Core Insights - The National Security Agency (NSA) has introduced the Commercial National Security Algorithm Suite 2.0 (CNSA 2.0) to establish quantum-resistant cryptographic standards, urging data centers and computing markets to become post-quantum ready within two years [1][3] - Microchip Technology has developed the MEC175xB embedded controllers featuring post-quantum cryptography, enhanced security features, and low power consumption to meet evolving security demands [1][2] Company Overview - Microchip Technology Inc. is a leading provider of smart, connected, and secure embedded control and processing solutions, serving over 100,000 customers across various markets including industrial, automotive, consumer, aerospace, defense, communications, and computing [10] Product Features - The MEC175xB family employs a modular approach for developers to adopt post-quantum cryptography efficiently, ensuring long-term data protection without compromising existing functionality [2][3] - These controllers incorporate NIST-approved post-quantum cryptographic algorithms, including Module-Lattice-Based Digital Signature Algorithms (ML-DSA) and Module-Lattice-Based Key-Encapsulation Mechanism (ML-KEM), implemented in immutable hardware to block potential attack paths [3][4] - The controllers feature secure boot and firmware update schemes configurable for CNSA 1.0 or 2.0, enhancing system integrity and authenticity [4] Technical Specifications - The MEC175xB controllers are powered by an Arm Cortex-M4F processor running at 96 MHz, with 480 KB of SRAM and various connectivity options including I3C and optional USB 2.0 Full-Speed interface [4] - They are compatible with MPLAB X Integrated Development Environment (IDE) and supported by example projects and development boards [6] Availability - The MEC175xB controllers are currently available as part of Microchip's early adopter program, with further information accessible through Microchip's sales representatives or website [7]

Summary of Microchip (MCHP) FY Conference Call - May 14, 2025 Company Overview - Microchip is a leading semiconductor company, ranked among the top five microcontroller suppliers globally, with a significant presence in the industrial market, holding the third-largest market share in industrial MCUs [2][41] - The company has a diverse portfolio, with 60% of its MCU offerings being 32-bit and higher architectures, alongside a solid analog and FPGA portfolio [2] Core Insights and Arguments Financial Performance and Outlook - Microchip has experienced a cyclical downturn but is optimistic about recovery, indicating a 7.7% sequential growth forecast for the June quarter [3][4] - The company is undergoing an inventory reduction program, expecting to decrease inventory by approximately $350 million in the current fiscal year [5] - Gross margins have bottomed out, with a long-term target of 65% non-GAAP gross margin and 40% non-GAAP operating margin [5] Market Dynamics - The company reported a book-to-bill ratio greater than one for the first time in nearly three years, indicating stronger order activity [7][10] - There is a distinction between demand pull-ins due to tariff expirations and genuine cyclical recovery, with the latter being more significant [7][12] - Inventory levels at distributors have decreased significantly, leading to increased reordering activity [11] Pricing Strategy - Microchip anticipates a mid-single-digit percentage decline in average pricing, which is more aggressive than some peers, driven by a strategy to gain market share [21][23] - The company is focusing on aggressive pricing for new designs to maintain competitiveness [23][24] Product Strategy and Innovation - Microchip is enhancing its total solution strategy (TSS) to increase attach rates of additional products per anchor product, with an average of four to five additional products per design [30][32] - The introduction of a new 64-bit microprocessor family based on RISC V architecture aims to provide more flexibility for customers, complementing existing ARM-based products [35][36] Competitive Landscape - The MCU market remains competitive, particularly in the 8-bit segment, where Microchip faces increased competition from Chinese vendors [41][43] - Microchip's strength lies in industrial and automotive sectors, where customers prefer comprehensive platforms over individual components [45] Megatrends and Growth Areas - Megatrend revenues have historically grown at twice the rate of Microchip's overall business, representing 47% of revenues in fiscal 2024 [46][48] - The company sees significant opportunities in AI and machine learning, particularly in robotics and predictive maintenance applications [49][50] Aerospace and Defense Segment - The aerospace and defense segment has shown resilience, growing from 11% to 18% of total revenue, driven by strong demand for radiation-hardened products [53][55] Manufacturing and Capacity - The closure of the Fab 2 facility is expected to streamline operations without significant capacity loss, as production will shift to other fabs [58][59] - Microchip maintains a balanced approach with 35% to 40% of wafer needs met internally, with plans for gradual capacity expansion [62][63] Other Important Insights - The company is closely monitoring inventory levels and expects to increase production as inventory falls below 200 days [66][67] - Significant inventory reserve charges are anticipated to decrease as inventory levels normalize, positively impacting gross margins [70][73] This summary encapsulates the key points discussed during the conference call, highlighting Microchip's strategic direction, market dynamics, and financial outlook.

CHANDLER, Ariz., May 13, 2025 (GLOBE NEWSWIRE) -- Microchip Technology (Nasdaq: MCHP) today announces that registration is now open for its MASTERs Conference in North America, the premier technical training event for embedded design engineers. This year marks the 25th anniversary of the annual MASTERS Conference, once again taking place at the Fairmont Scottsdale Princess in Scottsdale, Arizona, from August 4–7, 2025. MASTERs is short for "Microchip Annual Strategic Technical Exchange and Review" and is ta ...

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 comprehensive product portfolios and development tools to reduce risk and lower total system costs [3] Upcoming Event - The company will present at the J.P. Morgan 53rd Annual Global Technology, Media, and Communications Conference on May 14, 2025, at 3:00 p.m. Eastern Time [1] - Mr. Eric Bjornholt, Senior Vice President and Chief Financial Officer, will represent the company during the presentation [1] - A live webcast of the presentation will be available on the Microchip website [1]

Core Viewpoint - Microchip Technology is positioned for a rebound, having reached the bottom of its business cycle with improved demand and an inflection point expected at the end of fiscal 2024 [1][2]. Group 1: Market Position and Demand - Microchip Technology holds a critical position in the semiconductor manufacturing supply chain, producing various semiconductor products for multiple industries [3]. - The company has a strong presence in key markets such as industrial, automotive, data center, appliance, and IoT, with U.S.-based fabs in Oregon and Colorado, limiting exposure to Asia and excluding China [4]. Group 2: Financial Performance - In the fourth fiscal quarter, revenue declined by 27% year-over-year, but the decline was less severe than anticipated, indicating signs of a market rebound [5]. - The company reported its first positive book-to-bill ratio in years, signaling a market bottom, with guidance for Q1 FY2025 expected to exceed consensus estimates [6]. Group 3: Balance Sheet Strength - Microchip Technology has a robust balance sheet, highlighted by a $356.2 million reduction in debt and favorable terms for its revolving credit facility [8]. - The company has seen a 630 basis point increase in equity due to debt reduction, with further equity gains anticipated in 2025 as the business rebounds [9]. Group 4: Dividend and Income Potential - The company offers a dividend yield of 3.29% with a strong track record of 23 years of dividend payments and a three-year annualized growth rate of 28.58% [10][11]. - Despite a payout ratio exceeding 100% in 2024 and 2025, the healthy balance sheet and cash flow support the sustainability of the dividend [11][12]. Group 5: Analyst Sentiment - Analysts' sentiment for Microchip Technology has improved, with significant price target increases following recent results, indicating a potential 35% upside from pre-release close [13]. - The stock is on track to regain support at a critical uptrend line, with the potential for triple-digit gains as it approaches previous highs near $100 [14].

Core Insights - Microchip Technology (MCHP) reported a significant decline in earnings and sales for the fourth quarter of fiscal 2025, with non-GAAP earnings of 11 cents per share, beating estimates by 28.57% but down 81.5% year over year [1] - Net sales were $970.5 million, a decrease of 26.8% year over year, but slightly above the consensus estimate [1][2] - The company provided positive guidance for the first quarter of fiscal 2026, expecting net sales between $1.02 billion and $1.07 billion [9] Financial Performance - Non-GAAP gross margin contracted by 830 basis points year over year to 52% [5] - Non-GAAP operating margin declined to 14% from 32.9% in the previous year [6] - Cash flow from operating activities was $205.9 million, significantly up from $43.6 million in the previous quarter [8] Segment and Geographic Performance - Sales from Mixed-signal Microcontroller, Analog, and Other segments accounted for 49.2%, 27%, and 23.8% of net sales, respectively [3] - Direct sales made up 55% of total sales, while distribution accounted for 45% [4] - Geographically, revenues from the Americas, Europe, and Asia contributed 29.3%, 21.6%, and 49.2% to net sales, respectively [4] Balance Sheet and Cash Flow - As of March 31, 2025, cash and short-term investments totaled $771.7 million, up from $586 million at the end of December 2024 [7] - Total debt decreased to $5.63 billion from $6.75 billion over the same period [7] - Free cash flow for the quarter was $191.7 million, compared to $22.8 million in the previous quarter [8] Future Outlook - For the first quarter of fiscal 2026, non-GAAP earnings are anticipated to be between 18 cents and 26 cents per share, with gross margin expected between 52.2% and 54.2% [9] - The company plans capital expenditures of approximately $100 million for fiscal 2026 [10]

Core Insights - Microchip Technology reported revenue of $970.5 million for the quarter ended March 2025, a decrease of 26.8% year-over-year, with EPS at $0.11 compared to $0.57 in the same quarter last year [1] - The revenue exceeded the Zacks Consensus Estimate of $961.07 million by 0.98%, while the EPS also surpassed the consensus estimate of $0.10 by 10% [1] Financial Performance - The company's mixed-signal microcontrollers net sales were $477.20 million, below the estimated $500.65 million, reflecting a year-over-year decline of 31.4% [4] - Net sales for other categories reached $231.70 million, exceeding the average estimate of $210.26 million, but still representing a 23.1% decrease year-over-year [4] - Analog net sales were reported at $261.60 million, slightly above the average estimate of $250.64 million, with a year-over-year decline of 20.5% [4] Stock Performance - Over the past month, shares of Microchip Technology have returned +26.6%, outperforming the Zacks S&P 500 composite's +13.7% change [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Microchip Technology (MCHP) came out with quarterly earnings of $0.11 per share, beating the Zacks Consensus Estimate of $0.10 per share. This compares to earnings of $0.57 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 10%. A quarter ago, it was expected that this chipmaker would post earnings of $0.28 per share when it actually produced earnings of $0.20, delivering a surprise of -28.57%.Over the last four quarters, the com ...

Financial Data and Key Metrics Changes - Net sales for March were $970.5 million, down 5.4% sequentially and down 26.8% year-over-year, indicating a significant inventory correction following a post-COVID super cycle [14][25] - Non-GAAP gross margins were 52%, while GAAP gross margins were 51.6% [14][15] - Non-GAAP net income was $61.4 million, with non-GAAP earnings per diluted share at $0.11, exceeding the midpoint of guidance by $0.01 [14][15] - For fiscal year 2025, net sales were $4.402 billion, down 42.3% from fiscal year 2024 [15][16] - Total debt decreased by $1.125 billion in March, and net debt decreased by $1.31 billion [18] Business Line Data and Key Metrics Changes - Revenue from microcontroller and analog business units was down sequentially, while FPGA remained flat, and other businesses, mainly driven by technology licensing, were up sequentially [25] - The company aims to reduce inventory by over $350 million during fiscal year 2026, targeting an inventory level of 130 to 150 days [6][8] Market Data and Key Metrics Changes - Geographically, business was seasonally down in the Americas and Asia, while Europe saw a seasonal increase [25] - The company reported a book-to-bill ratio of 1.07 in March, indicating a healthy demand environment [26] Company Strategy and Development Direction - The company is executing a nine-point recovery plan, which includes resizing manufacturing, reducing inventory, and strengthening customer relationships [5][10] - The focus has shifted from 5G to artificial intelligence and from ADAS to network and connectivity, reflecting changes in megatrends [8] - The company is committed to returning 100% of adjusted free cash flow to investors in the form of dividends, while also planning to reduce borrowings as cash flow improves [31][32] Management's Comments on Operating Environment and Future Outlook - Management believes substantial inventory destocking has occurred, and customers are starting to increase purchases, marking the last quarter as a revenue bottom [25][26] - The company expects net sales for June to be approximately $1.045 billion, with non-GAAP gross margins between 52% and 54.2% [27] - Management expressed optimism about the September quarter, with higher backlog compared to previous quarters [82] Other Important Information - The company completed a $1.485 billion mandatory convertible preferred stock offering to reduce debt and preserve its investment-grade rating [18] - The company has seen a notable shift in end markets, with aerospace and defense now representing a larger portion of the business due to increased defense spending [39][40] Q&A Session Summary Question: Demand signals and potential pull-ins from tariffs - Management noted that demand signals began improving in early January, with bookings significantly higher than December, and no tariff-related activity impacting demand [35][36] Question: Recovery relative to key end markets - Aerospace and defense have become a significant market, increasing from 11% to 17% of the business, driven by high defense budgets and geopolitical factors [39][40] Question: Macro impact of tariffs - Management indicated that direct impacts of tariffs on their products are minimal, as less than 4% of parts are made in China, and they have moved production to other countries [49][50] Question: Margin leverage and headwinds - Current headwinds include underutilization charges and inventory reserve charges, but these are expected to decrease as revenue increases [54][56] Question: Visibility on order patterns - Management highlighted improved visibility due to increased distribution sales and higher bookings, indicating a positive trend in demand [102] Question: China strategy - The company is revising its China strategy due to changes in regulations, focusing on production in Taiwan and other regions to avoid tariffs [73][75]

Financial Data and Key Metrics Changes - Net sales for March were $970.5 million, down 5.4% sequentially and down 26.8% year-over-year, indicating a significant inventory correction following a post-COVID super cycle [14][24] - For fiscal year 2025, net sales totaled $4.402 billion, a decrease of 42.3% from fiscal year 2024 [15] - Non-GAAP gross margins were 52%, while GAAP gross margins were 51.6% [14][15] - Non-GAAP net income was $61.4 million, with diluted earnings per share at $0.11, exceeding the midpoint of guidance by $0.01 [14] - Total debt decreased by $1.125 billion, and net debt decreased by $1.31 billion [19] Business Line Data and Key Metrics Changes - Revenue from microcontroller and analog business units was down sequentially, while FPGA remained flat, and other businesses, mainly driven by technology licensing, were up sequentially [24] - Non-GAAP operating income was 14% of sales, while GAAP operating income was 6.7% of sales [14][15] Market Data and Key Metrics Changes - Geographically, business was seasonally down in the Americas and Asia, but seasonally up in Europe [24] - The aerospace and defense segment grew from 11% to 17-18% of total business, becoming the second largest market after industrial [39] Company Strategy and Development Direction - The company is focused on a nine-point recovery plan, including resizing manufacturing footprint, reducing inventory, and strengthening customer relationships [4][5][9] - The company aims to reduce inventory by over $350 million during fiscal year 2026, targeting an inventory level of 130 to 150 days [6][17] - Strategic initiatives include investments in next-generation technologies and enhancing product lines to drive top-line growth and improve profitability [21][22] Management's Comments on Operating Environment and Future Outlook - Management believes substantial inventory destocking has occurred, with a healthy book-to-bill ratio of 1.07 in March, indicating a positive outlook for revenue growth [25] - The company expects net sales for June to be approximately $1.045 billion, with non-GAAP gross margins projected between 52% and 54.2% [26] - Management expressed optimism about the September quarter, with higher backlog compared to previous quarters [80] Other Important Information - The company is returning nearly 100% of adjusted free cash flow to investors in the form of dividends, with plans to improve cash flow as inventory is liberated [31] - A mandatory convertible preferred stock offering of $1.485 billion was completed to reduce debt and preserve investment-grade rating [19] Q&A Session Summary Question: Demand signals and potential tariff impacts - Management noted that demand signals began improving in early January, with no significant tariff-related activity observed [35][36] Question: Recovery in key end markets - Aerospace and defense have shown strong growth, while other segments are experiencing a broad-based recovery driven by inventory depletion and new designs [39][42] Question: Macro impact of tariffs - Management indicated minimal direct impact from tariffs due to strategic production shifts away from China [48][49] Question: Margin leverage and headwinds - Current headwinds include underutilization and inventory reserve charges, but margins are expected to improve as revenue increases [54][55] Question: Visibility on future revenue - Management highlighted improved visibility due to increased distribution sales and higher bookings in recent months [98][102] Question: Changes in China strategy - The company is revising its China strategy due to changes in trade rules, focusing on local assembly and production outside of China [70][72]