⚡What does Microchip do, in 30 seconds?
Microchip designs and sells microcontrollers, tiny one-chip computers that run things like appliances, car parts and power tools 23. It also sells analog chips that manage power, timing and signals 2. It sold $4.7bn ✓ in FY2026, and mixed-signal microcontrollers made up 50% ✓ of that. Demand is picking up again as customers work down extra stock 17.
📱What does Microchip sell?
Microchip reports three product lines, and microcontrollers are the biggest. It also sells chips that control storage and memory and link parts together inside AI data centers 2. Here is what each line is and who buys it.
Microcontrollers
Microchip's biggest line, bringing in $2.4bn ✓ in FY2026. A microcontroller is a small computer on one chip that controls a device, such as an appliance, a car part or a power tool 23. Microchip makes 8-bit, 16-bit and 32-bit microcontrollers, plus 32-bit and 64-bit microprocessors 2. In July 2024 it moved into 64-bit microprocessors with its PIC64 family, built on RISC-V 2.
👥 Makers of appliances, cars, factory gear and power tools 23 2.
Analog
Chips that handle power, heat, timing, radio signals and security 2. Analog brought in $1.3bn ✓ in FY2026, or 28% ✓ of sales.
👥 Microchip's own microcontroller customers, plus buyers who use other firms' microcontrollers 2.
How the mix has shifted
💸How does Microchip make money?
Follow the money from left to rightfrom top to bottom: what customers pay for, what it costs to make, and what is left as profit.
FY2025: Microchip made a loss, so there was no profit left to follow and no money map is drawn for that year.
Microchip sold $4.7bn ✓ of chips in FY2026. Making them cost $2.0bn ✓. What is left is gross profit, the money kept after paying for what was sold. That came to $2.7bn ✓.
Next come the costs of running the company. Research and development took $1.1bn ✓, and sales, marketing and admin took $0.7bn ✓. Other operating costs took $0.5bn ✓. Operating profit, the profit from the main business, was $0.5bn ✓. Items outside the main business came to -$0.2bn ✓, and net income was $0.2bn ✓. Out of every hundred dollars of sales, Microchip kept about $5 ✓ as profit.
That was a weak year by Microchip's own standards. Use the year tabs to compare: in FY2024, it kept $25 ✓ of every hundred dollars. FY2025 was weaker still, with operating profit of just $0.3bn ✓ on sales of $4.4bn ✓.
Out of every $100 customers paid in FY2026…
⏱️ Microchip by the clock
Spread the FY2026 totals evenly over its 365 days and you get this. Source: MICROCHIP TECHNOLOGY INC 10-K [4].
📈How is Microchip doing?
Microchip is climbing out of a deep slump, but its sales are still well below their peak. Sales hit $8.4bn ✓ in FY2023. Growth was then -9.5% ✓ in FY2024 and -42.3% ✓ in FY2025, leaving sales at $4.4bn ✓. Customers pushed out or cancelled orders in fiscal 2024 and most of fiscal 2025 17. In March 2025, Microchip began a recovery plan that cut costs, factory capacity and staff 17. It closed its Fab 2 factory in May 2025 because it had high stock and spare room at other fabs 15.
The turn came in FY2026, when sales grew 7.1% ✓ to $4.7bn ✓. In the four quarters to 30 June 2026, sales reached $5.1bn ✓, up 20.9% ✓ on the four quarters before. Sales in the June 2026 quarter alone were up 38.0% on a year earlier 18. Microchip says demand improved as customers worked down extra stock 17. Operating margin rose to 15.5% ✓ over those four quarters, from 10.4% ✓ in FY2026. Microchip expects September 2026 quarter sales of $1.589 billion to $1.618 billion 18. That is a forecast, not a result.
Over ten years, sales grew 8.0% ✓ a year on average, from $2.2bn ✓ in FY2016. They rose in 7 ✓ of 10 ✓ years. Gross margin slipped from 67.5% ✓ in FY2023 to 56.1% ✓ in FY2025, then rose to 57.7% ✓. Free cash flow stayed positive through the slump, at $0.8bn ✓ in FY2025 and $0.9bn ✓ in FY2026. Debt is the weak spot: net cash was -$5.1bn ✓ at 30 June 2026, because borrowings far exceed cash.
📝 The report card
Microchip earns an A ✓ for cash and a B ✓ for profit. It gets an F ✓ for growth, an F ✓ for its balance sheet and an F ✓ for steadiness. Every company is graded on the same fixed scale, so an A means the same thing on every page. The strip shows where Microchip (orange) and its 3 peers land; further right is better.
Growth
Microchip's sales shrank over its last three fiscal years: its average yearly growth was -17.6% ✓. That earns an F ✓ on the fixed scale. The count starts from FY2023, its best year, when sales were $8.4bn ✓. Its rivals shrank too, at -4.1% ✓ for Texas Instruments, -2.8% ✓ for Analog Devices and -2.4% ✓ for NXP. Each also earns an F: Texas Instruments ✓, Analog Devices ✓ and NXP ✓.
Why this measure? (higher is better)
Growing sales is the engine of a business. Mature giants rarely grow fast, so 5% a year already earns a C.
Profitability
Over the last three years combined, Microchip kept 20.05% ✓ of sales as operating profit, just enough for a B ✓. That mixes a strong FY2024, at 33.7% ✓, with thin years at 6.7% ✓ and 10.4% ✓. Texas Instruments did best in the group, at 37.0% ✓, an A ✓.
Why this measure? (higher is better)
Operating margin is the share of each sales dollar left after running the business. Software and platforms often clear 30%; hardware makers usually sit below 10%.
Cash generation
Over the last three years combined, Microchip turned 25.4% ✓ of sales into free cash flow, an A ✓. Only Analog Devices did better, at 33.5% ✓. Texas Instruments managed 10.7% ✓, a C ✓.
Why this measure? (higher is better)
Free cash flow is the cash left after paying for factories, data centres and equipment. It funds dividends, buybacks and new bets.
Balance sheet
At 31 March 2026, the end of fiscal 2026, Microchip's cash and investments minus its borrowings came to -111.5% ✓ of a year's sales, an F ✓. In other words, its debt, after taking away its cash, is bigger than a whole year of sales. By 30 June 2026 it held $0.3bn ✓ of cash and investments against $5.4bn ✓ of debt. In February 2026 it borrowed $900 million through 0% convertible notes, a kind of bond 9.
Why this measure? (higher is better)
More cash than debt gives a company room to ride out bad years. Some debt is normal; a lot of it makes a company fragile.
Steadiness
Microchip's yearly growth swings a lot, with a standard deviation of 27.0% ✓, which earns an F ✓. Growth ranged from 56.8% ✓ in FY2017 to -42.3% ✓ in FY2025. Texas Instruments was the steadiest in the group, at 12.3% ✓, a D ✓.
Why this measure? (lower is better)
Steady growers are easier to plan around. Big swings mean sales depend on product cycles, the economy or one-off events.
🧑🏫 How the grades work
- Same scale for everyone. Each measure has fixed cut-offs (shown under each strip). Clear the A line and you get an A, whatever your peers do.
- Three years together. Profitability and cash generation add up the last three fiscal years before dividing, so one unusual year counts for less than it would on its own (a year much bigger than the others still weighs most).
- Peers for context. The rank shows how Microchip compares with the group. Companies within 0.1 percentage point share a rank.
- Same source. Every company's figures come from its own latest annual report (10-K), so fiscal years end in different months.
- Judgement, openly stated. The cut-offs are QuantVantage.ai's view of what good looks like for a large, established company. They are not a forecast or a recommendation.
11 years at a glance
Where the cash goes
Microchip now pays out more cash than its business brings in. Dividends alone came to $984.0 million in fiscal 2026 24. In FY2026, buybacks and dividends equalled 113% ✓ of free cash flow, after 139% ✓ in FY2025. Free cash flow was $0.9bn ✓ that year, down from $3.1bn ✓ in FY2023.
🧮Ratios 101: what are Microchip's key financial ratios?
Ratios shrink Microchip's numbers into easy comparisons, and most of them show a company still getting over a slump. A ratio divides one number by another so companies of any size can be compared. Each card shows the formula with Microchip's real FY2026 numbers, the peer median and the trend.
💰 Profitability: how much of each sale is kept?
Gross margin
What is left from each sale after paying to make the product or deliver the service.
👉 At 57.7% ✓, Microchip sits just above the 57.0% ✓ peer median and its own 55.5% ✓ of FY2016. It is still below the 67.5% ✓ it reached in FY2023.
📏 Rule of thumb: Above 40% usually signals pricing power or a big software or services mix.
Operating margin
What is left after also paying for research, marketing and running the company.
👉 Microchip's 10.4% ✓ is far below the 26.6% ✓ peer median and its own 16.2% ✓ of FY2016, as costs stayed high while sales were low.
📏 Rule of thumb: Above 20% is strong for a large company.
Net margin
The bottom line: profit after interest and taxes, per dollar of sales.
👉 Microchip kept just 4.9% ✓ of sales as final profit, against a 20.6% ✓ peer median and 14.9% ✓ in FY2016.
📏 Rule of thumb: Above 15% is strong; one-off tax items can move it in a single year.
Return on equity (ROE)
Profit earned for each dollar that shareholders have left in the company.
👉 ROE of 3.6% ✓ trails the 20.1% ✓ peer median, because FY2026 profit was small, at just $0.2bn ✓.
📏 Rule of thumb: Around 15% or more is good, but buybacks shrink equity and can make ROE look huge.
⚙️ Efficiency: how hard do the assets work?
Return on assets (ROA)
Profit earned from everything the company owns, however it was paid for.
👉 ROA of 1.6% ✓ is below the 7.6% ✓ peer median and the 5.9% ✓ Microchip earned in FY2016.
📏 Rule of thumb: Above 10% is strong; banks and factories usually earn less.
Asset turnover
Dollars of sales squeezed out of each dollar of assets.
👉 Microchip's sales were just 0.3x ✓ its total assets of $14.4bn ✓, below the 0.5x ✓ peer median.
📏 Rule of thumb: Retailers often top 2x; asset-heavy businesses can sit below 0.5x.
Inventory days
How many days of products sit in warehouses before they are sold.
👉 On this page's measure, Microchip holds 190 ✓ days of stock, above the 169 ✓ peer median and up from FY2016's level of 116 ✓ days. By Microchip's own count, stock fell from 185 days at 31 March 2026 to 175 days at 30 June 2026 17.
📏 Rule of thumb: Fewer days means less cash tied up and less risk of products going stale.
🛟 Safety: could it survive a bad year?
Current ratio
Can short-term assets (cash, money owed by customers, stock) pay the bills due within a year?
👉 At 2.1x ✓, Microchip has about twice as much in short-term assets as in bills due within a year, close to the 2.2x ✓ peer median.
📏 Rule of thumb: Above 1.0x is the classic comfort line, but cash-rich giants can run below it on purpose.
Debt to equity
How much the company has borrowed for each dollar shareholders have in it.
👉 Debt equals 0.9x ✓ shareholders' equity, level with the 0.9x ✓ peer median.
📏 Rule of thumb: Below 1.0x is conservative. Like ROE, it can rise when buybacks shrink equity, even if debt has not changed.
Interest cover
How many times over operating profit could pay the year's interest bill.
👉 Operating profit was only 2.2x ✓ interest costs in FY2026, far below the 7.9x ✓ peer median, so a thin profit year leaves little room to spare.
📏 Rule of thumb: Above 5x is comfortable; below 2x is a warning sign.
💵 Cash and owners: where does the money end up?
Cash conversion
Does reported profit turn into real cash? Free cash flow is operating cash minus capital spending.
👉 Free cash flow was 3.8x ✓ net income, far above the 1.2x ✓ peer median, because profit was small while cash flow held up.
📏 Rule of thumb: Near or above 1.0x means profits are backed by cash.
R&D intensity
How much of each sales dollar goes into inventing future products.
👉 Microchip spends 23.0% ✓ of sales on R&D, the most in its group and well above the 16.0% ✓ peer median.
📏 Rule of thumb: Tech companies often spend 10% to 20%; more is not always better if it does not pay off.
Stock pay
Pay given to staff in shares instead of cash. It is a real cost to owners because it adds shares.
👉 Stock pay is 5.4% ✓ of sales, above the 2.9% ✓ peer median and the 3.3% ✓ of FY2016.
📏 Rule of thumb: Under 5% of sales is modest for a tech company.
Shareholder payout
How much of the year's profit was handed back to owners.
👉 Microchip paid out 427.8% ✓ of FY2026 profit, far above the 129.5% ✓ peer median. Nearly all of it was dividends of $1.0bn ✓, paid while profit was small.
📏 Rule of thumb: Above 100% means it returned more than it earned, using cash savings or debt.
Ratios use fiscal-year-end balance sheet values. Inputs are shown rounded, so dividing them can differ from the result in the last digit. A peer median leaves out peers that do not report the inputs, or where the ratio means nothing (for example, negative shareholders' equity). Rules of thumb are general guides from QuantVantage.ai, not hard limits. No share-price ratios (like price-to-earnings) are shown on this page.
🥊Who are Microchip's competitors?
Microchip competes with other big makers of microcontrollers and analog chips for cars, factories and appliances. Texas Instruments, Analog Devices and NXP all overlap with it 2310 1112 213.
| Company | Where they compete | Revenue | Growth/yr (3y) | Op. margin | FCF margin |
|---|---|---|---|---|---|
| Microchip (MCHP, FY2026) | Microcontrollers, analog chips, FPGAs and data-center chips 23 2 2 | $4.7bn | -17.6% | 10.4% | 18.5% |
| Texas Instruments (TXN, FY2025) | Microcontrollers and analog chips for factories and cars; analog was about 79% of TI's 2025 revenue 2310 | $17.7bn | -4.1% | 34.1% | 14.7% |
| Analog Devices (ADI, FY2025) | Analog chips; it plans to grow in microcontrollers through its pending deal for Alif Semiconductor 1112 | $11.0bn | -2.8% | 26.6% | 38.8% |
| NXP (NXPI, FY2025) | Microcontrollers and processors for cars and factories; NXP names Microchip as a main rival 213 | $12.3bn | -2.4% | 24.8% | 19.7% |
NXP's annual report also names Infineon, Renesas and STMicroelectronics among its main public rivals, alongside Microchip 22.
🧭Microchip SWOT: strengths, weaknesses, opportunities and threats
💪 Strengths
- About 102,000 customers buy from Microchip, and its ten largest direct customers made up only about 11% of revenue 17.
- Microchip says its microcontroller prices have stayed fairly steady in recent years because the designs are its own, while chip prices usually fall over time 3.
- Over the last three years combined, Microchip turned 25.4% ✓ of sales into free cash flow, an A ✓ on our report card.
- Its chips go into many markets, from cars and factories to data centers and spacecraft 2 2.
🩹 Weaknesses
- Net cash, meaning cash minus debt, was -$5.1bn ✓ at 30 June 2026, so debt far exceeds cash.
- Sales swing hard with the chip cycle. Growth was -42.3% ✓ in FY2025, as customers pushed out or cancelled orders 17.
- Operating margin was 10.4% ✓ in FY2026, well under the 26.6% ✓ peer median.
- About 65% of fiscal 2026 sales came from chips made by outside foundries, not its own fabs 15.
🚀 Opportunities
- Sales in the June 2026 quarter were up 38.0% on a year earlier 18, as demand improved 17.
- Design wins for its PCIe Gen6 data-center chips doubled from six to 12 programs in one quarter 18.
- Microchip bought Hailo, a maker of edge AI processors, in September 2026 1920.
- Its 64-bit PIC64 chips, launched in July 2024, take it into more powerful processors 2.
⚠️ Threats
- Tariffs and trade limits could raise costs, upset supply and hurt customer demand 17.
- Microchip says some companies in China and Taiwan have copied or cloned its products 16.
- NXP names Microchip among its main rivals, and both chase the same car and factory buyers 213.
- Operating profit covered interest costs just 2.2x ✓ in FY2026, so another slump would bite.
🏰Does Microchip have a moat?
Why 3?
Microchip owns US wafer fabs and does about 67% of assembly and 69% of testing in its own plants 15. It says this makes it one of the lowest-cost producers in its field 15. But about 65% of fiscal 2026 sales came from chips made by outside foundries 15. It also closed its Fab 2 factory in May 2025 because of spare capacity 15.
A moat is what keeps rivals from taking a company's customers and profits. Scores are QuantVantage.ai's judgement (5 = strongest), set with the same rubric on every explainer (orange is Microchip; grey dots are peers).
🔭What should you watch next?
September 2026 quarter results
Microchip expects sales of $1.589 billion to $1.618 billion, up 7% to 9% on the June quarter 18. Figures on this page run to FY2026 and the four quarters to 30 June 2026 ✓.
Leadership
Chief Operating Officer Richard Simoncic left on 17 August 2026 to become CEO of another company 25.
📚Learn the words
❓Frequently asked questions about Microchip
What does Microchip Technology do?
Microchip designs and sells chips that control everyday things, from home appliances and power tools to satellites and spacecraft 2. Its biggest line is microcontrollers, small computers on one chip 23.
How does Microchip make money?
Microchip makes money by selling chips to about 102,000 customers 17. In FY2026, microcontrollers brought in $2.4bn ✓, analog chips $1.3bn ✓ and other products $1.0bn ✓.
Is Microchip's revenue growing again?
Yes, sales rose 7.1% ✓ in FY2026 after two years of decline. They grew 20.9% ✓ in the four quarters to June 2026. They are still below the $8.4bn ✓ peak of FY2023.
Why did Microchip's sales fall so much?
Customers pushed out or cancelled orders in fiscal 2024 and most of fiscal 2025 17. Demand improved once customers worked down their extra stock 17. In FY2025 alone, growth was -42.3% ✓.
Who are Microchip's biggest competitors?
Texas Instruments, Analog Devices and NXP are among its main rivals in microcontrollers and analog chips 2310 1112 213. NXP's annual report also names Infineon, Renesas and STMicroelectronics among its own main rivals, alongside Microchip 22.
Who runs Microchip?
Steve Sanghi is Microchip's Chair, CEO and President 23. He first ran the company from 1991 to 2021, then came back as CEO in November 2024 23.
Where does Microchip make its chips?
Microchip makes some chips in its own US wafer fabs, but about 65% of fiscal 2026 sales came from chips made by outside foundries 15. It does about 67% of assembly and 69% of testing in its own plants 15.
Does Microchip pay a dividend?
Yes, Microchip paid $984.0 million in dividends in fiscal 2026 24. That was more than its free cash flow of $0.9bn ✓ that year.
🎮Play: higher or lower, then test yourself
Figures come from each company's latest annual report (10-K); fiscal years end in different months. Sources: [4] [5] [6] [7].
🧠 Test yourself
5 quick questions. Score: 0 / 5
1. What is a microcontroller?
2. About how much of Microchip's FY2026 sales came from microcontrollers?
3. Which of these can have Microchip chips inside?
4. Roughly how many customers does Microchip have?
5. When does Microchip's fiscal year end?
🔎Sources and method
Every figure comes from a source listed here or is calculated from those sources (marked ✓). Company financials are taken from SEC filings (10-K and 10-Q) as tagged in XBRL. Peer grades rank the same measures across the company and its peers. This page contains no share-price data and no valuation.
- Microchip (MCHP) Form 10-K for fiscal year 2026, filed 2026-05-21 — revenue and cost of sales by product, segment and geography (accessed 2026-10-28)
- Microchip 10-K FY2026 (Item 1, Business) — Company overview, product lines and development tools (accessed 2026-10-29)
- Microchip 10-K FY2026 (Item 7, net sales by product line) — Product line shares and average selling price commentary (accessed 2026-10-29)
- SEC EDGAR companyfacts: Microchip (MCHP) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: TEXAS INSTRUMENTS INC (TXN) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: ANALOG DEVICES INC (ADI) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: NXP Semiconductors N.V. (NXPI) — annual 10-K facts (accessed 2026-10-28)
- SEC EDGAR companyfacts: Microchip (MCHP) — balance sheet at 2026-06-30 (accessed 2026-10-28)
- Microchip 8-K, Feb 11, 2026 (convertible notes) — 0% convertible senior notes due 2030 (accessed 2026-10-29)
- Texas Instruments 10-K for 2025 (Business) — TI segments, analog share of revenue, markets (accessed 2026-10-29)
- Microchip Technology 10-K, fiscal 2026 (filed 2026-05-21) — Products and net sales by product line (accessed 2026-10-29)
- Analog Devices 8-K, Exhibit 99.1: agreement to acquire Alif Semiconductor (2026-09-09) — Alif deal terms, purpose and expected closing (accessed 2026-10-29)
- NXP Semiconductors 10-K for 2025 (Business; MD&A) — NXP's named competitors, products and automotive revenue (accessed 2026-10-29)
- Microchip 10-K FY2026 (Item 1, Sales and Distribution) — Customer count, distributor share, largest distributor (accessed 2026-10-29)
- Microchip 10-K FY2026 (Item 1, Manufacturing) — Own wafer fabs, outsourced share, assembly and test (accessed 2026-10-29)
- Microchip 10-K FY2026 (Item 1, Patents, Licenses and Trademarks; Competition) — Patent expiry range, cloning risk (accessed 2026-10-29)
- Microchip 10-Q for quarter ended June 30, 2026 (MD&A and risk factors) — Recovery, inventory days, customer count, tariffs (accessed 2026-10-29)
- Microchip Q1 FY2027 results release (8-K Exhibit 99.1, Aug 6, 2026) — June 2026 quarter net sales, design wins, September quarter outlook (accessed 2026-10-29)
- RTTNews: Microchip Technology to acquire Hailo (Jul 25, 2026) — Hailo deal announced; expected close (accessed 2026-10-29)
- Vermoegenszentrum news: Microchip Technology completes acquisition of Hailo (Sep 21, 2026) — Hailo acquisition completed (accessed 2026-10-29)
- SEC EDGAR companyfacts: Microchip (MCHP) — quarterly 10-Q/10-K facts (accessed 2026-10-28)
- NXP 10-K FY2025 (filed 2026-02-19) — Patents and named competitors (accessed 2026-10-29)
- Microchip 10-K FY2026 (Item 1, Human Capital and Executive Officers) — Employees, CEO, incorporation, headquarters (accessed 2026-10-29)
- Microchip Q4 FY2026 results release (8-K Exhibit 99.1, May 7, 2026) — Fiscal 2026 net sales and dividends returned (accessed 2026-10-29)
- Microchip 8-K, Jul 24, 2026 (officer departure) — Chief Operating Officer resignation (accessed 2026-10-29)