Investor Presentation Fiscal First Quarter 2026 A Leading Provider of Smart, Connected and Secure Embedded Solutions SAFE HARBOR Forward Looking Statement Safe Harbor: During the course of this presentation, we will make projections or other forward-looking statements regarding the future financial performance of the company (including our guidance) or future events, including our strategy, growth drivers, industry trends, end markets, our long-term model, market size, PIC64 opportunity, 10Base-T1S opportun ...

Investment Rating - The report maintains a positive investment rating for the semiconductor industry, forecasting a sales increase of 8% year-over-year (YoY) for 2025, amounting to $675.3 billion [5][20][12] Core Insights - April semiconductor sales were reported at $55.0 billion, reflecting an 11.1% month-over-month (MoM) decline, which is below the seasonal expectation of a 10.0% MoM decrease, but aligns with the report's estimate [1][2][8] - The report anticipates a below-seasonal growth in the second half of 2025 due to a tariff-induced correction, despite a strong start to the year [5][20] - The top picks for investment in the semiconductor sector are Analog Devices (ADI) and Texas Instruments (TXN), identified as the most defensive options during economic downturns [5][23][1] Sales Performance - April sales increased by 23.2% YoY, consistent with the report's expectations [2][8] - The three-month rolling average sales from February to April 2025 were $57.0 billion, showing a 20.9% YoY increase [9] Unit and Pricing Trends - Units excluding discretes decreased by 7.8% MoM, which is below the estimate of a 7.3% decline but better than the seasonal expectation of a 9.7% drop [3][14] - Average Selling Prices (ASPs) excluding discretes fell by 3.2% MoM, which is better than the estimated decline of 5.3% but below the seasonal increase of 0.2% [4][16] Future Projections - The report projects that units excluding discretes will grow by 4% YoY and ASPs will also increase by 4% YoY in 2025 [20][12] - The semiconductor industry is expected to experience seasonal growth in the first and second quarters of 2025, followed by below-seasonal growth in the third and fourth quarters [5][20]

Summary of Microprocessor Market Share Conference Call Industry Overview - The conference call discusses the microprocessor market in the United States, focusing on the performance of major companies including ARM, AMD, and Intel during the first quarter of 2025 (1Q25) [1][7]. Key Points Market Performance - Total microprocessor unit shipments in 1Q25 decreased by 6.1% quarter-over-quarter (QoQ), which is better than the seasonal decline of 9.4% QoQ, primarily due to stronger-than-expected server CPU shipments [1][5]. - ARM gained market share, increasing its share by 281 basis points QoQ to 13.6% [1][4]. - AMD's overall market share decreased by 99 basis points QoQ to 21.1% [2][8]. - Intel's market share fell by 182 basis points QoQ to 65.3%, marking the lowest share recorded since 2002 [3][10]. Company-Specific Insights - **AMD**: - AMD's notebook MPU unit share dropped by 196 basis points QoQ to 18.8%, while its desktop share increased by 92 basis points to 26.2% [2][8]. - Server MPU share rose by 108 basis points to 24.4% [2][8]. - **Intel**: - Intel's desktop MPU share decreased by 66 basis points to 67.4%, and its notebook share fell by 219 basis points to 64.6% [3][10]. - Server MPU share declined by 210 basis points to 65.4% [3][10]. - **ARM**: - ARM's server MPU share increased by 102 basis points to 10.2%, driven by strong performance from Nvidia Grace CPUs [4][12]. - Notebook MPU share surged by 415 basis points to 16.6%, supported by Qualcomm and Google Chromebook CPUs [4][12]. - Desktop MPU share slightly decreased by 26 basis points to 6.4% [4][12]. Shipment Trends - Notebook MPU shipments fell by 6.9% QoQ, which is worse than the seasonal decline of 3.5% [5][14]. - Desktop MPU shipments decreased by 8.0% QoQ, significantly better than the seasonal decline of 21.8% [5][14]. - Server MPU shipments increased by 6.7% QoQ, contrasting with the expected seasonal decline of 11.5% [5][14]. Analyst Ratings - The analysts maintain a Neutral rating on both AMD and Intel, indicating a cautious outlook on their performance moving forward [1][15]. Additional Insights - The report highlights the competitive dynamics in the microprocessor market, with ARM making significant gains at the expense of both AMD and Intel [1][7]. - The data suggests a shift in market preferences, with ARM's growth in specific segments indicating potential long-term trends that could affect future market shares [4][12]. This summary encapsulates the key findings and insights from the conference call regarding the microprocessor market and the performance of major players within it.

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.

Financial Performance & Strategy - The company reported FY25 net sales of $4.4 billion[7] - The company's strategic shift to Megatrend business increased from 33% to 47% of total revenue[20] - The company's GAAP revenue for Fiscal Fourth Quarter 2025 was $970.5 million, a 5.4% QoQ decline and a 26.8% YoY decline[23] - The company's GAAP revenue for Fiscal Year 2025 was $4.402 billion[26] - The company's Adj Free Cash Flow for Fiscal Fourth Quarter 2025 was $182.6 million, representing 18.8% of net sales[23] - The company's Adj Free Cash Flow for Fiscal Year 2025 was $742.5 million, representing 16.9% of revenue[26] Capital Allocation - The company's total cash return in FY2025 was $1.07 billion[46] - The company's dividends paid was ~$4.2 billion[46] - The company's shares repurchased was ~$2.4 billion[46] Future Outlook - The company is targeting inventory reduction of >$350 million by March 31, 2026[32] - The company's Q1 FY26 GAAP Revenue guidance is $1,045.0 million at the mid-point[27]