Microchip Technology, Inc.

Strong Financial Performance: Microchip Technology reported net sales of $1.186 billion for December 2025, an increase of 4% sequentially and 15.6% year-over-year. This surpassed their guidance expectations, indicating a healthy growth trajectory driven primarily by networking, data center, and licensing business units. Non-GAAP earnings per diluted share were $0.44, surpassing guidance by $0.04.

Guidance for March 2026: The company expects net sales to be approximately $1.26 billion (plus or minus $20 million), representing a sequential growth of 6.2% and an increase of 29.8% from the previous year. Non-GAAP gross margin is projected to range between 60.5% and 61.5%, indicating continued operational efficiency despite ongoing financial challenges.

Inventory and Utilization Challenges: The company reported a decrease in inventory balance to $1.058 billion but noted charges of $51.7 million related to capacity underutilization and significant inventory reserve charges. Although inventory normalization is expected, factory utilization rates remain low, which could present ongoing operating margin headwinds until utilization improves.