Microchip (MCHP) KeyBanc Capital Markets Technology Leadership Forum summary

Market recovery and bookings trends

• Bookings improved significantly, with July reaching the highest level in three years after a March bottom.

• Book-to-bill ratio was 1.07 in March and remained above one in June.

• Sequential revenue grew 10.8% last quarter, with improving gross and operating margins.

• Guidance for the next quarter is up 5.1%, above typical seasonal trends.

• Visibility remains low due to high inventory and short lead times, with bookings concentrated in the near term.

Customer inventory and lead times

• Distribution inventory has declined for seven quarters, with sell-through increasing for the first time in eight quarters.

• Direct customers still have some inventory, but signs indicate normalization is underway.

• Lead times have extended in some product areas due to tight OSAT capacity, especially for data center and AI-related products.

• Customers are encouraged to extend backlog coverage, with a 45-day cancellation window now in place.

Segment performance and end markets

• Aerospace and defense is a strong segment, now 18% of business, benefiting from rising global defense budgets.

• Data center demand is rebounding, while industrial is mixed and automotive remains sluggish.

• The Microsemi portfolio, especially FPGAs, is a key differentiator in aerospace and defense.