# Microchip Technology (MCHP) Sector: Semiconductors: microcontrollers and analog chips | Field | Value | |---|---| | Price | $62.13 | | Market cap | $34B | | Intrinsic value source | Analysts | | Data as of | 2026-11-12 | | Next earnings | 2027-02-04 (estimate) | Analysts: Bullish Picks: Top pick Discount category: Below intrinsic value ## In short The market doubts that the recovery in chip orders lasts while debt is still high, and rising sales with steady margins and data center design wins can lift its value. ## Themes and gap - Themes: AI supplier (ai-supplier), High debt (leverage) - Gap type: Can close (closable) - Why: The Q3 fiscal 2027 report in early February 2027 and its Q4 guidance show whether sales keep growing and debt falls. ## About Microchip Technology Incorporated (Microchip) is a broadline supplier of semiconductors, based in Chandler, Arizona. It sells microcontrollers, microprocessors and related chips. It serves data center, aerospace and defense, industrial, robotics, automotive and intelligent edge markets. In September 2026, it bought Hailo, a maker of edge AI processors, and in October 2026 it bought Vorago Technologies, a maker of radiation-hardened chips. Its fiscal year ends on March 31, so Q2 fiscal 2027 ended on September 30, 2026. Steve Sanghi is President and Chief Executive Officer. The common shares trade on Nasdaq in US dollars. Its depositary shares of mandatory convertible preferred stock also trade on Nasdaq. ## Thesis The price of Microchip depends on whether the recovery from a weak year lasts and lifts earnings to a new high. Net sales rose 42.2% to $1,621.5 million in the quarter ended September 2026, and non-GAAP operating margin was 39.5%, against 24.3% a year earlier. Bookings are strong, with a book-to-bill ratio well above one. Debt is still high: principal was $5.55 billion at September 30, 2026. For the price to hold or rise, four things must be true. Sales must keep growing from the Q3 fiscal 2027 guidance of $1,573 million to $1,638 million. Operating expenses must grow more slowly than sales. The company must get enough wafer supply as lead times get longer. Design wins in data center, which grew to 24 for PCIe Gen6 switches and retimers, must become revenue. The next tests are the Q3 fiscal 2027 report in early February 2027 and the Q4 fiscal 2027 guidance. ## Checkpoints - Feb 4, 2027 (estimate): Q3 fiscal 2027 results: sales and margin. Status: Pending. Watch: Net sales land in the range of $1.573 billion to $1.638 billion with non-GAAP gross margin of 64% to 65%, and this passes; sales below the range fails. - May 2027 (estimate): Q4 fiscal 2027 results and debt. Status: Pending. Watch: Sales keep growing and debt falls from $5.55 billion, and this passes; a fall in orders or new debt for buybacks fails. ## Balance sheet - Cash: $457M - Debt: $5.6B - Net debt: $5.1B - Undrawn credit line: $2.3B - Last debt due: 2030 At September 30, 2026, Microchip had cash of $457.0 million. Gross debt was $5,551.9 million: $364.0 million of commercial paper, $3,000.0 million of senior notes due 2028, 2029 and 2030, and $2,187.9 million of convertible debt. All of it has a fixed rate, and none of it was drawn on the $2.25 billion revolving credit facility, which ends in 2030. The company also has $1,485 million of 7.50% mandatory convertible preferred stock, which pays $27.8 million of dividends each quarter. Cash from operations was $930.7 million in six months of fiscal 2027, and capital spending was $37.0 million. The dividend on common stock costs about $248 million per quarter. As of 2026-09-30. Sources: - https://www.sec.gov/Archives/edgar/data/827054/000082705426000062/mchp-20260930.htm - https://www.sec.gov/Archives/edgar/data/827054/000082705426000061/exhibit991q2fy27.htm ## Dividends - Dividend yield: 2.9% (last 12 months, at the current price) - Paid per share, last 12 months: $1.82 (4 payments) - Current annual rate: $1.82 ($0.455 x 4 a year) - Payout ratio: 827% of the earnings of the last fiscal year (the year ended 2026-03-31) - Latest ex-dividend date: 2026-08-24, $0.455 per share - Growth from 2020 to 2025: 19.9% a year - Growth from 2015 to 2025: 9.8% a year Dividends per share by year: 2016: $0.72, 2017: $0.724, 2018: $0.728, 2019: $0.732, 2020: $0.736, 2021: $0.852, 2022: $1.158, 2023: $1.59, 2024: $1.811, 2025: $1.82. Source: company filings and market data, read on 2026-11-13. ## Recent events - 2026-11-05: Microchip reported Q2 fiscal 2027 results. Net sales were $1.622 billion, up 42.2% from a year earlier and 9.2% from the prior quarter. GAAP net income for common stockholders was $373.6 million, or $0.68 per diluted share. Non-GAAP EPS was $0.97, and non-GAAP operating income was $639.9 million. - 2026-11-05: Microchip guided Q3 fiscal 2027 net sales to $1.573 billion to $1.638 billion, and non-GAAP EPS to $0.87 to $0.95. It said that $53 million of infrequent revenue items in the September quarter do not repeat. It declared a quarterly dividend of $0.455 per common share, payable on December 8, 2026. - 2026-11-05: Microchip said that Victor Peng told the board on November 3, 2026, that he will step down from the board because of other work. - 2026-10-08: Microchip completed its purchase of Vorago Technologies, a maker of radiation-hardened microcontrollers and microprocessors, for about $93.1 million in cash at closing. On September 17, it completed its purchase of Hailo, a maker of edge AI processors. - 2026-08-06: Microchip reported Q1 fiscal 2027 results. Net sales were about $1.485 billion, and the company guided the September quarter to a midpoint of $1.604 billion. ## Latest news and filings - Last earnings: 2026-11-05 (8-K: https://www.sec.gov/Archives/edgar/data/827054/000082705426000061/) - Next earnings: 2027-02-04 (expected; the company has not confirmed it) | Filed | Form | Headline | Period end | XBRL document | Link | | --- | --- | --- | --- | --- | --- | | 2026-11-05 | 10-Q | Quarterly report for the period ended Sep 30, 2026 | 2026-09-30 | mchp-20260930 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000062/mchp-20260930.htm | | 2026-11-05 | 8-K | Earnings release | | mchp-20261105 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000061/ | | 2026-08-19 | 8-K | Change of directors or officers and Shareholder vote results | | mchp-20260818 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000042/mchp-20260818.htm | | 2026-08-06 | 10-Q | Quarterly report for the period ended Jun 30, 2026 | 2026-06-30 | mchp-20260630 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000038/mchp-20260630.htm | | 2026-08-06 | 8-K | Earnings release | | mchp-20260806 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000037/ | | 2026-07-24 | 8-K | Change of directors or officers | | mchp-20260723 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000031/mchp-20260723.htm | | 2026-06-01 | 8-K | Change of directors or officers | | mchp-20260528 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000020/mchp-20260528.htm | | 2026-05-21 | 10-K | Annual report for the period ended Mar 31, 2026 | 2026-03-31 | mchp-20260331 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000016/mchp-20260331.htm | | 2026-05-07 | 8-K | Earnings release | | mchp-20260507 | https://www.sec.gov/Archives/edgar/data/827054/000082705426000012/ | | 2026-02-11 | 8-K | New material agreement and New debt or financial obligation | | | https://www.sec.gov/Archives/edgar/data/827054/000119312526046713/d18435d8k.htm | Every filing on SEC EDGAR (CIK 827054): https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0000827054&type=&dateb=&owner=include&count=40 ## Risks - High: Demand for chips swings widely. Net sales were $1,140.4 million a year earlier and rose 42.2% in a year. A new fall in industrial and automotive orders would cut sales and margins fast. - Medium: Debt is high. Principal was $5,551.9 million at September 30, 2026, and cash was $457.0 million. The 2017 convertible notes of $37.9 million mature on February 15, 2027, and the company plans to refinance with new debt. - Medium: The preferred stock will add shares. The 7.50% mandatory convertible preferred stock converts on March 15, 2028, into 16.0060 to 19.6080 common shares per preferred share. This is 23.8 million to 29.1 million shares for 1,485,000 preferred shares. - Medium: Supply is tight. Lead times are getting longer, and the company works to add capacity and wafer supply. A shortage can limit sales. - Low: New acquisitions can cost more than planned. Hailo and Vorago add new products, but they must be joined to the business, and Microchip says that it may not get the gains it expects. ## Links - Page: https://picks.utilarium.app/company/MCHP/ - History of changes: https://picks.utilarium.app/company/MCHP/history/ - JSON with full history: https://picks.utilarium.app/data/company/MCHP.json > Picks is a personal record of stock picks. It gives general opinions about stocks, including a "Top pick" label. They are not tailored to your needs, goals or risk tolerance. Kevin is not a registered adviser and relies on the general-advice exemption in Canadian securities law (NI 31-103 s.8.25). Do your own research, or ask a registered adviser. Kevin may hold any stock on this site. Prices, intrinsic values and ratings can be delayed or wrong; check the original source. Full disclaimer: /disclaimer/.