Core Insights - Microchip Technology is enhancing its TrustMANAGER platform to address IoT security challenges through secure code signing, Firmware Over-the-Air (FOTA) updates, and remote management of firmware images and cryptographic keys, aligning with the European Cyber Resilience Act (CRA) [1][3] Group 1: Product Enhancements - The TrustMANAGER platform now includes FOTA services, allowing secure real-time firmware updates to patch vulnerabilities and comply with cybersecurity regulations [2][3] - The Microchip WINCS02PC Wi-Fi network controller module used in the TrustMANAGER development kit is certified against the Radio Equipment Directive (RED), which mandates strict standards for wireless devices in the EU [3] Group 2: Regulatory Compliance - The CRA requires strong cybersecurity measures for digital products sold in the EU, influencing global regulations and emphasizing the need for secure firmware updates and lifecycle credential management [1][3] - Compliance with standards such as ETSI EN 303 645 and ISA/IEC 62443 is essential for manufacturers to meet evolving cybersecurity regulations [1] Group 3: Market Positioning - Microchip Technology serves over 100,000 customers across various sectors, including industrial, automotive, consumer, aerospace, and defense, providing solutions that reduce risk and lower system costs [9]

Core Insights - Microchip Technology has introduced the dsPIC33AK512MPS512 and dsPIC33AK512MC510 Digital Signal Controller families to enhance power conversion efficiency in data centers and complex real-time systems [1][2] Product Features - The dsPIC33AK512MPS family offers high-speed control with 78 ps Pulse Width Modulations (PWMs) and 40 Msps low-latency ADCs, optimizing performance for Silicon Carbide (SiC) and Gallium Nitride (GaN)-based DC-DC converters [2] - The dsPIC33AK512MC family provides a cost-optimized solution for multi-motor control and complex embedded applications with 40 Msps ADCs and 1.25 ns PWM resolution [2][3] - Both families integrate a double precision floating-point unit and support a 200 MHz core speed, enhancing efficiency for low-latency, real-time control applications [3] Safety and Compliance - The dsPIC33AK512MPS/MC DSCs comply with functional safety standards, developed according to ISO 26262 and IEC 61508 processes, making them suitable for safety-critical automotive and industrial applications [4] - Integrated security features include crypto accelerators and a Flash security module, enabling secure boot and firmware upgrades [4] Development Support - Microchip provides a comprehensive development tool ecosystem for the dsPIC33AK512MPS/MC DSCs, including MPLAB XC-DSC Compiler and MPLAB ML Development Suite [6][7] - Partner software such as SAFERTOS real-time operating system and TRACE32 debugger further supports development efforts [7] Pricing and Availability - The dsPIC33AK512MPS/MC DSCs are priced starting at $1.50 each in volume, available for purchase directly from Microchip or authorized distributors [8]

Financial Data and Key Metrics Changes - Book to bill ratio for the first quarter ended March was approximately 1.07, indicating an increase in bookings since December, with May bookings being the highest in several years [6][7] - Distribution inventory is currently around 33 days, which is within the typical range of 28 to 35 days, suggesting a healthy inventory level [9][10] Business Line Data and Key Metrics Changes - The manufacturing footprint remains at approximately 60% foundry and 40% in-house, with a significant increase in in-house assembly and testing, now at about 80% [12][13] - The FPGA business, particularly the PolarFire line, has seen increased bookings, with a focus on industrial control, machine vision, and robotics markets [18][20] Market Data and Key Metrics Changes - The company is experiencing growth across various markets, including automotive and industrial sectors, with a notable focus on low power consumption and security features in their products [19][20] - The PCIe product line is being designed into both data center and automotive applications, with a focus on low power per channel [23][28] Company Strategy and Development Direction - The company is focusing on product diversification, particularly in AI, networking, and connectivity, with significant investments in these areas [35][52] - Recent acquisitions, such as TF Semiconductor, are aimed at enhancing the company's product offerings in high voltage drivers and completing total system solutions for customers [42][45] Management's Comments on Operating Environment and Future Outlook - Management noted that customer distribution inventory has bottomed out, leading to replenishment orders, indicating a positive demand trend [8][10] - The company is not focusing on the domestic Chinese market but rather on export opportunities, which helps mitigate risks from local competition [66][68] Other Important Information - The company has been investing in AI services to simplify product design for customers, enhancing productivity through tools that integrate AI into their development processes [52][54] - Management emphasized the importance of maintaining strong customer relationships, reporting improvements in customer satisfaction metrics [75][78] Q&A Session Summary Question: How is the company addressing competition from China? - The company has shifted focus to customers that require export from China, minimizing exposure to local market competition [66][68] Question: What is the outlook for design activity in the defense market? - There is significant design activity in the defense sector, with efforts to adapt products for new lower-cost entrants [74] Question: How is the company progressing in strengthening customer relationships? - Management reported improvements in customer relationships, with a majority of previously degraded relationships now back on track [75][78]

Core Viewpoint - The semiconductor industry is redefining reliability standards as chips are increasingly deployed in harsh environments, necessitating advanced testing and validation methods to ensure performance under extreme conditions [2][17]. Group 1: Testing and Validation - The shift towards more complex applications requires manufacturers to validate performance under normal operating conditions rather than just extreme scenarios, starting from the wafer stage [2][3]. - System-Level Testing (SLT) is becoming essential for identifying early failure modes that traditional aging tests may miss, particularly under real-world operational stresses [3][4]. - Integrating SLT into testing processes allows manufacturers to make informed decisions early in the product lifecycle, enhancing reliability and performance [5][6]. Group 2: Reliability Prediction - Manufacturers are increasingly using data from the entire lifecycle of chips to predict and prevent failures, moving beyond traditional certification methods [7][9]. - The combination of optical inspection, embedded telemetry, and machine learning is crucial for predicting failure mechanisms and improving reliability [9][11]. - Real-time monitoring and feedback loops are essential for optimizing testing coverage and expected lifespan, particularly in high-reliability markets [12][14]. Group 3: Standards and Certification - Certification standards are evolving to reflect the complexities of modern semiconductor applications, with a trend towards convergence across different sectors [13][14]. - The integration of accelerated life testing and field telemetry feedback is enhancing the ability to validate performance under actual workload conditions [14][16]. - Continuous detection and adaptive testing are becoming increasingly important due to the high density and diversity of materials used in semiconductor packaging [16][17]. Group 4: Challenges in Harsh Environments - Chips used in harsh environments face significant thermal and mechanical stresses, making even minor measurement errors potentially catastrophic [15][16]. - Corrosion detection is gaining attention, especially for aerospace and industrial applications, where long-term exposure to moisture can lead to degradation [15][16]. - The need for ongoing monitoring and adaptive testing is critical to manage reliability in unpredictable operational conditions [16][17].

Company Overview - Microchip Technology Incorporated is a leading provider of smart, connected, and secure embedded control solutions [3] - The company serves approximately 112,000 customers across various markets including industrial, automotive, consumer, aerospace and defense, communications, and computing [3] - Microchip is headquartered in Chandler, Arizona, and offers outstanding technical support along with dependable delivery and quality [3] Upcoming Event - The company will present at the Mizuho 2025 Technology Conference on June 10, 2025, at 9:45 a.m. Eastern Time [1] - Presenters will include Mr. Richard Simoncic, Chief Operating Officer, and Mr. Sajid Daudi, Head of Investor Relations [1] - A live webcast of the presentation will be available on the Microchip website [1]

Summary of Key Points from the Conference Call Companies Involved - **Apple Inc. (AAPL)** [9] - **Broadcom Inc. (AVGO)** [10][11] - **Coherent Corp. (COHR)** [12] - **KLA Corporation (KLAC)** [15][16] - **Microchip Technology Inc. (MCHP)** [17][18] Core Insights and Arguments Apple Inc. (AAPL) - Expectations for the upcoming Worldwide Developers Conference (WWDC) are low, with investors anticipating a lackluster event [9] - The company is expected to announce incremental updates related to AI features, including third-party app developer access to on-device AI LLMs and integration with Google Gemini and ChatGPT [9] - Potential positive surprises could include specific timelines for upgraded Siri features in North America and the launch of Apple Intelligence in China [9] Broadcom Inc. (AVGO) - Anticipated strong earnings results and guidance, driven by growth in AI products and stabilization in non-AI semiconductor sectors [10][11] - Revenue guidance for the upcoming quarter is projected to be around $16.1 billion, exceeding consensus estimates [11] - The launch of the Tomahawk 6 chip is expected to contribute significantly to revenue growth, with a lifetime revenue potential exceeding $15 billion [11] Coherent Corp. (COHR) - Positive investor sentiment following management meetings, with a strong focus on datacom share opportunities [12] - The company is transitioning to 6" InP wafers to enhance competitiveness and margin accretion [12] - Management reiterated that their growth targets are based on organic initiatives and consolidation, without factoring in potential divestitures [12] KLA Corporation (KLAC) - The company is confident in achieving $38 in earnings power by next year, supported by strong market share in process control equipment [15][16] - KLA's process control segment has outperformed overall wafer front-end (WFE) spending, with a projected 12% CAGR from 2013 to 2024 [16] - The company maintains a dominant market share of 56% in the process control market, with expectations for continued growth due to rising capital intensity in semiconductor manufacturing [16] Microchip Technology Inc. (MCHP) - Recent meetings indicated a stronger recovery in bookings, with May bookings being the highest in two years [17][18] - Management expects to reduce balance sheet inventories to below 200 days by the December quarter, with a potential for gross margins to exceed 60% [18] - The company is seeing growth in core industrial and automotive markets, as well as in cloud and AI datacenter sectors [18] Other Important Insights - The macroeconomic environment shows mixed signals, with the OECD cutting global economic outlook for the US GDP in 2025 and 2026 to 1.6% and 1.5% respectively [20] - The semiconductor industry is experiencing increased complexity in manufacturing, driving demand for advanced process control systems [16] - Overall, the semiconductor equipment market is expected to grow faster than the overall semiconductor industry, with KLA positioned to benefit from this trend [16]

Summary of Microchip's Conference Call Company Overview - **Company**: Microchip Technology Inc. - **Industry**: Semiconductor Key Points and Arguments Financial Performance and Guidance - Microchip recently updated its financial guidance, removing the low end of the range due to stronger-than-expected demand in the quarter [5][6] - Bookings in May reached the highest level seen in two years, indicating a rebound in demand [5] - Revenue fell to approximately $970.4 million last quarter, down from a peak of nearly $2.3 billion per quarter [10] Inventory Management - The company has been focusing on inventory reduction as part of its nine-point plan [6] - Inventory write-offs amounted to over $90 million in March, combined with underutilization charges of about $54 million, totaling nearly $145 million in charges [7] - Microchip aims to achieve a non-GAAP gross margin target of 65%, with underlying product gross margins reaching almost 67% when excluding inventory reserve charges [8] Demand Recovery - The current recovery is attributed to both improved end demand and the need for inventory replenishment after a period of depletion [10][11] - The recovery is broad-based across all end markets and geographies, with no significant distinction between industrial and automotive sectors [16][17] - Industrial markets account for about 30% of Microchip's business, with aerospace and defense contributing an additional 18% [18] Customer Relationships and Market Position - Microchip has been actively engaging with customers to rebuild relationships that may have been strained during previous cycles [29][30] - A survey indicated that 24% of customer relationships improved, while 12% were damaged, with efforts focused on the latter group [29][30] - The company is confident in its ability to regain market share and return to higher revenue levels [30] Pricing Environment - Pricing is expected to decline in the mid-single digits this fiscal year, with a return to more stable pricing conditions anticipated thereafter [48][49] - The company has adjusted its long-term gross margin target from 68% to 65% to reflect a more achievable model [48] Operational Efficiency - Microchip has implemented a reduction in force, with operational expenses (OpEx) expected to stabilize around $356 million, which is significantly lower than previous peaks [56][57] - The company aims to align OpEx with revenue growth, targeting 25% of revenue in the long term [58] Future Outlook - The company anticipates a gradual increase in factory output, which could positively impact gross margins in the coming quarters [64] - Microchip is committed to maintaining its dividend while focusing on reducing leverage before considering stock buybacks [75][76] Tariff Impact - Approximately 14% of Microchip's revenue is subject to US-China tariffs, but the direct impact on the company is expected to be minimal [70][71] - The company has flexibility in its supply chain to mitigate potential tariff impacts by shifting production as needed [71] Seasonality and Market Trends - Seasonality is not expected to significantly impact performance, as inventory replenishment may override typical seasonal trends [72] - The company is optimistic about multiple quarters of strong performance driven by inventory replenishment [73] Additional Important Insights - Microchip is utilizing AI and machine learning to better manage customer data and inventory, aiming to avoid past issues related to capacity and order management [43][44] - The company is focused on ensuring that its pricing strategies align with market conditions and competitive pressures [52][56]

Company Announcement - Microchip Technology Incorporated will present at the Bank of America 2025 Global Technology Conference on June 4, 2025, at 9:20 a.m. Pacific Time, with Mr. Eric Bjornholt, Senior Vice President and Chief Financial Officer, as the presenter [1] - A live webcast of the presentation will be available on the Microchip website [1] Company Overview - Microchip Technology is a leading provider of smart, connected, and secure embedded control solutions, serving approximately 112,000 customers across various markets including industrial, automotive, consumer, aerospace and defense, communications, and computing [3] - The company offers easy-to-use development tools and a comprehensive product portfolio that help customers create optimal designs, reducing risk while lowering total system cost and time to market [3] - Microchip is headquartered in Chandler, Arizona, and is known for its outstanding technical support, dependable delivery, and quality [3]

Core Viewpoint - The semiconductor industry is experiencing a complex and prolonged downcycle that deviates from traditional cyclical patterns, indicating a structural change rather than a simple cyclical downturn [1][16]. Group 1: Semiconductor Cycle Understanding - The typical semiconductor cycle consists of phases from demand surge to recovery, lasting approximately 16 quarters or 4 years, but the current cycle has shown prolonged and complicated downturns since the pandemic began in 2021 [1]. - Recent reports suggest that Wolfspeed, a leading SiC company, is seeking bankruptcy protection, highlighting the uncertainty in the current market phase [1][17]. Group 2: Performance of Analog Chip Companies - The performance of major analog chip manufacturers in Q1 2025 generally exceeded market expectations, indicating potential positive signals in the industry [5]. - Companies like TI, ADI, and Infineon have shown signs of recovery in industrial and automotive markets, while others like Microchip are still struggling with all major markets at low points [8][9]. Group 3: Market Recovery and Predictions - The Q2 2025 financial guidance shows a 3.6% quarter-over-quarter growth but a 2.9% year-over-year decline, suggesting a potential recovery phase that is still cautious [11][13]. - Nine out of twelve analog chip companies have raised their performance expectations, with TI and ADI anticipating a return to year-over-year growth in Q2 [14]. Group 4: Structural Changes in the Industry - The semiconductor industry is witnessing a shift where investment decisions are increasingly influenced by non-market factors such as policy guidance and geopolitical considerations, rather than solely by market demand and financial returns [16][20]. - The market dynamics have changed, with companies that are well-positioned in industrial and communication sectors showing resilience, while those reliant on consumer electronics face ongoing challenges [22].

CHANDLER, Ariz., May 29, 2025 (GLOBE NEWSWIRE) -- Microchip Technology Incorporated, a leading provider of smart, connected, and secure embedded control solutions, today updated the range of its prior guidance for net Sales and GAAP and non-GAAP earnings per share for its fiscal first quarter of 2026 ending June 30, 2025. Microchip now expects consolidated net sales for the June quarter to be between $1.045 billion and $1.070 billion. Microchip previously provided guidance on May 8, 2025 of consolidated net ...