Analyst Conference Summary

semiconductors

conference date: May 7, 2026 @ 2:00 PM Pacific Time
for quarter ending: March 31, 2026 (Q4, fourth fiscal quarter 2026)

Forward-looking statements

Overview: Ramping back up. Beat guidance.

Basic data (GAAP):

Revenue was $1.31 billion, up 11% sequentially from $1.19 billion, and up 35% from $0.97 billion in the year-earlier quarter.

Net income was $144 million, up sequentially from $62.7 million, and up from negative $155 million in the year-earlier quarter.

EPS (diluted earnings per share) were $0.21, up sequentially from $0.06, and up from negative $0.29 year-earlier.

Guidance:

For fiscal Q1 2027 (June quarter) revenue between $1.442 and $1.469 bilion. EPS (diluted) GAAP 0.28 to $0.29; non-GAAP $0.67 to $0.71. Cap ex about $20 million.

Conference Highlights:

CEO Steve Sanghi said "We ended the fiscal year with strong momentum, representing meaningful progress from the challenging conditions we were navigating just a few quarters ago. As demand conditions have improved and customer inventory has normalized, we are seeing increasing momentum across our product lines, improving booking and sell-through trends, strong expedite activity, and meaningful operating leverage, reflecting disciplined execution against our nine-point recovery plan. As conditions have improved, we are encouraged by the progress we made during the last five quarters in reducing inventory levels across the company and the channel. We now expect lower inventory and improving demand to support higher internal factory utilization, which will further drive operating leverage and progress toward our long-term gross and operating margin objectives." Looking to sell the Tempe fab. Realligned business units, but not breatking out revenue for new segments yet. All end markets are growing.

Declared a 45.5 cent dividend for shareholders of record on May 22, payable June 5, 2026. Going forward expects for cash flow to exceed the dividend, and excess will be used to pay off debt.

In Fiscal Q4 Microchip reduced inventory by $22.3 million and lowered days of inventory from 201 days in December to 185 days in March, while distributor inventory declined to 26 days, near the low end of the historical range. Seeing signs of restocking. Backlog increased sequentially. Lead times are increasing on some products due to various constraints.

Seeing significant ramps in the 3 divisions of the data center business. Strengthening product roadmap. Storage controllers, memory controllers, switches. GEN6 switch will begin production ramp this quarter. Our products have very good energy efficiency.

Revenue was 49.7% from mixed signal MCUs; 28.1% analog; 22.2% other. By end market 31% industrial, 18% data center, 16% defense, 17% automotive, 9% consumer appliance, 9% communications.

Microchip closed Fab 2 in mid-May 2025. It is on rotating schedules at Fabs 4 and 5. CHIPS Act activity has been paused.

As usual, many new products were added in the quarter. Microchip conserving capital but supporting new, fast-growing products.

Non-GAAP numbers: Net income was $327 million, up 29% sequentially from $253 million and up 436% from $61 million year-earlier. EPS was $0.57, up 30% sequentially from $0.44 and up 418% from $0.11 year-earlier.

Cash and investments ended at $240 million, down sequentially from $250 million. Cash flow from operations was $257 million. $14 million capital spend in quarter. $243 million free cash flow. Long term debt was about $5.5 billion, up due to refinancing in quarter. $247 million used for dividends. $0 million used for stock repurchases.

GAAP cost of goods sold was $512 million, leaving gross profit of $800 million. Operating expenses of $582 million consisted of: research and development $294 million; selling, general and administrative $174 million; amortization $108 million; and special charges $6 million. Leaving operating income of $217 million. Other expense $54 million. Income tax $20 million. Net income $144 million. Dividends on Series A Preferred stock $28 million. Leaving $116 million net income attributable to common stockholders.

Full fiscal year 2026 revenue was $4.71 billion. Net income to common stockholders ws $119 million. GAAP diluted EPS was $0.22.

Q&A selective summary:

Pro-forma growth rate? Phenomenal growth right now, don't want to put a number on it for fiscal 2027.

Inventory reserve charges normalized in the quarter.

Driver of current growth? Three things: distributors and direct customers have been burning inventory. Fully corrected distributor inventory now. Improved customer relationships, thousands of customers, count has increased. End-market improvements, including from automotive designs as well as data centers. September quarter backlog is higher than the June quarter backlog.

Data center business hit bottom in June of last year, rapid growth now. Other markets bottomed at other points. We believe we are winning over competitors in the datacenter business. When we hit production we should see more design wins and higher volume.

Pricing? We try to give customers a price at the time of design that will hold for the life of the product. During Covid we did need to raise prices, which hurt customer relations. Since gross margins are doing well we are trying to keep prices level. But customer by customer and product by product, especially if input prices go up.

While we will be spending cap ex, that is not to expand capacity, mostly. We have a lot of capacity from the last upcycle we can grow into.

Data center AI is now shifting from training to agentic and inference workloads.

If there is supply tightness it would be on the bleeding edge, like 3nm.

We are constrained in substrates, and in wafers for 3 nm. Substrates have a shelf life, can't stockpile them too much, it is affecting our output.

We see some customers come to us as competitors raise their prices.

OpenIcon Analyst Conference Summaries Main Page
Microchip Investor Relations page
Microchip

Search

More Analyst Conference Pages: