued growth in high-end processing

AI & Data Center Ops

Q2 FY2025: Highlighted PCIe switches, SSD controllers, CXL solutions, and AI-driven data center growth. " "

Q3 FY2025: No direct mention of PCIe/SSD/CXL, but 64-bit AI-capable MCUs were introduced; data center specifics not addressed. "

Little new data; main AI focus on 64-bit MCUs

TSS Strategy

Q2/Q1 FY2025: Emphasized total system solutions to boost content per application; tracked subsets and reference designs. " "

Q3 FY2025: No specific update mentioned; scheduled review on March 3. "

No new details; broader update pending

Geographic Variability

Q2/Q1 FY2025: Significant declines in Americas and Europe, with Asia holding steadier. " " " "

Q3 FY2025: Sequential decline in all regions (Americas, Europe, Asia), with inventory destocking ongoing. "

Sustained weakness across geographies

PSP Exposure

Q4 FY2024: PSP likely amplified downturn; late dismantling causing sharper correction. "

Q3 FY2025: Confirmed PSP ended two quarters later than peers, causing higher customer inventory of Microchip products. "

Significant factor elevating inventories

Sharp Recovery Expectation

Q2/Q1/Q4 FY2025: Hinted at strong snap-back when inventory aligns with consumption; uncertain timing. " " "

Q3 FY2025: Optimistic on eventual rebound but no firm timeline; bookings still low, leftover inventory persists. " "

Recovery optimism remains but timing unclear

Factory Shutdowns & CapEx

Q2/Q1/Q4 FY2025: Used shutdowns and reduced capex to manage inventory; capital investments slowed sharply. " " "

Q3 FY2025: Continuing rotating time-off and global adjustments; FY2025 capex ~$135M; plan to grow into existing capacity. " "

Ongoing tight control of expenditures

Acquisition & AI Edge

Q4 FY2024: Mentioned acquisitions (e.g., Neuronex) for AI edge expansion; multiple tuck-ins for faster design wins. " "

Q3 FY2025: No mention of acquisitions; AI focus mainly on in-house 64-bit RISC-V introduction. "

No new acquisition updates

Deeper Revenue Declines vs Competitors

Q2/Q1/Q4 FY2025: Acknowledged sharper declines due to later correction cycle, PSP impact, and high industrial/auto exposure. " " "

Q3 FY2025: Direct customer inventory remains high, reinforcing revenue declines vs. peers; delayed PSP changes worsened the gap. "

Continues under deeper pressure