MCHP 10-K & 10-Q changes, risk factors and insider trading
Microchip Technology Inc. (also MCHPP) · Nasdaq · Semiconductors & Related Devices · CIK 827054 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.”
New heading “Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, resellers or suppliers.”
New heading “Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.”
New heading “We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.”
Removed heading “We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.”
Largest changes
“We regularly review the financial viability and performance of our licensees, customers, distributors, resellers and suppliers. Any downturn in global or regional economic conditions as a result of geopolitical conditions, broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. …”see in full comparison
“We regularly review the financial viability and performance of our licensees, customers, distributors and suppliers. Any downturn in global or regional economic conditions, as a result of tariffs, high interest rates, high inflation, instability in the banking sector, the enactment of broad sanctions or tariffs by the U.S. or other countries, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. …”see in full comparison
“Future adverse conditions in the U.S. or global economies, labor markets, or credit markets, whether resulting from tariffs or other factors, could materially impact distributor operations. Any deterioration in the financial condition, disruption in the operations of our distributors, or disruption of our ability to conduct business with our distributors would likely adversely impact the flow of our products to our end customers and adversely impact our results of operation. For example, on October 8, 2025, certain subsidiaries of Arrow Electronics (Arrow) were placed on the U.S. …”see in full comparison
see in full comparisonThe U.S. and other countries have levied tariffs and taxes on certain goods, implemented trade restrictions, and introduced national security protection policies. Trade tensions between the U.S. and China, have continued to escalate from 2018 to present, and include the U.S. increasing tariffs on Chinese origin goods and China increasing tariffs on U.S. origin goods. Additionally, the U.S has imposed a baseline 10% tariff on almost all imported goods globally. We previously took steps to mitigate the costs of these tariffs on our business by adjusting our operations and supply chain, but may be unable to mitigate the costs of additional tariffs, including those imposed in March and April of 2025. Although these tariff increases did not result in a material adverse impact on our operating costs in fiscal 2019 or fiscal 2020, they did reduce demand for our products during fiscal 2019 and fiscal 2020.Increased tariffs on our customers' products could adversely impact their sales, and increased tariffs on our products in comparison to those of our competitors could each result in lower demand for our products. Further, governments may impose restrictions on the sale to certain customers of our products, or any applications containing our products. For example, the Chinese government has announced restrictions relating to sales of certain raw materials and to sales of products containing certain products made by Micron, and they may direct companies within China to purchase Chinese-made products. The Chinese government may also re-initiate the suspended antidumping investigation into imports of analog chips originating in the United States and aggressively enforce the new regulation intended to combat the extraterritorial application of foreign trade controls, sanctions and other measures, which would likely have an adverse impact on our revenue if additional tariffs are imposed by the Chinese government on products subject to the investigation. Similar restrictions on our products or the products of our customers or suppliers could negatively impact our business and financial results. It is also possible that evolving U.S. export controls may encourage our non-U.S.governmentscustomers torequest that our customerspurchase from companies not subject to U.S. export controls, thereby harming our business, market position, and financial results. Excessive export controls increase the risk of investing in U.S. advanced semiconductor products, because by the time a new product is ready for market, it may be subject to new unilateral export controls restricting its sale. At the same time, such controls may increase investment in foreign competitors, which would be less likely to be restricted by U.S. controls.
“AI‑related laws, regulations and national and regional governmental policies are rapidly evolving and inconsistent across jurisdictions. New and existing frameworks in the United States, the European Union and China - including the EU AI Act’s risk‑based approach - may impose additional compliance, transparency, conformity assessment, monitoring or usage‑restriction obligations on AI‑enabled products. …”see in full comparison
“In November 2023, the U.S. Department of Commerce added restrictions and export license requirements to end uses and product categories previously described in the October 2022 regulation. To date, the U.S. Department of Commerce has issued a number of regulations that further restrict transactions involving semiconductors and related products. In addition, the U.S. …”see in full comparison
Full comparison: every changed paragraph (149)
•impact of supplier disruptions affecting the availability and cost of raw materials, components, or equipment;
•impact of restrictions, export controls, or other limitations on critical materials sourced from concentrated suppliers reducing sales;
•impact of price increases, increased tariffs, raw material availability or other factors affecting our suppliers;
•impact of geopolitical instability in the Middle East on the availability of critical semiconductor materials, fuel costs, and our ability to meet customer demand;
•dependence on orders received and shipped in the same quarter, limited visibility to product shipments other than those shipped through our certain LTSAs;
•ability to introduce new products on a timely basis, including in response to market changes driven by AI and other factors, or by changing our product design and manufacturing to more advanced technology nodes;
•ability to introduce new products on a timely basis;
•impact of evolving risks related to artificial intelligence, cybersecurity and data privacy across our products, operations, regulatory compliance, intellectual property, talent, and transactions;
•risks related to internal use of artificial intelligence (AI);
•risks related to compliance with laws and regulations regarding privacy, data protection, cybersecurity,AI, cybersecurity (including U.S. Department of War requirements), and handling of government-regulated data (e.g., controlled unclassified information, classified data, export-controlled data);
•general economic, industry, public health or political conditions in the U.S. or internationally, including uncertain economic conditions in U.S., China and Europe, changes in tariffs,geopolitical conditions, interest rates, persistent inflationinflation, tariffs or instability in the banking sector;
•trade restrictions and increase in tariffs, including those on business in China, or focused on specific companies or types of products;
•our ability to introduce new products that will achieve broad market acceptance at favorable prices and margins;
•disruptions in our business, our supply chain or our customers' businesses due to public health concerns (including viral outbreaks and pandemics), cybersecurity incidents, terrorist activity, armed conflict, war (including military conflict in the Middle East and Russia's invasion of Ukraine), worldwide oil prices and supply, transportation interruption, public health concerns (including viral outbreaks and pandemics), fires, natural disasters or disruptions in the transportation system;
•our ability to continueincrease toor increasedecrease our factory capacity as needed to respond to changes in customer demand;
•unauthorized copyingcounterfeiting of our products resulting in pricing pressure and loss of sales;
•our ability to successfully transition to more advanced process technologies to reduce manufacturing costs or introduce more advanced products, and the ability to produce these products at desired volumes, such as our first 3nm PCIe Gen 6 Switch;
Our operating results may be adversely impacted by the financial viability and performanceinability of our licensees,key customers,suppliers distributors,to provide us with necessary raw materials, components, or suppliers.equipment.
Our manufacturing operations require a continuous supply of raw and processed materials, components, and production equipment that must meet stringent performance and quality standards. Although we generally maintain multiple sources for these items, only a limited number of suppliers may be capable of meeting our technical requirements. From time to time, we have experienced supply shortages, extended lead times, supplier announcements that certain orders could not be fulfilled, or the discontinuation of updates or parts for certain equipment. For example, in fiscal 2023 and fiscal 2022, we experienced cost increases from certain suppliers for materials used in our production processes; although conditions stabilized in fiscal 2024 and fiscal 2025, similar cost pressures may recur.
Any interruption in the supply of raw materials, components, or equipment - or reduced supplier support for key manufacturing tools - could adversely affect our ability to produce products in the required volumes or on expected timelines. Supply availability may be further limited as global semiconductor demand increases, suppliers shift production toward higher cost or more complex products, or as a result of supply chain disruptions, transit delays, or political instability. For example, as memory manufacturers transition to more advanced products, availability of the memory components we use may become constrained, have longer lead times, or become more expensive. Consolidation among suppliers may reduce supply alternatives or alter our commercial relationships. In addition, reduced labor availability or public health concerns may further impact the supply chain.
Any of these factors could increase our manufacturing costs, impair our sourcing flexibility, delay our production schedules, and adversely affect our operating results. Additionally, our sales may be adversely impacted if tariffs or government trade actions restrict access to needed supplies.
Tariffs, trade restrictions, and evolving global trade policies pose risks to our supply chain, cost structure, and customer demand. Beginning in 2018 and continuing through 2026, the U.S. imposed additional tariffs on various imports, and several countries have imposed retaliatory tariffs on goods originating from the U.S. Although semiconductors currently remain exempt from certain U.S. tariffs under the ongoing Section 232 investigation, many inputs used in semiconductor manufacturing - including chemicals, metals, and equipment - remain subject to country specific tariffs or may become subject to new duties. The tariff landscape remains uncertain and may change with limited notice.
New or increased tariffs imposed on raw materials, components, equipment, or other inputs used in our production processes could increase our manufacturing costs. We may also incur incremental costs associated with supply chain adjustments undertaken to mitigate the effects of trade restrictions or tariffs. While we attempt to reduce cost burdens and secure alternative supply arrangements, we may experience higher operating costs, reduced sourcing flexibility, or lower demand for our products if customers face higher input costs or trade related disruptions.
Tariffs and trade restrictions also affect our customers. If customers face reduced availability of labor, materials, or components, whether due to trade restrictions, supplier disruptions, escalating shipping constraints, or public health issues, they may reduce or suspend production of their own products, leading to decreased demand for our products. For example, in 2025, government actions involving Nexperia (including export control measures and interventions affecting its operations and cross-border shipments) resulted in restricted availability of certain mature-node semiconductors (such as discrete devices and standard logic) that are widely used by automotive and consumer electronics manufacturers. As a result, some of our customers may experience shortages of these components which may reduce their production volumes and, in turn, reduce demand for our products. Any such customer side disruptions may negatively affect our revenue and operating results.
On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs collected pursuant to the International Emergency Economic Powers Act (IEEPA) were unconstitutional. On April 20, 2026, the U.S. Customs and Border Protection (CBP) began processing refunds through its Consolidated Administration and Processing of Entries (CAPE) portal. Although Microchip was the importer of record for products that were subject to tariffs imposed under IEEPA and should be entitled to a refund, the timing and the amount of any such recovery is not yet clear. As such, this could have a favorable impact on our financial position, operations, or cash flows, but we cannot predict the timing, likelihood, or amount of any refunds or other recoveries we may realize.
We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.
Certain materials used in semiconductor manufacturing, including rare earth elements, minerals, and metals, are available from a limited number of countries. Geopolitical tensions, trade disputes, economic conditions, transit disruptions, public health concerns, or regulatory actions may affect the availability or cost of these materials. Although we do not purchase significant amounts of materials, components or equipment from Russia, Belarus, or Ukraine, the broader semiconductor industry relies on raw materials sourced from these regions - such as neon, palladium, cesium, rubidium, and nickel. Current U.S. restrictions on imports of certain metals of Russian origin highlight the risk that geopolitical events or sanctions may limit access to critical materials. If we or our suppliers cannot obtain necessary inputs at commercially reasonable prices or in adequate quantities, our ability to manufacture products - or customer demand for such products - may be adversely affected.
China is a predominant producer of many rare earth materials essential to the global electronics industry. In 2025, China imposed and later expanded export restrictions and licensing requirements on certain rare earth elements and related magnets. Although some restrictions were subsequently suspended for certain U.S. end‑users, future restrictions or renewed implementation could constrain global supply. If China further restricts exports or pressures other countries to do so, our suppliers may face shortages, longer lead times, or increased costs. Limited access to these materials could impair our ability to manufacture certain products, increase our production costs, or reduce our competitiveness relative to manufacturers with alternative supply sources. These constraints may also affect downstream customers; for example, export controls on rare earth magnets have previously led certain automotive manufacturers to temporarily suspend operations.
Any such impacts on our customers’ production levels may reduce demand for our products and adversely affect our operating results.
We regularly review the financial viability and performance of our licensees, customers, distributors and suppliers. Any downturn in global or regional economic conditions, as a result of tariffs, high interest rates, high inflation, instability in the banking sector, the enactment of broad sanctions or tariffs by the U.S. or other countries, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. The financial decline of a large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales. Also, these parties may not comply with their contractual commitments, or may interpret them differently than we do, which could lead to termination of their performance with little or no notice to us, which could limit our ability to mitigate our exposure. If one of our counterparties becomes insolvent, files for bankruptcy, has business leverage, or favorable contractual terms, then our ability to recover any losses suffered as a result of that counterparty's cessation of performance may be limited by their liquidity, the applicable laws, or their willingness to negotiate a resolution. In the event of such default or cessation of performance, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.
We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
Our manufacturing operations require raw and processed materials and equipment that must meet exacting standards. We generally have multiple sources for these supplies, but there may be a limited number of suppliers capable of meeting our standards. We have experienced supply shortages from time to time in the past, and on occasion our suppliers have told us they need more time to fill our orders, that they cannot fill certain orders, that they will no longer support certain equipment with updates or parts, or that they are increasing prices. In particular, in fiscal 2023 and in fiscal 2022, we experienced increased prices at certain suppliers for certain materials required for production purposes. However, in fiscal 2024 and fiscal 2025, the pricing environment stabilized compared to the two prior fiscal years. An interruption of any materials or equipment sources, or the lack of supplier support for a particular piece of equipment, could harm our business. The supplies necessary for our business could become more difficult to obtain as worldwide use of semiconductors increases, or due to supply chain disruptions, transit disruptions, trade restrictions or political instability. Additionally, consolidation in our supply chain due to mergers and acquisitions may reduce the number of suppliers or change our relationships with them. Also, the reduced availability of necessary labor, the application of sanctions, trade restrictions or tariffs by the U.S. or other countries or the impact of public health concerns, may adversely impact the industry supply chain. The U.S. has imposed additional tariffs on imports, and certain countries have imposed retaliatory tariffs on imports that have the U.S. as their country of origin. For example, in March and April 2025, the U.S imposed tariffs on imports from China and other countries and foreign governments imposed tariffs on imports from the U.S. It is unclear what tariffs will apply to semiconductors during this time of change.
Additional tariffs imposed on components, raw materials, or equipment may increase our costs and have an adverse impact on our operating results in future periods. We may also incur increases in manufacturing costs in mitigating the impact of tariffs on our operations. We will attempt to mitigate the impact of those tariffs on our business but may experience an increase in operating costs, impaired sourcing flexibility, and reduced demand for our products, resulting in reduced revenue.
Our customers may also be adversely affected by the tariffs and other issues described above. The labor, supplies and equipment necessary for their businesses could become more difficult to obtain for various reasons not limited to business interruptions of suppliers, reduced availability of labor, transit disruptions, consolidation in their supply chain, or sanctions, trade restrictions or tariffs or the impact of public health concerns that impair sourcing flexibility or increase costs. If our customers are not able to produce their products, then their need for our products will decrease. Such interruptions of our customers’ businesses could harm our business.
We do not, nor have we historically, purchased significant amounts of equipment from Russia, Belarus, or Ukraine. However, the semiconductor industry, and purchasers of semiconductors, use raw materials that are sourced from these regions, such as neon, palladium, cesium, rubidium, and nickel. If we, or our direct or indirect customers, are unable to obtain the requisite raw materials or components needed to manufacture products, our ability to manufacture products, or demand for our products, may be adversely impacted. This could have a material adverse effect on our business, results of operations or financial condition. While there has been an adverse impact on the world’s palladium, neon, cesium, and rubidium supply chains, at this time, our supply chains have been able to meet our needs. While sales of our products into Russia, Belarus and Ukraine and to customers that sell into these countries, have been negatively impacted by the Russian invasion of Ukraine, at this time, we have not experienced a material impact on our business, results of operations or financial conditions. Further, because we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus.
Additionally, certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals. Trade disputes, geopolitical tensions, economic circumstances, transit disruptions, political conditions, or public health issues, may limit our ability to obtain materials or equipment. Although rare earth and other materials are generally available from multiple suppliers, China is the predominant producer of certain of these materials. In April 2025, China imposed export restrictions on certain rare earth minerals. If China were to further restrict or stop exporting these materials or pressure other countries to do so, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost. Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China or other countries.
We rely on outside wafer foundries for a significant portion of our wafer fabrication needs. Specifically, during fiscal 20252026 and fiscal 2024,2025, approximately 64%65% and 64%, respectively, of our net sales came from products that were produced at outside wafer foundries. We also use several contractors for a portion of the assembly and testing of our products. Specifically, during fiscal 2025,2026, approximately 33% of our assembly requirements and 31% of our test requirements were performed by third-party contractors compared to approximately 33% of our assembly requirements and 33% of our test requirements wereduring performedfiscal by2025. third-partyWe contractorshave comparedlong-term tocommitment approximatelycontracts 41%with certain of our assemblythird-party requirements and 29% of our test requirements during fiscal 2024. Duesuppliers to thehelp amount of inventory of our productsensure that we arereceive holding,capacity from them to manufacture wafers and assemble and test our products. We may decide to still purchase products or services under these contracts even though we currently may not need all of them in order to take advantage of contract credits. This could result in excess inventory and inventory reserve charges that may negatively affect our gross margin and results of operations. Additionally, if we have recentlya takenneed actionsfor togreater decrease our capacity allocation from our wafer fabrication,manufacturing, assembly andor test subcontractors. In the event that we need to increase capacity allocation from our wafer fabrication, assembly and test subcontractors in the futurefuture, or greater capacity for certain types of products, there can be no assurance that we will be able to secure the necessary allocation of capacity from our wafer foundries and other contractors,contractors with the process technologies that we need, or that such capacity will be available on acceptable terms. As our manufacturing subcontractors move to more advanced process technologies over time, we may find that they do not invest in some of the trailing edge process technologies on which a large portion of our products are manufactured. IfAs thismore occurs,companies itfocus on building leading edge products, our manufacturing subcontractors are becoming capacity constrained in their ability to manufacture such products. These events may limit the amounts of net sales that we can achieve or require us to make significant investments to be able to manufacture these products in our own facilities or at other foundries and assembly and testing contractors.contractors, Webut expectwe believe that ourwe reliancewill onbe third party contractors may increase over time as our business grows, and any inabilityable to secureobtain necessary external capacity could adversely affect our operating results. Transitioning production of products to new manufacturers may result in delayed product launches, reduced yields, or decreased product performance. If we encounter issues with product quality, insufficientsufficient capacity from a third-party manufacturer, or if we discontinue using a particular manufacturer or contractor, we may face challenges in securing an alternative supply for specific products in a timely manner. This could lead to significant delays in product shipments, potentially having an adverse impact on our resultsmanufacturing of operations. If our reliance on third-party contractors increases over time, our inability to secure necessary external capacity could adversely affect our operating results.subcontractors.
We expect that our reliance on third party contractors may increase over time as our business grows, and any inability to secure necessary external capacity could adversely affect our operating results. Transitioning production of products to new manufacturers may result in delayed product launches, reduced yields, or decreased product performance. If we encounter issues with product quality, insufficient capacity from a third-party manufacturer, or if we discontinue using a particular manufacturer or contractor, we may face challenges in securing an alternative supply for specific products in a timely manner. This could lead to significant delays in product shipments, potentially having an adverse impact on our results of operations. If our reliance on third-party contractors increases over time, our inability to secure necessary external capacity could adversely affect our operating results.
In August 2022, the U.S. government passed the CHIPS Act to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry. We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and applied for other incentives provided by the legislation; however, we have not concluded negotiations with the U.S. Department of Commerce and there can be no assurance that we will pursue or receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position. If we conclude our CHIPS Act negotiations and receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs.
Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, resellers or suppliers.
We regularly review the financial viability and performance of our licensees, customers, distributors, resellers and suppliers. Any downturn in global or regional economic conditions as a result of geopolitical conditions, broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. The financial decline of a large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales. Also, these parties may not comply with their contractual commitments, or may interpret them differently than we do, which could lead to termination of their performance with little or no notice to us, which could limit our ability to mitigate our exposure. If one of our counterparties becomes insolvent, files for bankruptcy, has business leverage, or favorable contractual terms, then our ability to recover any losses suffered as a result of that counterparty's cessation of performance may be limited by their liquidity, the applicable laws, or their willingness to negotiate a resolution. In the event of such default or cessation of performance, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.
Sales to foreign customers account for a substantial portion of our net sales. During fiscal 2026, approximately 75% of our net sales were made to foreign customers, including 18% in China and 15% in Taiwan. During fiscal 2025, approximately 75% of our net sales were made to foreign customers, including 17% in China and 16% in Taiwan. During fiscal 2024, approximately 75% of our net sales were made to foreign customers, including 18% in China, 12% in Taiwan and 10% in Germany.
Having a strong position in the Chinese market is a key component of our global growth strategy. Although our sales in the Chinese market werehave verybeen strong in calendarthe 2021,past, competition in China is intense,intense. Throughout fiscal 2024, fiscal 2025 and China's economic growth slowed in calendar 2022 and through the first half of calendar 2023. In fiscal 20242026, and in fiscal 2025, economic weaknesschanges in the Chinese market adversely impacted our sales volumes in China. As discussed above, the trade relationship between the U.S. and China remains challenging and could worsen in 2025,worsen, economic conditions in China remain uncertain, and we are unable to predict whether such uncertainty will continue or worsen in future periods. TheAny increase in tariffs on semiconductors and raw materials that have the U.S. as their country of origin could lower demand for our products in China and other countries. Further,For increasingexample, investmenton September 13, 2025, China's Ministry of Commerce initiated an antidumping investigation of imports into China of analog semiconductors originating in the semiconductorUnited industryStates. byWhile we were not a subject of this investigation and the Chinese government andis various state-owned of affiliated entities are intendedexpected to advancesuspend China'sthese statedinvestigations nationalpursuant policyto objectives.the Thelatest trade deal with the U.S., the Chinese government may restrictresume usthis frominvestigation participatingat inits election. If this takes place, additional tariffs are likely to be imposed as a result of this investigation and could have an adverse impact on our revenue. Also, on April 13, 2026, China's State Council released a regulation intended to be a retaliatory measure to combat the Chinaextraterritorial market, or may prevent us from competing effectively with Chinese companies. Weakeningapplication of foreign markets,laws especiallypertaining into China,trade hascontrols, resultedsanctions, inand lowersimilar demandmeasures. forThis ourregulation products,may whichexpose hasus adverselyto impactedpotential ourcivil revenueliability, inadministrative recentmeasures, quartersand and,other remedial actions if suchthe conditionsChinese continue,government itdetermines that we caused harm by complying with certain foreign laws. This could have a material adverse effect on our business, results of operations or financial conditions.
Further, increasing investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities are intended to advance China's stated national policy objectives. The Chinese government may restrict us from participating in the China market, or may prevent us from competing effectively with Chinese companies. Weakening of foreign markets, especially in China, has resulted in lower demand for our products, which has adversely impacted our revenue in the past and, if such conditions continue, it too could have a material adverse effect on our business, results of operations or financial conditions.
We purchase a substantial portion of our raw materials and equipment from foreign suppliers. Please see the risks related to access to raw materials, components, or equipment on page 16. In addition, we own product assembly and testing facilities, and finished goods warehouses near Bangkok, Thailand, which has experienced periods of political instability and severe flooding in the past. There can be no assurance that any future flooding or political instability in Thailand would not have a material adverse impact on our operations. We have a test facility in Calamba, Philippines.the Philippines, and specialized test and assembly facilities for our aerospace and defense products in Germany, France, Ireland, the United Kingdom, the Philippines, Thailand, and the United States. We use foundries and other foreign contractors for a significant portion of our assembly and testing and wafer fabrication requirements.
Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
Geopolitical instability and conflicts in the Middle East, including military activity and escalating tensions involving Iran, create significant uncertainty for global markets, including energy and materials markets, and could adversely impact our operations and financial results. The region is a major source of global oil production and a critical transit point for maritime shipping routes. Hostilities, infrastructure damage, sanctions, or blockages of key shipping lanes could disrupt oil production and distribution, reducing the availability of fuel or increasing fuel prices. Recent armed conflicts have already forced key state sponsored fuel production facilities in the region offline, contributing to global fuel price volatility.
In addition to fuel‑related risks, current conflict in the Middle East is disrupting supplies of critical semiconductor materials - including helium and bromine, both essential for wafer fabrication processes. For example, Qatar accounts for more than one‑third of the world’s helium production, and recent Iranian drone strikes halted operations at major helium facilities. Additionally, bromine supplies are also at risk, as approximately two‑thirds of the global production originates from Israel and Jordan, and disruptions in the region could affect semiconductor etching, detection, and circuit‑formation processes.
Our operations rely heavily on global logistics networks - including ocean freight, air freight, and long‑haul trucking - that depend on stable and cost‑effective fuel supplies. Significant increases in fuel costs, reductions in carrier capacity, or extended transit times could materially increase our transportation and distribution expenses. Shipping carriers may impose fuel surcharges, reroute vessels, reduce service frequency, or experience delays, each of which could impair our ability to obtain raw materials or deliver finished products to customers on expected timelines.
Because many of our semiconductor products support time‑critical applications in the automotive, industrial, communications, aerospace and defense, and consumer sectors, delays in obtaining critical materials or increases in logistics costs could negatively impact customer relationships and customers’ production schedules or purchasing decisions, reduce demand, and result in penalties under certain customer agreements. Prolonged or severe disruption - whether due to fuel shortages, materials constraints, logistics delays, or increased energy costs, or reduced customer demand - could adversely affect our ability to meet customer commitments and could materially harm our business, financial condition, and results of operations.
We depend on orders that are received and shipped in the same quarter and have limited visibility to product shipments other than orders placed under ourcertain LTSAs.
Our net sales in any given quarter depend upon a combination of shipments from backlog, and orders that are both received and shipped in the same quarter, which we call turns orders. We measure turns orders at the beginning of a quarter based on the orders needed to meet the shipment targets that we set entering the quarter. Historically, our ability to respond quickly to customer orders has been part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules. Shorter lead times generally mean that turns orders as a percentage of our business are relatively high in any particular quarter and reduce our visibility on future shipments. Turns orders correlate to overall semiconductor industry conditions and product lead times, and in light of current industry conditions, turns orders are once again key to our ability to meet our business objectives. Because turns orders can be difficult to predict, especially in times of economic volatility and changes in tariffs, as experienced in current and recent quarters, where customers may change order levels within the quarter, varying levels of turns orders make it more difficult to forecast net sales. The level of turns orders has in the past and may in the future decrease in periods where customers are holding excess inventory of our products. We believe our customers increased their order levels in previous periods of tight supply to help ensure they had sufficient inventory of our products to meet their needs, and then they were unable to sell their products at their forecasted levels which reduced our level of turns orders. As a significant portion of our products are manufactured at foundries, foundry lead times may affect our ability to satisfy certain turns orders. If we do not achieve a sufficient level of turns orders in a particular quarter relative to our revenue targets or effectively manage our production based on changes in order forecasts, our revenue and operating results will likely suffer.
Starting in the first quarter of calendar 2022, we began entering into LTSAs, which offer our customers the ability to receive prioritized capacity. LTSAs are not a guarantee of supply; however, they were designed to provide the highest priority for those orders which were under this program, and the capacity priority was on a first-come, first-served basis until the available capacity was booked. ForThis example,program and increases in thecustomer fourth quarter of fiscal 2023, in fiscal 2024 and in fiscal 2025, we accommodated requests by customers to push-out certain orders to help them manage inventoryorder levels and,outside in some cases, to help other customers that are experiencing supply shortages. However, in the event that we decide to not accommodate a request to push out orders and customers underof this program still attempt to cancel or reschedule orders, or refuse shipment, we may be unable to recover damages from customers that default under this program. Additionally, this program has resulted in some customers holding excess inventory of our products and thus decreased their need to place new orders, including turns orders, in recentfiscal periods.2023 Weand fiscal 2024. Because we built inventories in response to customer demand, and the cancellation or deferral of product orders has resulted in excess inventory, which hasthen resulted in write-downs of inventory and an adverse effect on our gross margins in recentfiscal periods.2025 and fiscal 2026.
The semiconductor industry is intensely competitive and faces price erosion and rapid technological change. We compete with major domestic and international semiconductor companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution and other resources than we do. In addition, some governments, such as China, may provide, or have provided and may continue to provide, significant assistance financial or otherwise, to some of our competitors, or to new entrants, and may intervene in support of national industries and/or competitors, including to trytrying to disrupt the U.S. semiconductor industry. The semiconductor industry has experienced significant consolidation in recent years which has resulted in several of our competitors becoming much larger in terms of revenue, product offerings and scale. We may be unable to compete successfully in the future, which could harm our business. Our ability to compete successfully depends on a number of factors, including, but not limited to:
•our success in designing and manufacturing new products including those implementing new technologiestechnologies, including AI, or complying with new governmental restrictions regarding implementation of new technologies;
•product introductions by our competitors or by us in response to actions taken by our competitors;
•the rate at which the markets that we serve redesign and change their own productsproducts, including in response to market changes caused by developing technologies such as AI and other market forces;
•product introductions by our competitors;
We have experienced, and may experience in the future, modest pricing declines in certain of our proprietary product lines, primarily due to competitive conditions. In the past, we have moderated average selling price declines in many of our proprietary product lines by introducing new products with more features and higher prices.prices and we were able to pass cost increases on to our customers in the form of higher price for our products. However, we may not be able to do so in the future. We have experienced in the past, and may experience in the future, competitive pricing pressures on our memory and non-proprietary products in our analog product line. In fiscal 2023 and fiscal 2022, we experienced cost increases which we were able to pass on to our customers.products. However, in the future, we may be unable to maintain average selling prices due to an oversupply of product in the market or increased pricing pressure, including as a result of tariffs being applied to the products we sell or purchase, or actions taken by foreign governments such as China to favor companies located in their own country through tariffs or other actions, which could adversely impact our operating results.
Integrated circuit manufacturing processes are complex and sensitive to many factors, including contaminants in the manufacturing environment or materials used, the performance of our personnel and equipment, and other quality issues. As is typical in the industry, we have from time to time experienced lower than anticipated manufacturing yields. Our operating results will suffer if we are unable to maintain yields at or above approximately the current levels. This could include delays in the recognition of revenue, loss of revenue, and penalties for failure to meet shipment deadlines. Our operating results are adversely affected when we operate below normal capacity. In fiscal 2025 and in fiscal 2024, we operated at below normal capacity levels resulting in unabsorbed capacity charges of $173.0 million and $40.7 million, respectively. Additionally, as we are moving production between factories, we may experience lower than anticipated yields during this transition.
Management's Discussion & Analysis (MD&A)
New heading “Dividends and Share Repurchases”
Removed heading “Capital Returns”
Largest changes
“There continues to be uncertainty regarding overall macroeconomic conditions, including increased geopolitical tensions, risk of a recession, and the effects of potential trade policies, including tariffs. Long established global trade relationships are potentially changing in fundamental ways that make it difficult to predict how global supply chains and economic environments will be affected. For example, in March and April 2025, the U.S. imposed tariffs on imports from China and other countries and foreign governments imposed additional tariffs on imports from the U.S. …”see in full comparison
“During fiscal 2025, our overall business was weak as we navigated through a large inventory correction due to our customers holding excess levels of inventory. In March 2025, we implemented a business recovery plan which included restructuring actions to reduce our costs, resize our manufacturing operations and reduce our headcount. In fiscal 2026, we saw an improvement in our business due to increased demand after our customers reduced excess inventory levels. Net sales in all our product lines and all our geographies increased in fiscal 2026 compared to fiscal 2025. …”see in full comparison
In March 2025, we entered into a Second Amended and Restated Credit Agreement (the Second Amended and Restated Credit Agreement) pursuant to which thesee in full comparisonamended and restatedCredit Agreement,dated as of December 16, 2021was amended and restated in its entirety. ThesecondSecondamendedAmended andrestatedRestated Credit Agreement provides for an unsecured revolving loan facility in an aggregate principal amount of up to $2.25 billion, with a $250.0 million foreign currency sublimit, a $25.0 million letter of credit sublimit and a $20.0 million swingline loan sublimit. The Second Amended and Restated Credit Agreement amended the maximum total leverage ratio financial covenant to the following: 5.50 to 1.00 for period ending March 31, 2025, 5.50 to 1.00 for period ending June 30, 2025, 6.25 to 1.00 for period ending September 30, 2025, 5.75 to 1.00 for period ending December 31, 2025, 4.75 to 1.00 for period ending March 31, 2026, 4.00 to 1.00 for period ending June 30, 2026, 3.75 to 1.00 for period ending September 30, 2026, and 3.50 to 1.00 for any such period ended after the Restatement Effective Date that is not a period ending during the Covenant Relief Period. The Covenant Relief Period means the period following the Restatement Effective Date to (but excluding) the earlier of (a) December 31, 2026 and (b) the date in which the Total Leverage Ratio for the most recently ended fiscal quarter shall not exceed 3.50 to 1.00 and certain other conditions are satisfied.In November 2024, the amended and restated Credit Agreement, was amended to amend the maximum total leverage ratio financial covenant for the quarterly periods ending on December 31, 2024 through December 31, 2025 to 4.75 to 1.00. In August 2023, our amended and restated Credit Agreement, dated as of December 16, 2021 was amended by the first incremental term loan amendment, dated as of August 31, 2023. Pursuant to this amendment, we borrowed an aggregate principal amount of $750.0 million under the new 2025 Term Loan Facility bearing interest at the Adjusted Term SOFR Rate, plus a margin of 1.125% to 1.5%, or Alternate Base Rate, plus a margin of 0.125% to 0.5%, with a maturity date of August 31, 2025, which was repaid in full in December 2024. The interest rate margins are determined based on our credit ratings.
“During fiscal 2024, many of our customers felt the adverse effects of slowing economic activity, increasing business uncertainty, persistent inflation and higher interest rates and we received requests to push out or cancel backlog resulting from customer actions to reduce inventory levels. …”see in full comparison
“While we continue to evaluate the potential impacts of these proposed tariffs and our ability to mitigate their related impacts, these tariffs and any retaliatory tariffs imposed may adversely impact our revenue and cost of goods sold in the U.S. and internationally. …”see in full comparison
“Loss on settlement of debt in fiscal 2025 was $1.7 million compared to $12.2 million in fiscal 2024. In fiscal 2025, the loss primarily related to the amendment and restatement of our Revolving Credit Facility. In fiscal 2024, the loss related to the settlement of a portion of our outstanding Convertible Debt.”see in full comparison
Full comparison: every changed paragraph (76)
•Our expectation that we will experience period-to-period fluctuations in operating results, gross margins, and product mix and average gross profit per unit;
•Our expectations regarding our inventory levels and revenue growth;
•Our ability to effectively utilize our facilities at appropriate capacity levels or obtain sufficient capacity from our manufacturing, assembly and test sub-contractors;
•The benefits and risks of the use of artificial intelligence by us, our partners and customers, or malicious third parties and its impact on our products, our labor and technological needs, and regulatory or intellectual property compliance;
•The amounts and timing, and our plans and expectations relating to the U.S. Statutory Notice of Deficiencies and proposed income adjustment from the Malaysian Inland Revenue Board;
•The impact on our business from the global minimum tax (GMT) and the Side-by-Side system introduced by the Organisation for Economic Co-operation and Development;
•Our expectation that the global minimum tax (GMT) will not have a material impact on our fiscal 2026 results;
•Our expected debt obligation maturities, including the conversion of debt, Depositary Shares, and Series A Preferred Stock, and plans to refinance or repay our existing debt;
•The impact of any failure by useus to adequately control the storage, use, discharge and disposal of regulated substances;
•Our expectations regarding the amount, timing, and future applications for investment tax credits under the CHIPS Act;
The following discussion should be read in conjunction with the consolidated financial statements and the related notes that appear elsewhere in this document, as well as with other sections of this Annual Report on Form 10-K, including "Item 8. Financial Statements and Supplementary Data." For an overview of our business and recent trends, refer to our "Business and Macroeconomic Environment" discussed below.
We begin our Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) with a discussion of our Business and Macroeconomic Environment followed by the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then discuss our results of operations for fiscal 20252026 compared to fiscal 2024,2025, followed by an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in the section titled "Liquidity and Capital Resources." Our liquidity and capital resources section generally discusses fiscal 20252026 compared to fiscal 2024.2025. For our discussion of our fiscal 20242025 results compared to fiscal 20232024 for both our results of operations and our liquidity and capital resources sections, refer to "Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K for the fiscal year ended March 31, 20242025 filed with the SEC on May 23, 20242025 which is incorporated by reference herein.
During fiscal 2025, our overall business was weak as we navigated through a large inventory correction due to our customers holding excess levels of inventory. In March 2025, we implemented a business recovery plan which included restructuring actions to reduce our costs, resize our manufacturing operations and reduce our headcount. In fiscal 2026, we saw an improvement in our business due to increased demand after our customers reduced excess inventory levels. Net sales in all our product lines and all our geographies increased in fiscal 2026 compared to fiscal 2025. Consistent with our recovery plan, we reduced inventory in fiscal 2026 compared to fiscal 2025 and we are now in a significant revenue growth mode and we expect our inventory to continue to decline as we appropriately manage our manufacturing and foundry resources. However, there continues to be uncertainty regarding overall macroeconomic conditions, including increased geopolitical tensions, risk of a recession, and the effects of potential trade policies, including tariffs.
During fiscal 2024, many of our customers felt the adverse effects of slowing economic activity, increasing business uncertainty, persistent inflation and higher interest rates and we received requests to push out or cancel backlog resulting from customer actions to reduce inventory levels. Although we began to see evidence of improvements in our business in the March 2024 quarter which have continued in fiscal 2025, such as a decrease in customer requests to push out or cancel backlog while the number of expedites and shipment pull in requests grew, the overall macroeconomic environment remained weak throughout fiscal 2025 as we navigated through a large inventory correction. With our inventory levels being high and having ample capacity in place, on December 2, 2024, we announced our decision to close our Tempe, Arizona wafer fabrication facility that we refer to as Fab 2. Many of the process technologies that run in Fab 2 also run in our Oregon and Colorado factories, which both have ample clean room space for expansion. The closure of Fab 2 was completed in May 2025 and we expect that it will generate annual cash savings of approximately $90 million. Due to the high levels of inventory of the products which are manufactured in Fab 2, we do not expect to see income statement savings from the closure until the start of the June 2026 quarter based on a first-in first-out basis. We expect that the Fab 2 closure will begin to help us moderate our inventory levels. On March 3, 2025, we announced additional restructuring actions to reduce costs, resize manufacturing operations and to reduce headcount at our Fab 4 and Fab 5 facilities and our backend manufacturing facility in the Philippines which will result in approximately $25 million in annual savings from the temporarily reduced compensation costs. These actions resulted in a reduction of inventory in the March 2025 quarter. We also announced a 10% headcount reduction across our company to decrease our operating expenses, which reduction will be fully implemented by the June 2025 quarter. We expect this action to reduce our ongoing operating expenses by approximately $90 million to $100 million on an annualized basis. Consistent with the macroeconomic environment, most of our factory expansion activity remains paused, we have reduced our planned capital investments, and we remain focused on reducing our inventory levels and days of inventory through fiscal 2026.
There continues to be uncertainty regarding overall macroeconomic conditions, including increased geopolitical tensions, risk of a recession, and the effects of potential trade policies, including tariffs. Long established global trade relationships are potentially changing in fundamental ways that make it difficult to predict how global supply chains and economic environments will be affected. For example, in March and April 2025, the U.S. imposed tariffs on imports from China and other countries and foreign governments imposed additional tariffs on imports from the U.S. It is unclear what tariffs will apply to semiconductors during this time of change.
While we continue to evaluate the potential impacts of these proposed tariffs and our ability to mitigate their related impacts, these tariffs and any retaliatory tariffs imposed may adversely impact our revenue and cost of goods sold in the U.S. and internationally. The imposition of tariffs could impact our supply chain for rare earth and other materials and cause a decrease in the sales of products to customers located in China, other customers selling to Chinese end users, or other global customers, which could materially and adversely affect our business, financial condition and results of operations. The ultimate impact of any tariffs will depend on various factors, including whether semiconductors continue to be exempt from tariffs and any changes to the amount, scope and nature of the tariffs imposed by the U.S. or other countries. For additional information, see “Item 1A. Risk Factors”, including the risk factor titled “We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable."
Our discussion and analysis of our financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. GAAP. We review the accounting policies we use in reporting our financial results on a regular basis. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosure of contingent liabilities.expenses. On an ongoing basis, we evaluate our estimates, including those related to revenue recognition, inventories,inventories and income taxes and contingencies.taxes. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Our results may differ from these estimates due to actual outcomes being different from those on which we based our assumptions. We review these estimates and judgments on an ongoing basis. We believe the following critical accounting policies affect our more significant judgments and estimates used in the preparation of our consolidated financial statements.
Overall, our estimates of adjustments to contract price due to variable consideration under our contracts with distributor customers, based on our assumptions, have been materially consistent with our actual results. However, these estimates are subject to management’s judgment and actual provisions could be different from our estimates, resulting in future adjustments to our revenue and operating results. A 100-basis point increase in the blended price concession rate would have changed the measurement of our refund liability recorded within accrued liabilities by $5.0approximately $4.0 million as of March 31, 2025.2026.
The decreaseincrease in net sales in fiscal 20252026 compared to fiscal 20242025 was primarily due to adverseincreased economicdemand conditions, including slowing economic activity, increasing business uncertainty, persistent inflation, high interest rates, and shorter product lead times, which factors resulted in manyafter customers havingreduced higherexcess inventory levels ofas inventorywell andas delayingnew orcustomer reducingdesign orders.win activity entering production. Due to the size, complexity and diversity of our customer base, we are not able to quantify any material factor contributing to the changes in net sales. See our "Business and Macroeconomic Environment" discussion above for further information on our business outlook.
Other factors that we believe contributed to the decreasechanges in our reported net sales for fiscal 20252026 compared to fiscal 20242025 and which are drivers of long-term trends in our net sales but which factors we are not able to quantify include:
•intense competition in our key markets;
We sell a large number of products to a large and diverse customer base and there was not any single product or customer that accounted for a material portion of the changechanges in our net sales in fiscal 20252026 or fiscal 2024.2025.
Net sales of our mixed-signal microcontroller products decreasedincreased approximately 47.3%4.7% in fiscal 20252026 compared to fiscal 2024.2025. The decreaseincrease in net sales was primarily due to adverseincreased economicdemand conditions, including slowing economic activity, increasing business uncertainty, competitive pressures, persistent inflation, high interest rates, and shorter product lead times, which factors resulted in manyafter customers havingreduced higherexcess inventory levels ofas inventorywell andas delayingnew orcustomer reducingdesign orders.win activity entering production.
Net sales from our analog product line decreasedincreased approximately 42.6%14.9% in fiscal 20252026 compared to fiscal 2024.2025. The decreaseincrease in net sales was primarily due to adverseincreased economicdemand conditions,due includingto slowinga economicportion activity,of increasingour businesscustomer uncertainty, persistent inflation, high interest rates, and shorter product lead times, which factors resulted in many customersbase having higherreduced excess inventory levels ofas inventorywell andas delayingnew orcustomer reducingdesign orders.win activity entering production.
Net sales related to these products and services decreasedincreased approximately 26.1%3.4% in fiscal 20252026 compared to fiscal 2024.2025. ThisThe decreaseincrease in net sales was primarily due to adverse economic conditions, including slowing economic activity, increasing business uncertainty, persistent inflation, high interest rates, and shorter product lead times, which factors resulted in many customers having higher levelssales of inventory and delaying or reducing orders. In fiscal 2025, we settled an ongoing legal matter with onecertain of our licenseesintellectual whichproperty resultedrights inand thealso releasedue to a portion of an accrual, which increased both our revenuecustomer base having worked through their previous high inventory balances and profitsneeding byto $13.3purchase millionproducts inat sucha fiscalhigher period.level to support demand. Net sales of our other product line can fluctuate over time based on general economic and semiconductor industry conditions as well as changes in demand for our FPGA products, licenses, engineering services, memory products, timing systems, and manufacturing services (wafer foundry and assembly and test subcontracting).
Distributors accounted for approximately 45%47% and 47%45% of our net sales in fiscal 20252026 and fiscal 2024,2025, respectively. With the exception of Arrow Electronics, our largest distributor, which accounted for 10%12% and 12%10% of our net sales in fiscal 20252026 and in fiscal 2024,2025, respectively, no other distributor or direct customer accounted for more than 10% of our net sales induring fiscalthese 2025 or in fiscal 2024.periods. Our distributors focus primarily on servicing the product requirements of a broad base of diverse customers. We believe that distributors provide an effective means of reaching this broad and diverse customer base and that customers recognize Microchip for its products and brand name and use distributors as an effective supply channel.
At March 31, 2025,2026, our distributors maintained 3326 days of inventory of our products compared to 4133 days at March 31, 2024.2025. Over the past ten fiscal years, the days of inventory maintained by our distributors have fluctuated between approximately 17 days and 43 days. Inventory holding patterns at our distributors have had a material adverse impact on our net sales in recentfiscal periods.2025 Due toand the first half of 2026, as our distributors held relatively high levellevels of inventory days,and wepurchased havefewer accommodatedproducts effortsfrom by our distributors to manage their inventory levels by allowing them to push-out or cancel orders.us.
Americas sales include sales to customers in the U.S., Canada, Central America and South America. Sales to foreign customers accounted for approximately 75% of our total net sales in each of fiscal 20252026 and fiscal 2024.2025. TheNet decreasesales increased in netall sales in the European marketgeographies in fiscal 20252026 compared to fiscal 2024 was due to general weakness in the European economy, and decreases in our net sales in the European industrial and automotive markets, which were particularly weak. Our net sales in the Americas and Asia market decreased in fiscal 2025 compared to fiscal 2024, primarily due to adverseincreased economicdemand conditions,after including slowing economic activity, persistent inflation, high interest rates, and shorter product lead times which resulted in delayed orcustomers reduced orders.excess inventory levels as well as new customer design win activity entering production. Substantially all of our foreign sales are U.S. dollar denominated. Our sales force in the Americas and Europe supports a significant portion of the design activity for products which are ultimately shipped to Asia.
The primary reasonreasons for the decreaseincrease in gross profit of $2.34$253.2 billionmillion in fiscal 20252026 compared to fiscal 20242025 waswere andue unfavorableto netchanges impact of sales volume,in product mix, geographichigher mix,licensing revenue and averagelower grossinventory profit per unit in fiscal 2025.reserves. The net impact of product mix and average gross profit per unit may fluctuate over time due to the mix of sales volumes of lower or higher margin products, changes in selling prices, and fluctuations in product costs. We are not able to separately quantify these impacts on our gross profit. The impact of unabsorbed capacity charges was an adverseunfavorable impact of $132.3$27.8 million in fiscal 20252026 compared to fiscal 2024.2025. Unabsorbed capacity charges are expensed as incurred when we operate our manufacturing facilities below normal levels. The net impact to our gross profit from inventory reserve charges was ana adversefavorable impact of $87.7$115.3 million in fiscal 20252026, compared to fiscal 2024.2025. The gross margin impact of changes in licensing revenue, which has no associated cost of sales, was a favorable impact of $27.7$32.7 million in fiscal 20252026 compared to fiscal 2024.2025.
Our overall inventory levels were $1.04 billion at March 31, 2026, compared to $1.29 billion at March 31, 2025, compared to $1.32 billion at March 31, 2024.2025. We maintained 251185 days of inventory on our balance sheet at March 31, 20252026 compared to 224251 days of inventory at March 31, 2024.2025. Our overall inventory level in dollars wasand generallydays flatdecreased as a result of our efforts to balance manufacturing production, customer demand and inventory levels. However, our days of inventory increased significantly due to lower net sales. Our inventory amounts are impacted by timing of shipment activity in the quarter, the timing of receipt of raw materials, foundry wafers, and strategic last time buy materials and completion of finished goods. We believe that our current inventory and production capacity are adequate to fulfill the projected requirements of our customers.
We operate assembly and test facilities in Thailand,Thailand and the Philippines,Philippines. and other locations throughout the world. During fiscal 2025, approximatelyApproximately 67% of our assembly requirements were performed in our internal assembly facilities, compared to approximately 59%facilities during each of fiscal 2024.2026 and fiscal 2025. During fiscal 2025,2026, approximately 67%69% of our test requirements were performed in our internal facilities, compared to approximately 71%67% during fiscal 2024.2025. The percentage of our assembly and test operations that are performed internally fluctuates over time based on supply and demand conditions in the semiconductor industry, our internal capacity capabilities and our acquisition activities. We believe that the assembly and test operations performed at our internal facilities provide us with significant cost savings compared to third-party contractor assembly and test costs, as well as increased control over these portions of the manufacturing process. In addition, we have specialized assembly and test facilities dedicated to our aerospace and defense products in Germany, France, Ireland, the United Kingdom, the Philippines, Thailand, and the United States. These facilities are designed to support the unique requirements of these sectors, helping to accelerate time to market and ensure consistent, high-quality products. We plan to continue to selectively invest in assembly and test equipment to increase our internal capacity capabilities and transition certain outsourced assembly and test capacity to our internal facilities.
We rely on outside wafer foundries for a significant portion of our wafer fabrication requirements. ApproximatelyDuring 64%fiscal 2026, approximately 65% of our net sales came from products that were produced at outside wafer foundriesfoundries, incompared eachto ofapproximately 64% during fiscal 2025 and fiscal 2024.2025. This percentage may vary based on supply and demand conditions in the market.
R&D expenses for fiscal 20252026 were $1.09 billion, or 23.0% of net sales, compared to $983.8 million, or 22.4% of net sales, compared to $1.10 billion, or 14.4% of net sales, for fiscal 2024.2025. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies. We believe these investments are significant factors in maintaining our competitive position. R&D costs are expensed as incurred. Assets purchased to support our ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their expected useful lives. R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments.
R&D expenses decreasedincreased $113.6$102.1 million, or 10.4%, for fiscal 20252026 compared to fiscal 2024.2025. The primary reasons for the decreaseincrease in R&D expenses in fiscal 20252026 compared to fiscal 20242025 waswere lowerhigher employee compensation costs.costs, including higher share-based compensation partially offset by our restructuring efforts.
Selling, general and administrative expenses for fiscal 20252026 were $674.3 million, or 14.3% of net sales, compared to $617.7 million, or 14.0% of net sales, compared to $734.2 million, or 9.6% of net sales, for fiscal 2024.2025. Our goal is to continue to be more efficient with our selling, general and administrative expenses. Selling, general and administrative expenses include salary expenses related to field sales, marketing and administrative personnel, advertising and promotional expenditures and legal expenses as well as costs related to our direct sales force, CEMs and ESEsFAEs who work remotelyto stimulate demand from sales offices worldwide to stimulate demand by assisting customers in the selection and use of our products.
Selling, general and administrative expenses decreasedincreased $116.5$56.6 million, or 15.9%,9.2%, for fiscal 20252026 compared to fiscal 2024.2025. The primary reasonreasons for the decreaseincrease in selling, general and administrative expenses waswere lowerhigher employee compensation costs.costs, including higher share-based compensation partially offset by our restructuring efforts.
Special Charges (Income) and Other, Net
During fiscal 2026, we incurred special charges and other, net of $39.7 million primarily due to restructuring expenses, including $21.8 million related to the closure of our Tempe, Arizona wafer fabrication facility and $14.5 million related to contract exit costs. During fiscal 2025, we incurred special charges and other, net of $79.2 million primarily due to restructuring expenses, including $45.7 million related to contract exit costs and $27.1 million related to employee separation costs.
During fiscal 2025, we incurred special charges and other, net of $79.2 million primarily due to restructuring expenses, including $45.7 million related to contract exit costs and $27.1 million related to employee separation costs. During fiscal 2024, we earned special income and other, net of $12.3 million primarily related to a favorable resolution of a previously accrued legal matter partially offset by restructuring costs of acquired and existing wafer fabrication operations to increase operational efficiency. Restructuring expenses incurred during fiscal 2024 include $6.2 million related to the restructuring of our wafer fabrication operations.
Interest expense in fiscal 2025 was $259.2 million compared to $198.3 million in fiscal 2024. The primary reasons for the increase in interest expense in fiscal 2025 compared to fiscal 2024 were higher interest rates on our outstanding variable rate debt and higher outstanding debt balances, offset in part by lower interest expense on our revolving credit facility.
Loss on settlement of debt in fiscal 2025 was $1.7 million compared to $12.2 million in fiscal 2024. In fiscal 2025, the loss primarily related to the amendment and restatement of our Revolving Credit Facility. In fiscal 2024, the loss related to the settlement of a portion of our outstanding Convertible Debt.
OtherInterest loss, net,expense in fiscal 20252026 was $5.7$221.3 million compared to other loss, net of $2.2$259.2 million in fiscal 2024.2025. The primary reasonreasons for the changedecrease in otherinterest lossexpense duringin fiscal 20252026 compared to fiscal 20242025 relateswere tolower foreigndebt currencybalances exchangeand ratelower fluctuations.interest rates.
Other loss, net, in fiscal 2026 was $6.7 million compared to other loss, net of $5.7 million in fiscal 2025. The primary reason for the change in other loss during fiscal 2026 compared to fiscal 2025 relates to foreign currency exchange rate fluctuations.
Our provision for income taxes is attributable to U.S. federal, state, and foreign income taxes. Our effective tax rate for the fiscal year ended March 31, 2025,2026, increaseddecreased over the same period last year as a result of changes in the amount of pre-tax income earned, R&D credits, and the effects of foreign operations and various tax reserves.operations.
Our effective tax rate in fiscal 2026 includes a $55.6 million tax benefit received from current year generated R&D credits, which reduced our effective tax rate by 20.3%; an $83.0 million tax benefit for the notional interest deduction, which reduced our effective tax rate by 30.4%; and a $119.6 million tax expense for the effects of foreign operations, which increased our effective tax rate by 43.7%.
Our effective tax rate in fiscal 2024 includes a $69.8 million tax benefit received from R&D credits, which reduced our effective tax rate by 3.0%; and a $62.9 million tax expense for the effects of foreign operations, which increased our effective tax rate by 2.7%.
We are subject to taxation in many jurisdictions in which we have operations. The effective tax rates that we pay in these jurisdictions vary widely, but they are generally lower than our combined U.S. federal and state effective tax rate. Our domestic blended statutory tax rate in each of fiscal 2025 and fiscal 2024 was approximately 22%. Our non-U.S. blended statutory tax rates in fiscal 2025 and fiscal 2024 were lower than this amount. The difference in rates applicable in foreign jurisdictions results from a number of factors, including lower statutory rates, tax holidays, financing arrangements and other factors. Our effective tax rate has been and will continue to be impacted by the geographical dispersion of our earnings and losses.
Our foreign tax rate differential benefit primarily relates to our operations in Malta taxed at a 5.0% statutory tax rate and Ireland taxed at a 12.5% statutory tax rate. Additionally, our Thailand manufacturing operations are currently subject to numerous tax holidays granted to us based on our investment in property, plant, and equipment in Thailand. Our tax holiday periods in Thailand expire at various times in the future; however, we actively seek to obtain new tax holidays, otherwise we will be subject to tax at the statutory tax rate of 20.0%. We do not expect the future expiration of any of our tax holiday periods in Thailand to have a material impact on our effective tax rate.
In September 2021, we received a Statutory Notice of Deficiency (2007 to 2012 Notice) from the United States Internal Revenue Service (IRS) for fiscal 2007 through fiscal 2012. The disputed amounts largely relate to transfer pricing matters. In December 2021, we filed a petition in the U.S. Tax Court challenging the 2007 to 2012 Notice. In September 2023, we received a Revenue Agent Report (RAR) from the IRS for fiscal 2013 and fiscal 2016. In October 2023, we received a Statutory Notice of Deficiency (2014 to 2015 Notice) from the IRS for fiscal 2014 and fiscal 2015. The disputed amounts for fiscal 2013 to fiscal 2016 largely relate to transfer pricing matters. In December 2023, we filed a petition in the U.S. Tax Court challenging the 2014 to 2015 Notice. In September 2025, we reached a settlement with the IRS for fiscal 2007 through fiscal 2015.
In May 2023, we received a proposed income adjustment from the Malaysian Inland Revenue Board (IRB) for fiscal 2020. In December 2023, we received a Notice of Assessment from the IRB asserting the same proposed income adjustment. In March 2025, we entered into a Consent Judgment before the High Court, agreeing that the dispute will be heard before the Special Commissioners of Income Tax (SCIT). It was also agreed that the payment on the taxes assessed is stayed and the IRB will pause all enforcement and proceedings against the collection of the taxes assessed until the appeal before the SCIT is concluded. If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to $410.0MYR million.1.9 billion (approximately $480.2 million based on the exchange rate as of March 31, 2026). The disputed amounts largely relate to the characterization of certain assets. The timing of adjudicating this matter is uncertain but could occur in the next 1218 months.
In January 2025, we received several assessments from the German Tax Authorities (GTA) regarding the German extraterritorial taxation of royalty payments between nonresidents (referred to as offshore receipts in respect of intangible property or ORIP) and intellectual property transfers by nonresidents (referred to as extraterritorial capital gains taxation or ETT). If the assessment is upheld, it could result in income taxes and penalties up to $92.0 million. The timing of adjudicating this matter is uncertain but could occur in the next 12 months.
We firmly believe that the assessmentsIRB describedassessment above areis without merit and we plan to pursue all available administrative and judicial remedies necessary to resolve thisthe matter. We intend to vigorously defend our position, and we are confident in our ability to prevail on the merits. We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. The ultimate outcome of disputes of this nature is uncertain, and if the IRS, IRB and GTA were to prevail on theirits assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
The Organisation for Economic Co-operation and Development has introduced a global minimum corporate tax framework (GMT), with phased implementation starting January 1, 2024. While the U.S. has not adopted GMT, several countries where we operate have enacted related legislation, and others are expected to follow. In January 2026, the Organisation for Economic Co-operation and Development published a side-by-side system, which excludes U.S. multi-national entities from certain aspects of the GMT. We will continue to monitor developments around this guidance. The impact of the GMT for the fiscal year ended March 31, 2026 was not material to our financial results.
In July 2025, the U.S. government enacted the One Big Beautiful Bill Act (OBBBA), which includes permanent extensions of certain Tax Cuts and Jobs Act provisions and changes to the international tax framework. The effects of these changes have been recognized in the period ending March 31, 2026. The impact of OBBBA for the fiscal year ended March 31, 2026 was not material to our financial results. We will continue to evaluate the broader implications of OBBBA, including the effects of future regulatory guidance and interpretations.
In August 2022, the U.S. government enacted the Inflation Reduction Act into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (Corporate AMT) of 15.0% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.00 billion over a three-year period, as well as a 1% excise tax on the net fair market value of stock repurchases made after December 31, 2022. The Corporate AMT is effective beginning in fiscal 2024. The Inflation Reduction Act did not have a material impact on the year ending March 31, 2025 and the year ending March 31, 2024.
As of March 31, 2025, 55 countries have enacted various aspects of the Organisation for Economic Co-operation and Development’s Base Erosion and Profit Shifting Project to ensure that multinational enterprises pay a GMT. In 38 of those countries, the GMT is effective for tax years beginning in our fiscal 2025. As of March 31, 2025, the impact of GMT on our fiscal 2025 results is not material.
We had $771.7$240.3 million in cash and cash equivalents at March 31, 2025,2026, ana increasedecrease of $452.0$531.4 million from the March 31, 20242025 balance.
Net cash provided by operating activities was $962.1 million in fiscal 2026 primarily due to net income of $230.0 million, adjusted for non-cash and non-operating charges of $899.8 million and net cash outflows of $167.7 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities in fiscal 2026 include an increase in trade accounts receivable driven primarily by higher revenue and timing of shipments and collections, a decrease in income tax payable due to tax payments and settlements, a decrease in accrued liabilities and other long-term liabilities primarily due to cash refunded to our customers under certain LTSAs, offset by a decrease in inventories as a result of our efforts to balance manufacturing production, customer demand and inventory levels. Net cash provided by operating activities was $898.1 million in fiscal 2025 primarily due to net loss of $0.5 million, adjusted for non-cash and non-operating charges of $798.5 million and net cash inflows of $100.1 million from changes in our operating assets and liabilities.
Net cash provided by operating activities was $898.1 million in fiscal 2025 primarily due to net loss of $0.5 million, adjusted for non-cash and non-operating charges of $798.5 million and net cash inflows of $100.1 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities in fiscal 2025 include a decrease in trade accounts receivable driven primarily by reduced revenue and timing of shipments and collections, a decrease in inventories, offset by decreases in accrued liabilities driven by decreases in sales related reserves, and a decrease due to cash refunded to our customers under the LTSAs. Net cash provided by operating activities was $2.89 billion in fiscal 2024 primarily due to net income of $1.91 billion, adjusted for non-cash and non-operating charges of $1.06 billion and net cash outflows of $76.7 million from changes in our operating assets and liabilities.
Net cash used in investing activities was $195.5 million for fiscal 2026 compared to $287.8 million for fiscal 20252025. compared to $392.1 million forIn fiscal 2024. Fiscal 20252026 and fiscal 2024,2025, investing cash flows primarily related to capital purchases and investments in other assets.
What changed in the latest 10-Q
Risk Factors
New heading “We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.”
New heading “Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, resellers or suppliers.”
New heading “Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.”
New heading “We face significant and evolving risks related to AI across our products, operations, cybersecurity, regulatory compliance, intellectual property, confidential information, privacy, workforce, customer transactions, and customer demand, any of which could adversely affect our business, results of operations, financial condition and reputation.”
Removed heading “We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.”
Largest changes
“We regularly review the financial viability and performance of our licensees, customers, distributors, resellers and suppliers. Any downturn in global or regional economic conditions as a result of geopolitical conditions, broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. …”see in full comparison
“We regularly review the financial viability and performance of our licensees, customers, distributors, resellers and suppliers. Any downturn in global or regional economic conditions as a result of the enactment of broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. …”see in full comparison
“Our customers may also be adversely affected by the tariffs, supply interruptions and other issues described above. The labor, supplies and equipment necessary for their businesses could become more difficult to obtain for various reasons not limited to business interruptions of suppliers, reduced availability of supplies, components, or labor, transit disruptions, consolidation in their supply chain, or sanctions, trade restrictions or tariffs or the impact of public health concerns that impair sourcing flexibility or increase costs. …”see in full comparison
“AI‑related laws, regulations and national and regional governmental policies are rapidly evolving and inconsistent across jurisdictions. New and existing frameworks in the United States, the European Union and China - including the EU AI Act's risk‑based approach - may impose additional compliance, transparency, conformity assessment, monitoring or usage‑restriction obligations on AI‑enabled products. …”see in full comparison
“Our manufacturing operations require raw and processed materials and equipment that must meet exacting standards. We generally have multiple sources for these supplies, but there may be a limited number of suppliers capable of meeting our standards. We have experienced supply shortages from time to time in the past, and on occasion our suppliers have told us they need more time to fill our orders, that they cannot fill certain orders, that they will no longer support certain equipment with updates or parts, or that they are increasing prices. …”see in full comparison
see in full comparisonOn August 1, 2025, the U.S. administration implemented additional changes to its tariff policy, including the suspension of the de minimis exemption, expiration of the 10% baseline tariff, implementation of revised reciprocal tariffs tailored to each trading partner, and the imposition of tariffs on particular goods (e.g., copper). Although semiconductors remain exempt from most of the recent tariff actions, an increase in tariffs on semiconductors is expected to be imposed once the Section 232 investigation into the impact on U.S. national security by imports of semiconductors, semiconductor manufacturing equipment and their derivative products is concluded. Semiconductors may also be subject to tariffs resulting from ongoing trade negotiations.Increased tariffs on our customers' products could adversely impact their sales, and increased tariffs on our products in comparison to those of our competitors could each result in lower demand for our products. Further, governments may impose restrictions on the sale to certain customers of our products, or any applications containing our products. For example, in April 2025 the Chinese governmenthasannounced restrictions relating tosalesthe sale of certain raw materials andto sales ofproducts containing certainproductscomponents made by Micron, and they may direct companies within China to purchase Chinese-made products. The Chinese government may also re-initiate the suspended antidumping investigation into imports of analog chips originating in the UnitedStates,States and aggressively enforce the new regulation intended to combat the extraterritorial application of foreign trade controls, sanctions and other measures, which would likely have an adverse impact on our revenue if additional tariffs are imposed by the Chinese government on products subject to the investigation. Similar restrictions on our products or the products of our customers or suppliers could negatively impact our business and financial results. It is also possible that evolving U.S. export controls may encourage our non-U.S. customers to purchase from companies not subject to U.S. export controls, thereby harming our business, market position, and financial results. Excessive export controls increase the risk of investing in U.S. advanced semiconductor products, because by the time a new product is ready for market, it may be subject to new unilateral export controls restricting its sale. At the same time, such controls may increase investment in foreign competitors, which would be less likely to be restricted by U.S. controls.
Full comparison: every changed paragraph (98)
•impact of supplier disruptions affecting the availability and cost of raw materials, components, or equipment;
•impact of restrictions, export controls, or other limitations on critical materials sourced from concentrated suppliers reducing sales;
•impact of price increases, increased tariffs, raw material availability or other factors affecting our suppliers;
•impact of geopolitical instability in the Middle East on the availability of critical semiconductor materials, fuel costs, and our ability to meet customer demand;
•impact of evolving risks related to artificial intelligence (AI), cybersecurity and data privacy across our products, operations, regulatory compliance, intellectual property, talent, and transactions;
•risks related to internal use of artificial intelligence (AI);
•risks related to compliance with laws and regulations regarding privacy, data protection, AI, cybersecurity (including U.S. Department of DefenseWar requirements), and handling of government-regulated data (e.g., controlled unclassified information, classified data, export-controlled data);
•general economic, industry, public health or political conditions in the U.S. or internationally, including uncertain economic conditions in U.S., China and Europe, changes in tariffs,geopolitical conditions, interest rates, persistent inflationinflation, tariffs or instability in the banking sector;
•disruptions in our business, our supply chain or our customers' businesses due to public health concerns (including viral outbreaks and pandemics), cybersecurity incidents, terrorist activity, armed conflict, war (including military conflict in the Middle East and Russia's invasion of Ukraine), worldwide oil prices and supply, transportation interruption, public health concerns (including viral outbreaks and pandemics), fires, natural disasters or disruptions in the transportation system;
•constrained availability from other electronic suppliers or disruptions in transit systems impacting our customers' ability to ship their products, which in turn may adversely impact our sales to those customers;
•our ability to decreaseincrease or increasedecrease our factory capacity as needed to respond to changes in customer demand;
•unauthorized copyingcounterfeiting of our products resulting in pricing pressure and loss of sales;
•our ability to successfully transition to more advanced process technologies to reduce manufacturing costs or introduce more advanced products, and the ability to produce these products at desired volumes, such as our first 3nm PCIe Gen 6 Switchvolumes;
Our operating results may be adversely impacted by the financial viability and performanceinability of our licensees,key customers,suppliers distributors,to resellersprovide us with necessary raw materials, components, or suppliers.equipment.
Our manufacturing operations require a continuous supply of raw and processed materials, components, and production equipment that must meet stringent performance and quality standards. Although we generally maintain multiple sources for these items, only a limited number of suppliers may be capable of meeting our technical requirements. From time to time, we have experienced supply shortages, extended lead times, supplier announcements that certain orders could not be fulfilled, or the discontinuation of updates or parts for certain equipment. For example, in fiscal 2023 and fiscal 2022, we experienced cost increases from certain suppliers for materials used in our production processes; although conditions stabilized in fiscal 2024 and fiscal 2025, similar cost pressures may recur.
Any interruption in the supply of raw materials, components, or equipment - or reduced supplier support for key manufacturing tools - could adversely affect our ability to produce products in the required volumes or on expected timelines. Supply availability may be further limited as global semiconductor demand increases, suppliers shift production toward higher cost or more complex products, or as a result of supply chain disruptions, transit delays, or political instability. For example, as memory manufacturers transition to more advanced products, availability of the memory components we use may become constrained, have longer lead times, or become more expensive. Consolidation among suppliers may reduce supply alternatives or alter our commercial relationships. In addition, reduced labor availability or public health concerns may further impact the supply chain.
Any of these factors could increase our manufacturing costs, impair our sourcing flexibility, delay our production schedules, and adversely affect our operating results. Additionally, our sales may be adversely impacted if tariffs or government trade actions restrict access to needed supplies.
Tariffs, trade restrictions, and evolving global trade policies pose risks to our supply chain, cost structure, and customer demand. Beginning in 2018 and continuing through 2026, the U.S. imposed additional tariffs on various imports, and several countries have imposed retaliatory tariffs on goods originating from the U.S. Although semiconductors currently remain exempt from certain U.S. tariffs under the ongoing Section 232 investigation, many inputs used in semiconductor manufacturing - including chemicals, metals, and equipment - remain subject to country specific tariffs or may become subject to new duties. The tariff landscape remains uncertain and may change with limited notice.
New or increased tariffs imposed on raw materials, components, equipment, or other inputs used in our production processes could increase our manufacturing costs. We may also incur incremental costs associated with supply chain adjustments undertaken to mitigate the effects of trade restrictions or tariffs. While we attempt to reduce cost burdens and secure alternative supply arrangements, we may experience higher operating costs, reduced sourcing flexibility, or lower demand for our products if customers face higher input costs or trade related disruptions.
Tariffs and trade restrictions also affect our customers. If customers face reduced availability of labor, materials, or components, whether due to trade restrictions, supplier disruptions, escalating shipping constraints, or public health issues, they may reduce or suspend production of their own products, leading to decreased demand for our products. For example, in 2025, government actions involving Nexperia (including export control measures and interventions affecting its operations and cross-border shipments) resulted in restricted availability of certain mature-node semiconductors (such as discrete devices and standard logic) that are widely used by automotive and consumer electronics manufacturers. As a result, some of our customers may experience shortages of these components which may reduce their production volumes and, in turn, reduce demand for our products. Any such customer side disruptions may negatively affect our revenue and operating results.
On February 20, 2026, the U.S. Supreme Court ruled that certain tariffs collected pursuant to the International Emergency Economic Powers Act (IEEPA) were unconstitutional. On April 20, 2026, the U.S. Customs and Border Protection (CBP) began processing refunds through its Consolidated Administration and Processing of Entries (CAPE) portal. Although Microchip has submitted claims for refunds of certain previously paid tariffs under IEEPA and has received some of the requested refunds to date, the timing and amount of any additional recoveries remain uncertain. Accordingly, we cannot predict the timing, likelihood, or amount of any future refunds or other recoveries that may ultimately be realized.
We may lose sales if critical materials from concentrated sources become restricted or subject to export controls.
Certain materials used in semiconductor manufacturing, including rare earth elements, minerals, and metals, are available from a limited number of countries. Geopolitical tensions, trade disputes, economic conditions, transit disruptions, public health concerns, or regulatory actions may affect the availability or cost of these materials. Although we do not purchase significant amounts of materials, components or equipment from Russia, Belarus, or Ukraine, the broader semiconductor industry relies on raw materials sourced from these regions - such as neon, palladium, cesium, rubidium, and nickel. Current U.S. restrictions on imports of certain metals of Russian origin highlight the risk that geopolitical events or sanctions may limit access to critical materials. If we or our suppliers cannot obtain necessary inputs at commercially reasonable prices or in adequate quantities, our ability to manufacture products - or customer demand for such products - may be adversely affected.
China is a predominant producer of many rare earth materials essential to the global electronics industry. In 2025, China imposed and later expanded export restrictions and licensing requirements on certain rare earth elements and related magnets. Although some restrictions were subsequently suspended for certain U.S. end‑users, future restrictions or renewed implementation could constrain global supply. If China further restricts exports or pressures other countries to do so, our suppliers may face shortages, longer lead times, or increased costs. Limited access to these materials could impair our ability to manufacture certain products, increase our production costs, or reduce our competitiveness relative to manufacturers with alternative supply sources. These constraints may also affect downstream customers; for example, export controls on rare earth magnets have previously led certain automotive manufacturers to temporarily suspend operations.
Any such impacts on our customers' production levels may reduce demand for our products and adversely affect our operating results.
We regularly review the financial viability and performance of our licensees, customers, distributors, resellers and suppliers. Any downturn in global or regional economic conditions as a result of the enactment of broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. The financial decline of a large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales. Also, these parties may not comply with their contractual commitments, or may interpret them differently than we do, which could lead to termination of their performance with little or no notice to us, which could limit our ability to mitigate our exposure. If one of our counterparties becomes insolvent, files for bankruptcy, has business leverage, or favorable contractual terms, then our ability to recover any losses suffered as a result of that counterparty's cessation of performance may be limited by their liquidity, the applicable laws, or their willingness to negotiate a resolution. In the event of such default or cessation of performance, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.
We may lose sales if suppliers of raw materials, components or equipment fail to meet our or our customers' needs, increase prices, are impacted by increases in tariffs, or such raw materials, components or equipment become restricted or unavailable.
Our manufacturing operations require raw and processed materials and equipment that must meet exacting standards. We generally have multiple sources for these supplies, but there may be a limited number of suppliers capable of meeting our standards. We have experienced supply shortages from time to time in the past, and on occasion our suppliers have told us they need more time to fill our orders, that they cannot fill certain orders, that they will no longer support certain equipment with updates or parts, or that they are increasing prices. In particular, in fiscal 2023 and in fiscal 2022, we experienced increased prices at certain suppliers for certain materials required for production purposes. However, in fiscal 2024 and fiscal 2025, the pricing environment stabilized compared to the two prior fiscal years. An interruption of any materials or equipment sources, or the lack of supplier support for a particular piece of equipment, could harm our business. The supplies necessary for our business could become more difficult to obtain as worldwide use of semiconductors increases, suppliers change the mix of products they are selling, or due to supply chain disruptions, transit disruptions, or political instability. For example, as memory suppliers shift their production toward more complex and higher-cost products, the memory components we require may become more expensive, have longer lead times, and have limited availability. At this time, the availability of memory products has not adversely impacted the availability of our products. Additionally, consolidation in our supply chain due to mergers and acquisitions may reduce the number of suppliers or change our relationships with them. The reduced availability of necessary labor or the impact of public health concerns may also adversely impact the industry supply chain. Tariffs and trade restrictions present additional risks. The U.S. has imposed additional tariffs on imports, and certain countries have imposed retaliatory tariffs on imports that have the U.S. as their country of origin. For example, in 2025, the U.S. imposed tariffs on most imports from China, but semiconductors are currently exempted from these tariffs due to the ongoing Section 232 investigation by the U.S. Department of Commerce. Country-specific tariffs applicable to U.S. imports of input materials and products incorporating semiconductors remain in place. The tariff landscape remains uncertain and subject to change.
Supply interruptions or additional tariffs imposed on components, raw materials, or equipment may increase our costs and have an adverse impact on our operating results in future periods. We also have in the past and may in the future incur increases in manufacturing costs in taking actions which are designed to mitigate the impact of supply interruptions or tariffs on our operations. We will attempt to mitigate the impact of these various supply interruptions and tariffs on our business but may experience an increase in operating costs, impaired sourcing flexibility, and reduced demand for our products, resulting in reduced revenue.
Our customers may also be adversely affected by the tariffs, supply interruptions and other issues described above. The labor, supplies and equipment necessary for their businesses could become more difficult to obtain for various reasons not limited to business interruptions of suppliers, reduced availability of supplies, components, or labor, transit disruptions, consolidation in their supply chain, or sanctions, trade restrictions or tariffs or the impact of public health concerns that impair sourcing flexibility or increase costs. If our customers are not able to produce their products, then their need for our products will decrease. Such interruptions of our customers’ businesses could harm our business. For example, on September 30, 2025, the Dutch government took control of Nexperia, a Chinese-owned, Netherlands-based based chip company that manufactures chips used in the automotive and consumer electronics industries. On October 4, 2025, the Chinese Ministry of Commerce issued export controls which prohibit export of Nexperia products out of China. Various automotive and consumer electronics manufacturers may be adversely impacted by the Nexperia chip supply interruptions, resulting in a decrease in automotive and consumer electronics production, and a decrease in demand for our products by such customers. This decrease in demand could adversely impact our operating results.
We do not, nor have we historically, purchased significant amounts of equipment from Russia, Belarus, or Ukraine. However, the semiconductor industry, and purchasers of semiconductors, use raw materials that are sourced from these regions, such as neon, palladium, cesium, rubidium, and nickel. Currently, the U.S. Government imposes a ban on U.S. imports of nickel and other metals of Russian Federation origin. If we, or our direct or indirect customers, are unable to obtain the requisite raw materials or components needed to manufacture products, our ability to manufacture products, or demand for our products, may be adversely impacted. This could have a material adverse effect on our business, results of operations or financial condition. While there has been an adverse impact on the world’s palladium, neon, cesium, and rubidium supply chains, at this time, our supply chains have been able to meet our needs. While sales of our products into Russia, Belarus and Ukraine and to customers that sell into these countries, have been negatively impacted by the Russian invasion of Ukraine, at this time, we have not experienced a material impact on our business, results of operations or financial conditions. Further, because we do not support the actions of Russia against Ukraine, in March 2022 we stopped selling products to customers and distributors located in Russia and Belarus.
Additionally, certain materials are primarily available in a limited number of countries, including rare earth elements, minerals, and metals. Trade disputes, geopolitical tensions, economic circumstances, transit disruptions, political conditions, or public health issues, may limit our ability to obtain materials or equipment. Although rare earth and other materials are available from multiple suppliers, China is the predominant producer of certain of these materials. In April 2025, China imposed export restrictions on certain rare earth minerals. In October 2025, China added controls to additional elements and added a license requirement for export of these elements and related magnets to foreign manufacturers. In November 2025, the U.S. administration announced that China will suspend the global implementation of export controls on rare earth elements and issue general licenses for exports of rare earth elements for the benefit of U.S. end users and their suppliers. If China were to further restrict or stop exporting these materials or pressure other countries to do so, our suppliers' ability to obtain such supply may be constrained and we may be unable to obtain sufficient quantities, or obtain supply in a timely manner, or at a commercially reasonable cost. Constrained supply of rare earth elements, minerals, and metals may restrict our ability to manufacture certain of our products and make it difficult or impossible to compete with other semiconductor memory manufacturers who are able to obtain sufficient quantities of these materials from China or other countries. Such a constraint may also impact our customers. For example, the controls on rare earth magnets caused certain automotive manufacturers to pause operations. Such interruptions in our downstream markets could adversely impact the demand for our products.
We rely on outside wafer foundries for a significant portion of our wafer fabrication needs. Specifically, during the first ninethree months of fiscal 2026,2027, approximately 65%67% of our net sales came from products that were produced at outside wafer foundries compared to 64%65% of our net sales in fiscal 2025.2026. We also use several contractors for a portion of the assembly and testing of our products. Specifically, during the first ninethree months of fiscal 2026,2027, approximately 33%32% of our assembly requirements and 31%29% of our test requirements were performed by third-party contractors, compared to approximately 33% and 33%,31%, respectively, during fiscal 2025.2026. We have long-term commitment contracts with certain of our third-party suppliers to help ensure that we receive capacity from them to manufacture wafers and assemble and test our products. We may decide to still purchase products or services under these contracts even though we currently domay not need all of them in order to take advantage of contract credits. This could result in excess inventory and inventory reserve charges that may negatively affect our gross margin and results of operations. Additionally, if we have a need for greater manufacturing, assembly or test capacity in the future, or greater capacity for certain types of products, there can be no assurance that we will be able to secure the necessary allocation of capacity from our wafer foundries and other contractors with the process technologies that we need, or that such capacity will be available on acceptable terms. As our manufacturing subcontractors move to more advanced process technologies over time, we may find that they do not invest in some of the trailing edge process technologies on which a large portion of our products are manufactured. As more companies focus on building leading edge products, our manufacturing subcontractors are becoming capacity constrained in their ability to manufacture such products. These events may limit the amounts of net sales that we can achieve or require us to make significant investments to be able to manufacture these products in our own facilities or at other foundries and assembly and testing contractors, but we believe that we are going towill be able to obtain sufficient capacity from our manufacturing subcontractors.
In August 2022, the U.S. government passed the CHIPS Act to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry. We have received and expect to continue to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and applied for other incentives provided by the legislation; however, we have not concluded negotiations with the U.S. Department of Commerce for a CHIPS Act grant and there can be no assurance that we will pursue or receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position. If we conclude our CHIPS Act negotiations and receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs.
Our operating results may be adversely impacted by the financial viability and performance of our licensees, customers, distributors, resellers or suppliers.
We regularly review the financial viability and performance of our licensees, customers, distributors, resellers and suppliers. Any downturn in global or regional economic conditions as a result of geopolitical conditions, broad sanctions or tariffs by the U.S. or other countries, high interest rates, high inflation, instability in the banking sector, public health concerns, industry work stoppages, transit stoppages or other factors, may adversely impact their financial viability. The financial decline of a large licensee, customer, reseller or distributor, an important supplier, or a group thereof, could have an adverse impact on our operating results and could result in our inability to collect our accounts receivable balances, higher allowances for credit losses, and higher operating costs as a percentage of net sales. Also, these parties may not comply with their contractual commitments, or may interpret them differently than we do, which could lead to termination of their performance with little or no notice to us, which could limit our ability to mitigate our exposure. If one of our counterparties becomes insolvent, files for bankruptcy, has business leverage, or favorable contractual terms, then our ability to recover any losses suffered as a result of that counterparty's cessation of performance may be limited by their liquidity, the applicable laws, or their willingness to negotiate a resolution. In the event of such default or cessation of performance, we could incur significant losses, which could have a material adverse effect on our business, results of operations, or financial condition.
Sales to foreign customers account for a substantial portion of our net sales. During the first ninethree months of fiscal 2027, approximately 76% of our net sales were made to foreign customers, including 19% in China and 15% in Taiwan. During fiscal 2026, approximately 75% of our net sales were made to foreign customers, including 18% in China and 15% in Taiwan. During fiscal 2025, approximately 75% of our net sales were made to foreign customers, including 17% in China and 16% in Taiwan.
Having a strong position in the Chinese market is a key component of our global growth strategy. Although our sales in the Chinese market werehave verybeen strong in calendarthe 2021,past, competition in China is intense,intense. and China's economic growth slowed in calendar 2022 and through the first half of calendar 2023. In fiscal 2024,Throughout fiscal 2025 and in the first nine months of fiscal 2026, changes in the Chinese market adversely impacted our sales volumes in China. As discussed above, the trade relationship between the U.S. and China remains challenging and could worsen, economic conditions in China remain uncertain, and we are unable to predict whether such uncertainty will continue or worsen in future periods. Any increase in tariffs on semiconductors and raw materials that have the U.S. as their country of origin could lower demand for our products in China and other countries. For example, on September 13, 2025, China's Ministry of Commerce initiated an antidumping investigation of imports into China of analog chipssemiconductors originating in the United States. While we were not a subject of this investigation and the Chinese Governmentgovernment is expectedagreed to suspend these investigations pursuantas topart theof latesta trade dealagreement withannounced theon U.S.,November 1, 2025, the Chinese Governmentgovernment may resume this investigation at its election. If this takes place, additional tariffs are likely tomay be imposed as a result of this investigation and could have an adverse impact on our revenue. Further,Also, increasingon investmentApril in13, 2026, China's State Council released a regulation intended to be a retaliatory measure to combat the semiconductorextraterritorial industryapplication byof foreign laws pertaining to trade controls, sanctions, and similar measures. This regulation may expose us to potential civil liability, administrative measures, and other remedial actions if the Chinese government anddetermines variousthat state-ownedwe orcaused affiliatedharm entitiesby are intended to advance China's stated national policy objectives. The Chinese government may restrict us from participating in the China market, or may prevent us from competing effectivelycomplying with Chinese companies. Weakening ofcertain foreign markets,laws. especially in China, has resulted in lower demand for our products, which has adversely impacted our revenue in recent quarters and, if such conditions continue, itThis could have a material adverse effect on our business, results of operations or financial conditions.
Further, increasing investment in the semiconductor industry by the Chinese government and various state-owned or affiliated entities are intended to advance China's stated national policy objectives. The Chinese government may restrict us from participating in the China market, or may prevent us from competing effectively with Chinese companies. Weakening of foreign markets, especially in China, has resulted in lower demand for our products, which has adversely impacted our revenue in the past and, if such conditions continue, it too could have a material adverse effect on our business, results of operations or financial conditions.
•changes in laws related to taxes, trade, environmental,environment, health and safety, technical standards, climate change, and consumer protection;
Geopolitical instability in the Middle East may disrupt critical semiconductor materials, increase fuel costs, and adversely affect our ability to meet customer demand.
Geopolitical instability and conflicts in the Middle East, including military activity and hostilities involving Iran, create significant uncertainty for global markets, including energy and materials markets, and could adversely impact our operations and financial results. The region is a major source of global oil production and a critical transit point for maritime shipping routes. Hostilities, infrastructure damage, sanctions, or blockages of key shipping lanes could disrupt oil production and distribution, reducing the availability of fuel or increasing fuel prices. Ongoing armed conflicts have already forced key state sponsored fuel production facilities in the region offline, contributing to global fuel price volatility.
In addition to fuel‑related risks, current conflict in the Middle East is disrupting supplies of critical semiconductor materials - including helium and bromine, both essential for wafer fabrication processes. For example, Qatar accounts for more than one‑third of the world's helium production, and recent Iranian drone strikes halted operations at major helium facilities. Additionally, bromine supplies are also at risk, as approximately two‑thirds of the global production originates from Israel and Jordan, and disruptions in the region could affect semiconductor etching, detection, and circuit‑formation processes.
Our operations rely heavily on global logistics networks - including ocean freight, air freight, and long‑haul trucking - that depend on stable and cost‑effective fuel supplies. Significant increases in fuel costs, reductions in carrier capacity, or extended transit times could materially increase our transportation and distribution expenses. Shipping carriers may impose fuel surcharges, reroute vessels, reduce service frequency, or experience delays, each of which could impair our ability to obtain raw materials or deliver finished products to customers on expected timelines.
Because many of our semiconductor products support time‑critical applications in the automotive, industrial, communications, aerospace and defense, and consumer sectors, delays in obtaining critical materials or increases in logistics costs could negatively impact customer relationships and customers' production schedules or purchasing decisions, reduce demand, and result in penalties under certain customer agreements. Prolonged or severe disruption - whether due to fuel shortages, materials constraints, logistics delays, or increased energy costs, or reduced customer demand - could adversely affect our ability to meet customer commitments and could materially harm our business, financial condition, and results of operations.
Our net sales in any given quarter depend upon a combination of shipments from backlog, and orders that are both received and shipped in the same quarter, which we call turns orders. We measure turns orders at the beginning of a quarter based on the orders needed to meet the shipment targets that we set entering the quarter. Historically, our ability to respond quickly to customer orders has been part of our competitive strategy, resulting in customers placing orders with relatively short delivery schedules. Shorter lead times generally mean that turns orders as a percentage of our business are relatively high in any particular quarter and reduce our visibility on future shipments. Turns orders correlate to overall semiconductor industry conditions and product lead times, and in light of current industry conditions, turns orders are once again key to our ability to meet our business objectives. Because turns orders can be difficult to predict, especially in times of economic volatility and changes in tariffs, as experienced in current and recent quarters, where customers may change order levels within the quarter, varying levels of turns orders make it more difficult to forecast net sales. The level of turns orders has in the past and may in the future decrease in periods where customers are holding excess inventory of our products. We believe our customers increased their order levels in fiscal 2021 and in fiscal 2022 in periods of tight supply to help ensure they had sufficient inventory of our products to meet their needs, and then they were unable to sell their products at their forecasted levels which reduced our level of turns orders. As a significant portion of our products are manufactured at foundries, foundry lead times may affect our ability to satisfy certain turns orders. If we do not achieve a sufficient level of turns orders in a particular quarter relative to our revenue targets or effectively manage our production based on changes in order forecasts, our revenue and operating results will likely suffer.
Starting in the first quarter of calendar 2022, we began entering into LTSAs, which offer our customers the ability to receive prioritized capacity. LTSAs are not a guarantee of supply; however, they were designed to provide the highest priority for those orders which were under this program, and the capacity priority was on a first-come, first-served basis until the available capacity was booked. This program hasand increases in customer order levels outside of this program resulted in some customers holding excess inventory of our products and thus decreased their need to place new orders, including turns orders, in recentfiscal periods.2023 Weand fiscal 2024. Because we built inventories in response to customer demand, and the cancellation or deferral of product orders has resulted in excess inventory, which hasthen resulted in write-downs of inventory and an adverse effect on our gross margins in recentfiscal periods.2025 and fiscal 2026.
The semiconductor industry is intensely competitive and faces price erosion and rapid technological change. We compete with major domestic and international semiconductor companies, many of which have greater market recognition and substantially greater financial, technical, marketing, distribution and other resources than we do. In addition, some governments, such as China, may provide, or have provided and may continue to provide, significant assistance financial or otherwise, to some of our competitors, or to new entrants, and may intervene in support of national industries and/or competitors, including trying to disrupt the U.S. semiconductor industry. The semiconductor industry has experienced significant consolidation in recent years which has resulted in several of our competitors becoming much larger in terms of revenue, product offerings and scale. We may be unable to compete successfully in the future, which could harm our business. Our ability to compete successfully depends on a number of factors, including, but not limited to:
Integrated circuit manufacturing processes are complex and sensitive to many factors, including contaminants in the manufacturing environment or materials used, the performance of our personnel and equipment, and other quality issues. As is typical in the industry, we have from time to time experienced lower than anticipated manufacturing yields. Our operating results will suffer if we are unable to maintain yields at or above approximately the current levels. This could include delays in the recognition of revenue, loss of revenue, and penalties for failure to meet shipment deadlines. Our operating results are adversely affected when we operate below normal capacity. In the first ninethree months of fiscal 20262027 and in fiscal 2025,2026, we operated at below normal capacity levels resulting in unabsorbed capacity charges of $154.2$38.5 million and $173.0$200.8 million, respectively.
The semiconductor industry is characterized by seasonality and wide fluctuations of supply and demand. Historically, since a significant portion of our revenue is from international sales and consumer markets, our business generates stronger revenues in the first half of our fiscal year and comparatively weaker revenues in the second half of our fiscal year. However, broad fluctuations in our business, changes in semiconductor industry and global economic conditions have had and can have a more significant impact on our results than seasonality. In periods when broad fluctuations, changes in business conditions or acquisitions occur, it is difficult to assess the impact of seasonality on our business. The semiconductor industry has had significant economic downturns (including in recentfiscal periods2024 and fiscal 2025), characterized by diminished product demand, production over-capacity and high inventory levels. We have sought to reduce our exposure to this industry cyclicality by selling proprietary products, that cannot be quickly replaced, to a geographically diverse customer base across a broad range of market segments. However, we have experienced substantial period-to-period fluctuations in operating results and expect, in the future, to experience period-to-period fluctuations in operating results due to general industry or economic conditions. In this regard, many of our customers felt the effects of slowing economic activity and increasing business uncertainty, and customer requests to push-out or cancel backlog increased in the fourth quarter of fiscal 2023, in fiscal 2024 and in most of fiscal 2025, which adversely impacted our revenue in recent periods.revenue. Consistent with the slowing macroeconomic environment,environment during such periods, and the growthrelated ofinventory our inventory,growth, we paused our factory expansion actions at Fab 4 and Fab 5 and reduced our planned capital investments through fiscal 2026.2027. We are unable to predict the timing or impact of any future slowdown on our business.
Sales to distributors accounted for approximately 52% of our net sales in the first three months of fiscal 2027 and approximately 47% of our net sales in the first nine months of fiscal 2026 and approximately 45% of our net sales in fiscal 2025.2026. With the exception of certain orders placed under our LTSAs, we do not have long-term purchase agreements with our distributors, and we and our distributors may each terminate our relationship with little or no advance notice.
A significant portion of our sales are from or are derived from government agencies or customers who sell to U.S. or foreign government agencies. Such sales are subject to federal contracting regulations as well as uncertainties regarding governmental spending levels, spending priorities, regulatory and policy changes. Future sales into U.S. or foreign government projects are subject to uncertain government appropriations and national defense policies and priorities, including the budgetary process, changes in the timing and spending priorities, the impact of any past or future government shutdowns, contract terminations or renegotiations, future sequestrations, changes in regulations that we must comply with to be eligible to accept new contracts, such as the U.S. Department of War's Cybersecurity Maturity Model Certification requirements(CMMC) inprogram the U.S.,requirements, or the impact of pandemics. For example, in fiscal 2022, as a result of the COVID-19 pandemic, we experienced suspensions and stop work orders for some of our subcontracts. Additionally, a section in the U.S. National Defense Authorization Act for Fiscal Year 2023 (the FY2023 NDAA), signed into law on December 23, 2022, with provisions that go into effect in December 2027, prohibits U.S. government agencies from buying semiconductor products or services manufactured by SMIC, YMTC, CXMT and any other entity that the Secretary of Defense or the Secretary of Commerce determine is owned, controlled, or connected to the government of a foreign country of concern (Prohibited Companies). Some of our products are manufactured at SMIC, and some of our suppliers buy products manufactured at YMTC. If we are unable to alternately source or manufacture certain of our products, or discontinue use of products from Prohibited Companies, if any, when Section 5949 of the FY2023 NDAA go into effect in December 2027, this could adversely impact our sales to U.S. government agencies and their prime customers. Although such actions have not yet had a material adverse impact on our business, there can be no assurance as to the future costs or implications of such actions. Sales into government projects are also subject to uncertainties related to monetary, regulatory, and tax and trade policies implemented by current or future administrations.
Delays, reductions in or terminations of government contracts or subcontracts, including those caused by any past, current, or future shutdown of the U.S. federal or foreign governments, could materially and adversely affect our operating results. During any future government shutdown, we may experience delays, reductions in or terminations of government purchases, contracts or subcontracts, which could materially and adversely affect our operating results. While we generally function as a subcontractor in government transactions, further changes in U.S. or foreign government procurement regulations and practices, particularly surrounding initiatives to reduce costs or increase compliance obligations (such as the Cybersecurity Maturity Model CertificationCMMC in the U.S.), may adversely impact the contracting environment, our ability to enter into or renew contracts, our ability to hire and retain employees, and our operating results.
The U.S. government and its contractors may terminate their contracts with us at any time. Uncertainty in government spending and termination of contracts for government related projects could have a material adverse impact on the revenue from our government-related business. Our contracts with U.S. governmental agencies or prime customers require us to comply with the contract terms, and governmental regulations, particularly for our facilities, systems and personnel that service such customers and related to handling of government-regulated data. To be awarded new contracts after November 10, 2025 for the U.S. government, we may be required to meet certaina levelsCMMC of the Cybersecurity Maturity Model Certificationslevel that we may not meet, or may choose not to meet. Over time, more government contracts may require higher Cybersecurity Maturity Model Certificationsrequirements and if we do not meet them, we will become ineligible for certain contracts. We are also required to have facility security clearances to perform classified contracts and to build and sell classified products for U.S. governmental agencies. If personnel critical to our performance of these contracts are unable to obtain or maintain their security clearances, we may be unable to perform these contracts or compete for other projects of this nature, which could adversely affect our results of operations. We must also comply with regulations regarding the handling of controlled unclassified information and export-controlled data, as well as U.S. Department of DefenseWar cybersecurity requirements (such as those under the Federal Acquisition Regulations (FAR) and Defense Acquisition Regulations (DFARS)). Complying with these regulations, including audit requirements, requires that we devote significant resources to such matters in terms of training, personnel, information technology and facilities. The increased cost of compliance may adversely affect our operating results. In certain circumstances, failure to comply with these requirements, the terms of government contracts, or with other applicable regulations may result in fines and penalties, or loss of current or future business including our ability to continue as a supplier to U.S. governmental agencies and its contractors for a period of time. Any such suspension or debarment or other sanction may materially and adversely affect our operating results or reputation.
We have acquired, and expect in the future to acquire, additional businesses that we believe will complement or augment our existing businesses. Integration of our acquisitions is complex and may be costly and time consuming and include unanticipated issues, expenses and liabilities. We may not successfully or profitably integrate, operate, maintain and manage any newly acquired operations or employees. We may not be able to maintain uniform standards, procedures and policies. We may not realize the expected synergies and cost savings from the integration. There may be increased risk due to integrating financial reporting and internal control systems. It may be difficult to develop, manufacture and market the products of a newly acquired company, or grow the business at the rate we anticipate. There may be increased risk associated with the activities of the acquired company such as regulatory violations related to their use of AI in their operations, technology development or product offerings or cybercybersecurity securityor data governance risks. Following an acquisition, we may not achieve the revenue or net income levels that justify the acquisition. We may suffer loss of key employees, customers and strategic partners of acquired companies and it may be difficult to implement our corporate culture at acquired companies. We have been and may in the future be subject to claims from terminated employees, stockholders of Microchip or the acquired companies and other third parties related to the transaction. In particular, in connection with certain of our Microsemi and Atmelprior acquisitions, we became involved with third-party claims, litigation, governmental investigations and disputes related to such businesses and transactions. Acquisitions may also result in charges (such as acquisition-related expenses, write-offs, restructuring charges, or future impairment of goodwill), contingent liabilities, adverse tax consequences, additional share-based compensation expense and other charges that adversely affect our operating results. We may fund future acquisitions of new businesses or strategic alliances by utilizing cash, borrowings under our Revolving Credit Facility, issuing Commercial Paper, raising debt, issuing shares of our common stock, or other mechanisms.
When we acquire a business, a substantial portion of the purchase price of the acquisition is allocated to goodwill and other identifiable intangible assets. The amount of the purchase price which is allocated to goodwill is determined by the excess of the purchase price over the net identifiable assets acquired. As of DecemberJune 31,30, 2025,2026, we had goodwill of $6.70 billion and net intangible assets of $2.10$2.00 billion. We review our indefinite-lived intangible assets, including goodwill, for impairment annually in the fourth fiscal quarter or whenever events or changes in circumstances indicate that the carrying amount of those assets is more likely than not impaired. Factors that may be considered in assessing whether goodwill or intangible assets may be impaired include a decline in our stock price or market capitalization, reduced estimates of future cash flows and slower growth rates in our industry. Our valuation methodology for assessing impairment requires management to make judgments and assumptions based on experience and to rely heavily on projections of future operating performance. Because we operate in highly competitive environments, projections of our future operating results and cash flows may vary significantly from our actual results. Through DecemberJune 31,30, 2025,2026, we have never recorded a goodwill impairment charge. There were no material intangible asset impairment charges in the first ninethree months of fiscal 2026.2027. If in future periods, we determine that our goodwill or intangible assets are impaired, we will be required to write down these assets which would have a negative effect on our condensed consolidated financial statements.
Our business relies on our ability to attract and retain qualified employees across various functions, including management, technical, marketing, sales, research and development, manufacturing, and operations. Competition for qualified personnel has intensified for a variety of reasons, including the high demand for employees in rapidly developing fields such as AI, the increase in work-from-home arrangements,arrangements and increases in minimum wages and wage inflation in our industry, and the higher demand for employees in rapidly developing fields such as AI.industry. Our failure to attract and retain hardware and software engineers, as well as sales and marketing personnel, could delay product development and introduction, thereby adversely affecting our net sales. We depend on a direct labor force at our manufacturing facilities, and any inability to maintain this workforce could adversely affect our operations. This could lead to delays in production and shipments, hinder our ability to meet customer demand, and ultimately adversely impact our business, financial condition, and operational results. As the use and integration of AI becomes more prevalent, there is an anticipated shift in the skills required within the workforce, making AI literacy increasingly important for our employees. These competitive pressures and the resulting wage inflation may increase our labor costs and adversely impact our operational results.
We rely on the uninterrupted operation of complex IT systems and networks to operate our business. Any improper handling of confidential data, or significant disruption to our systems or networks, including, but not limited to, any that may relate to new system implementations, computer viruses, security breaches or incidents, cyber-attacks, ransom-style attacks, theft or tampering, inadvertent error, facility issues, natural disasters, terrorism, war, telecommunication failures or energy blackouts, security breaches or incidents in our customers’customers' or third-party providers’providers' networks, in third-party products we use, or in cloud-based services provided to, by, or enabled by us, or any data we or our service providers maintain or otherwise process, including but not limited to, data belonging to us or our customers, suppliers, contractors or employees, or any perception any of the foregoing has occurred, could have a material adverse impact on our business, operations, supply chain, sales and operating results, result in regulatory inquiries, investigations or other proceedings against us, result in claims, demands and litigation against us, or damage our reputation. Such improper handling of confidential data, or system or network disruption, or any cyber-attack or other means of effectuating a security breach or incident, could result in lossloss, unavailability or unavailabilitycompromise of all or a portion of our systems and business operations, and a loss, unavailability, an unauthorized release of, or other unauthorized use or processing of, personal data, or our suppliers’suppliers' or our customers’customers' intellectual property or confidential, proprietary or sensitive information. Any such matter, or any perception that it has occurred, could harm our business or competitive position, result in a loss of customer confidence, and cause us to incur significant costs to remedy the damages, and may result in lower revenue, lower margins, regulatory investigations, inquiries or other proceedings, enforcement actions, remediation obligations, claims for damages, litigation, and fines, penalties, damages, other liabilities, and other sanctions.
Due to the types of products we sell and the significant amount of sales we make to government agencies or customers whose principal sales are to U.S. government agencies, we have experienced and expect to continue to experience in the future, attacks on our IT systems and data, including attempts to breach our security, network compromises and attempts to introduce malicious software into our IT systems. Geopolitical events and tensions may increase these risks.
Due to the types of products we sell and the significant amount of sales we make to government agencies or customers whose principal sales are to U.S. government agencies, we have experienced and expect to continue to experience in the future, attacks on our IT systems and data, including attempts to breach our security, network compromises and attempts to introduce malicious software into our IT systems. Geopolitical events and tensions may increase these risks. Also, as AI continues to evolve, cyber-attackers could use AI and machine learning to enhance attack methods, develop malicious code, sophisticated phishing attempts, and convincing deep fakes. A deep fake is a manipulation of our content or the voices or images of our leaders to maliciously publish false messages that appear to be authentic. Such messages may harm our reputation, which may in turn have an adverse impact on our revenue and profits, and reduce the trading price of our stock. A threat could also be introduced by our or our customers' and business partners' use of AI tools. The output of these tools may include threats such as introducing malicious code when AI generated source code is incorporated into products or systems. Were any future attacks to be successful, or through the unintentional introduction of security vulnerability due to AI usage, we may be unaware of the incident, its magnitude, or its effects until significant harm is done. More generally, we may face significant delays in identifying, remediating, and otherwise responding to any interruption, disruption, security breach or incident.
Management's Discussion & Analysis (MD&A)
Largest changes
“In March 2025, we implemented a business recovery plan which included restructuring actions to reduce our costs, resize our manufacturing operations and reduce our headcount. In fiscal 2026, we saw an improvement in our overall business due to increased demand after our customers reduced excess inventory levels. Consistent with our recovery plan, we reduced inventory in fiscal 2026 and our inventory days decreased sequentially in the June 2026 quarter and we are now experiencing strong revenue growth. …”see in full comparison
“During the three and nine months ended December 31, 2025, we incurred special charges and other, net of $4.8 million and $33.3 million, respectively, primarily related to restructuring expenses, including contract exit costs, closure of our Tempe, Arizona wafer fabrication facility and employee separation costs. …”see in full comparison
“During the three months ended June 30, 2026, we incurred special charges and other, net of $18.9 million, primarily due to legal contingencies of $16.0 million and $2.9 million related to restructuring expenses for the closure of our Tempe, Arizona wafer fabrication facility. During the three months ended June 30, 2025, we incurred special charges and other, net of $22.2 million primarily related to restructuring expenses, including contract exit costs, closure of our Fab 2 wafer fabrication facility in Tempe, Arizona and employee separation costs.”see in full comparison
“In January 2025, we received several assessments from the German Tax Authorities (GTA) regarding the German extraterritorial taxation of royalty payments between nonresidents (referred to as offshore receipts in respect of intangible property or ORIP) and intellectual property transfers by nonresidents (referred to as extraterritorial capital gains taxation or ETT). If the assessment is upheld, it could result in income taxes and penalties up to $92.0 million. The timing of adjudicating this matter is uncertain but could occur in the next 12 months.”see in full comparison
Selling, general and administrative expenses increasedsee in full comparison$10.3$25.0 million, or6.5%,15.7%, for the three months endedDecemberJune31,30,20252026 over the same period lastyearyear.primarilyThedueincreasetoinhigher employee compensation costs, including higher share-based compensation. Selling,selling, general and administrative expensesincreased $34.4 million, or 7.4%, for the nine months ended December 31, 2025 over the same period last yearwas primarily due to higher employee compensation costs, including higher share-based compensation expenses partially offset byourlowerrestructuringcostsefforts.for professional services associated with certain legal matters.
R&D expenses increasedsee in full comparison$28.1$53.4 million, or11.4%,20.9%, for the three months endedDecemberJune31,30,2025 over the same period last year. R&D expenses increased $63.5 million, or 8.7%, for the nine months ended December 31, 20252026 over the same period last year. The primary reasons for theincreasesincrease in R&D expenses were higher employee compensationcosts,costs including higher share-based compensationpartially offset by our restructuring efforts.expenses.
Full comparison: every changed paragraph (72)
•Our expectations regarding our inventory levels and revenue growth;
•The ability of our partners to provide services, supplies, and materials and continued performance under financial challenges;
•Our belief that familiarity with and adoption of development tools from us and from our third-party development tool partners will be an important factor in the future selection of our embedded control products;
•Our ability to effectively utilize our facilities at appropriate capacity levels or obtain sufficient capacity from our manufacturingmanufacturing, assembly and test sub-contractors;
•The amounts and timing, and our plans and expectations relating to the U.S. Statutory Notice of Deficiencies, and proposed income adjustment from the Malaysian Inland Revenue Board, and taxation assessments from the German Tax AuthoritiesBoard;
•Our expectation regarding the treatment of our unrecognized tax benefits in the next 12 months;
•Our expectations regarding our tax expense, unrecognized tax benefits, cash taxes and effective tax rate;
•The impact on our business from the global minimum tax (GMT) and the Side-by-Side system introduced by the Organisation for Economic Co-operation and Development;
•Our expectation that the global minimum tax (GMT) will not have a material impact on our fiscal 2026 results;
•Our expectations regarding the amount, timing, and future applications for investment tax credits under the CHIPS Act;
•The impact on our business stemming from Russia’s invasion of Ukraine.Ukraine and military conflict in the Middle East.
We begin our Management's Discussion and Analysis of Financial Condition and Results of Operations with a summary of business and macroeconomic developments followed by a summary of our overall business strategy to provide an overview of the goals and overall direction of our business. This is followed by a discussion of the Critical Accounting Policies and Estimates that we believe are important to understanding the assumptions and judgments incorporated in our reported financial results. We then discuss our Results of Operations for the three and nine months ended DecemberJune 31,30, 20252026 compared to the three and nine months ended DecemberJune 31,30, 2024,2025, followed by an analysis of changes in our balance sheet and cash flows, and discuss our financial commitments in the section titled "Liquidity and Capital Resources."
In March 2025, we implemented a business recovery plan which included restructuring actions to reduce our costs, resize our manufacturing operations and reduce our headcount. In fiscal 2026, we saw an improvement in our overall business due to increased demand after our customers reduced excess inventory levels. Consistent with our recovery plan, we reduced inventory in fiscal 2026 and our inventory days decreased sequentially in the June 2026 quarter and we are now experiencing strong revenue growth. Net sales in each of our product lines and each of our geographies as well as net sales to our distributors increased sequentially in the June 2026 quarter compared to the March 2026 quarter. While current market trends are positive, there continues to be uncertainty regarding overall macroeconomic conditions, including increased geopolitical tensions, risk of a recession, and the effects of potential trade policies, including tariffs.
During most of fiscal 2025, our overall business was weak as we navigated through a large inventory correction. However, in the first nine months of fiscal 2026, we saw a significant improvement in our overall business compared to the fourth quarter of fiscal 2025. Net sales in our mixed-signal microcontroller and analog product lines increased sequentially in the December 2025 quarter compared to the September 2025 quarter. Net sales were up sequentially in the Americas and Europe and were essentially flat in Asia in the December 2025 quarter compared to the September 2025 quarter. Consistent with the business recovery plan which we implemented in March 2025, we continued to reduce inventory in the December 2025 quarter compared to the September 2025 quarter. Most of our factory expansion activity remains paused as we continue to execute our recovery plan and take actions to further reduce inventory.
We develop, manufacture and sell smart, connected and secure embedded control solutions used by our customers for a wide variety of applications. Our strategic focus includes general purpose and specialized 8-bit, 16-bit, and 32-bit mixed-signal microcontrollers, microprocessors, analog, FPGA, and memory products. In July 2024, we entered the 64-bit mixed-signal microprocessor market, furthering our expansion beyond 32-bit architecture. With over 35 years of technology leadership, our broad product portfolio isoffers a Total System Solution (TSS) for our customers that can provide a large portion of the silicon requirements in their applications. TSS is a combination of hardware, software and services which help our customers increase their revenue, reduce their costs and manage their risks compared to other solutions. Our strategic focus includes general purpose and specialized mixed-signal microcontrollers, microprocessors, analog, FPGA, data centers, networking and memory products. In July 2024, we entered the 64-bit mixed-signal microprocessor market, furthering our expansion beyond our 32-bit architecture. Our synergistic product portfolio empowers disruptive growth trends, including AI/ML, data centers,center, edge computing and Internet of Things (IoT),IoT, E-mobility, networking and connectivity, and sustainability, in key end markets such as automotive, aerospace and defense, communications, consumer appliances, data centers and computing, and industrial.
Our manufacturing operations include wafer fabrication, wafer probe, assembly and test. Due to high inventory levelstest and amplesystems capacity,builds. onIn December 2, 2024, we announced our decision to close the manufacturing operations of our Tempe,Fab Arizona2 wafer fabrication facility thatin weTempe, refer to as Fab 2Arizona and the closure of Fab 2 was completed in May 2025. WeThe entered into an agreementdecision to sellclose Fab 2 towas adriven thirdby partyhigh ininventory October 2025levels and theample closingmanufacturing ofcapacity theat saleour isother stillwafer pending.fabrication Manyfacilities. All of the process technologies that ranwere running in Fab 2 alsowill runbe transferred to Fab 4 and Fab 5 and many such technologies are already running in ourFab Oregon4 and ColoradoFab factories,5, both of which both have ample clean room space for expansion, and we are transferring production of many devices from Fab 2 to our Oregon and Colorado locations.expansion. The ownership of a substantial portion of our manufacturing resources is an important component of our business strategy, enabling us to maintain a high level of manufacturing control, resulting in us being one of the lowest cost producers in the embedded control industry. By owning wafer fabrication facilities and our assembly and test operations, and by employing statistical techniques (such as statistical process control, designed experiments and wafer level monitoring), we have been able to achieve and maintain high production yields. Direct control over manufacturing resources allows us to shorten our design and production cyclescycles. andThis control also allows us to capture a portion of the wafer manufacturing andmanufacturing, assembly and testing profit margin.
There were no changes to our critical accounting policies and estimates during the first ninethree months of the fiscal year ending March 31, 20262027 compared to our "Critical Accounting Policies and Estimates" as previously described in Part II, Item 7 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2025.2026.
The increase in net sales in the three months ended DecemberJune 31,30, 20252026 compared to theJune three30, months ended December 31, 20242025 was primarily due to increased customerdemand purchasesafter ascustomers they worked throughreduced excess inventory levels as well as new customer design win activity coming toentering production. The decrease in net sales in the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 was primarily due to many customers having high levels of inventory and delaying or reducing orders. Due to the size, complexity and diversity of our customer base, we are not able to quantify any material factor contributing to the changes in net sales. See our "Business and Macroeconomic Environment" discussion above for further information on our business outlook.
Other factors that we believe contributed to the changes in our reported net sales for the three and nine months ended DecemberJune 31,30, 20252026 compared to theJune three30, and nine months ended December 31, 20242025 and which are drivers of long-term trends in our net sales but which factors we are not able to quantify include:
We sell a large number of products to a large and diverse customer base and there was not any single product or customer that accounted for a material portion of the changes in our net sales in the three and nine months ended DecemberJune 31,30, 20252026 or the three and nine months ended DecemberJune 31,30, 2024.2025.
Our mixed-signal microcontroller product line represents the largest component of our total net sales. Mixed-signal microcontrollers and associated application development systems accounted for approximately 49.5% and 50.1%49.8% of our net sales in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to approximately 52.0% and 51.7%49.5% of our net sales in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025.
Net sales of our mixed-signal microcontroller products increased 10.0%38.8% in the three months ended DecemberJune 31,30, 2025,2026 compared to the three months ended DecemberJune 31,30, 20242025 primarily due to increased customerdemand purchasesafter ascustomers they worked throughreduced excess inventory levels as well as new customer design win activity coming toentering production. Net sales of our mixed-signal microcontroller products decreased 3.9% in the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024 primarily due to many customers having high levels of inventory and delaying or reducing orders.
Our analog product line includes analog, interface, mixed-signal and timing products. Our analog product line accounted for approximately 27.2% and 28.2%27.7% of our net sales in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to approximately 26.6% and 26.1%29.4% of our net sales in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025.
Net sales from our analog product line increased 18.4% and 7.3%29.9% in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to the three and nine months ended DecemberJune 31,30, 2024,2025, primarily due to increased demand due to a portion of our customer base having workedreduced through their previous highexcess inventory balances and needing to purchase products at a higher level to support demandlevels as well as new customer design win activity coming toentering production.
Our other product line includes FPGA products, royalties associated with licenses for the use of our SuperFlash and other technologies, sales of our intellectual property, fees for engineering services, memory products, timing systems, manufacturing services (wafer foundry and assembly and test subcontracting), legacy application specific integrated circuits, and certain products for aerospace applications. Revenue from these services and products accounted for approximately 23.3% and 21.7%22.5% of our net sales in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to approximately 21.4% and 22.2%21.1% of our net sales in the three and nine months ended DecemberJune 31,30, 2024, respectively.2025.
Net sales related to these services and products increased 25.7%47.6% in the three months ended DecemberJune 31,30, 20252026 compared to the three months ended DecemberJune 31,30, 20242025. The increase in net sales was primarily due to salesa of certainportion of our intellectualcustomer propertybase rights.having Netreduced salesexcess relatedinventory levels and needing to these services andpurchase products decreasedat 3.3%a inhigher the nine months ended December 31, 2025 comparedlevel to thesupport nine months ended December 31, 2024 primarily due to many customers having high levels of inventory and delaying or reducing orders.demand. Net sales of our other product line can fluctuate over time based on general economic and semiconductor industry conditions as well as changes in demand for our FPGA products, licenses, engineering services, memory products, timing systems, and manufacturing services (wafer foundry and assembly and test subcontracting).
Distributors accounted for approximately 52% of our net sales in the three months ended June 30, 2026 and approximately 47% of our net sales in each of the three and nine months ended DecemberJune 31,30, 2025, respectively, and approximately 43% and 45% of our net sales in the three and nine months ended December 31, 2024, respectively.2025. With the exception of Arrow Electronics, our largest distributor, which accounted for 12% and 10%11% of our net sales in the ninethree months ended DecemberJune 31,30, 20252026 and Decemberin 31,the 2024,three respectively,months ended June 30, 2025, no other distributor or direct customer accounted for more than 10% of our net sales during these periods. Our distributors focus primarily on servicing the product requirements of a broad base of diverse customers. We believe that distributors provide an effective means of reaching this broad and diverse customer base and that customers recognize Microchip for its products and brand name and use distributors as an effective supply channel.
At DecemberJune 31,30, 2025,2026, our distributors maintained 2825 days of inventory of our products compared to 3326 days at March 31, 2025.2026. Over the past ten fiscal years, the days of inventory maintained by our distributors have fluctuated between approximately 17 days and 43 days. Inventory holding patterns at our distributors may have had a material adverse impact on our net sales in recent periods. For example, when our distributors hold relatively high levels of inventory, they are likely to purchase fewer products from us.sales.
Americas sales include sales to customers in the U.S., Canada, Central America and South America. Sales to foreign customers accounted for approximately 72% and 75%76% of our total net sales in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to approximately 76% and 75%77% of our total net sales in the three and nine months ended DecemberJune 31,30, 2024,2025. respectively.Our Netnet sales increased in all geographies increased in the three months ended DecemberJune 31,30, 2025,2026 compared to the three months ended DecemberJune 31,30, 2024,2025, primarily due to increased customerdemand purchasesafter ascustomers they worked throughreduced excess inventory levels as well as new customer design win activity coming toentering production. The decreases in net sales in the Americas and in Asia in the nine months ended December 31, 2025, compared to the nine months ended December 31, 2024, were primarily due to many customers having high levels of inventory and delaying or reducing orders. Substantially all of our foreign sales are U.S. dollar denominated. Our sales force in the Americas and Europe supports a significant portion of the design activity for products which are ultimately shipped to Asia.
Our gross profit in the three months ended DecemberJune 31,30, 20252026 was $706.9$938.9 million, or 59.6%63.2% of net sales, compared to $561.4$576.7 million, or 54.7%53.6% of net sales, in the three months ended DecemberJune 31,30, 2024. Our gross profit in the nine months ended December 31, 2025 was $1.92 billion, or 56.5% of net sales, compared to $1.97 billion, or 57.3% of net sales, in the nine months ended December 31, 2024.2025.
The primary reasons for the increase in gross profit of $145.5$362.2 million in the three months ended DecemberJune 31,30, 20252026 compared to theJune three30, months ended December 31, 20242025 were due to changes in product mix, includinglower higherunabsorbed salescapacity ofcharges, networking,lower datainventory center and FPGA products,reserves and higher licensing revenue and lower inventory reserves. The primary reasons for the decreases in gross profit of $45.3 million in the nine months ended December 31, 2025 compared to the nine months ended December 31, 2024 were the impact of sales volume, product mix, and geographic mix.revenue. The net impact of product mix may fluctuate over time due to the mix of sales volumes of lower or higher margin products, changes in selling prices, and fluctuations in product costs. We are not able to separately quantify these impacts on our gross profit. The impact of unabsorbed capacity charges was ana unfavorablefavorable impact of $9.1 million and $35.7$13.0 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to theJune three30, and nine months ended December 31, 2024, respectively.2025. Unabsorbed capacity charges are expensed as incurred when we operate our manufacturing facilities below normal levels. The net impact to our gross profit from inventory reserve charges was a favorable impact of $34.6 million and $39.7$68.6 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026, compared to theJune three30, and nine months ended December 31, 2024, respectively.2025. The gross margin impact of changes in licensing revenue, which has no associated cost of sales, was a favorable impact of $27.9 million and $32.4$9.6 million in the three and nine months ended DecemberJune 31,30, 2025, respectively,2026 compared to theJune three30, and nine months ended December 31, 2024, respectively.2025.
Our overall inventory levels were $1.06$1.05 billion at DecemberJune 31,30, 2025,2026, compared to $1.29$1.04 billion at March 31, 2025.2026. We maintained 201175 days of inventory on our balance sheet at DecemberJune 31,30, 20252026 compared to 251185 days of inventory at March 31, 2025.2026. Our overall inventory level in dollars remained relatively flat and our inventory level in days decreased as a result of our efforts to balance manufacturing production, customer demand and inventory levels. Our inventory amounts are impacted by timing of shipment activity in the quarter, the timing of receipt of raw materials, foundry wafers, and strategic last time buy materials and completion of finished goods. We believe that our current inventory and production capacity are adequate to fulfill the projected requirements of our customers and our levels of inventory will continue to be lower over the next several quarters based on the actions we have taken.
We operate assembly and test facilities in Thailand and the Philippines. Approximately 64% and 67%68% of our assembly requirements were performed in our internal assembly facilities during the three andmonths nineended June 30, 2026, compared to 69% during the three months ended DecemberJune 31,30, 2025,2025. respectively, compared to approximately 67% during each ofDuring the three and nine months ended DecemberJune 31,30, 2024.2026, Approximatelyapproximately 68% and 69%71% of our test requirements were performed in our internal facilities compared to 68% during the three and nine months ended DecemberJune 31,30, 2025, respectively, compared to approximately 67% during each of the three and nine months ended December 31, 2024.2025. The percentage of our assembly and test operations that are performed internally fluctuates over time based on supply and demand conditions in the semiconductor industry, our internal capacity capabilities and our acquisition activities. We believe that the assembly and test operations performed at our internal facilities provide us with significant cost savings compared to third-party contractor assembly and test costs, as well as increased control over these portions of the manufacturing process. In addition, we have specialized assembly and test facilities dedicated to our aerospace and defense products in Germany, France, Ireland, the United Kingdom, the Philippines, Thailand, and the United States. These facilities are designed to support the unique requirements of these sectors, helping to accelerate time to market and ensure consistent, high-quality products. We plan to continue to selectively invest in assembly and test equipment to increase our internal capacity capabilities and transition certain outsourced assembly and test capacity to our internal facilities.
We rely on outside wafer foundries for a significant portion of our wafer fabrication requirements. Approximately 65%67% of our net sales came from products that were produced at outside wafer foundries during eachthe ofthree months ended June 30, 2026, compared to 64% during the three and nine months ended DecemberJune 31,30, 2025, compared to approximately 64% during each of the three and nine months ended December 31, 2024.2025. This percentage may vary based on supply and demand conditions in the market.
R&D expenses for the three months ended DecemberJune 31,30, 20252026 were $274.3$308.9 million, or 23.1%20.8% of net sales, compared to $246.2$255.5 million, or 24.0%23.8% of net sales, for the three months ended DecemberJune 31,30, 2024. R&D expenses for the nine months ended December 31, 2025 were $792.1 million, or 23.3% of net sales, compared to $728.6 million, or 21.2% of net sales, for the nine months ended December 31, 2024.2025. We are committed to investing in new and enhanced products, including development systems software, and in our design and manufacturing process technologies. We believe these investments are significant factors in maintaining our competitive position. R&D costs are expensed as incurred. Assets purchased to support our ongoing research and development activities are capitalized when related to products which have achieved technological feasibility or that have alternative future uses and are amortized over their expected useful lives. R&D expenses include labor, depreciation, masks, prototype wafers, and expenses for the development of process technologies, new packages, and software to support new products and design environments.
R&D expenses increased $28.1$53.4 million, or 11.4%,20.9%, for the three months ended DecemberJune 31,30, 2025 over the same period last year. R&D expenses increased $63.5 million, or 8.7%, for the nine months ended December 31, 20252026 over the same period last year. The primary reasons for the increasesincrease in R&D expenses were higher employee compensation costs,costs including higher share-based compensation partially offset by our restructuring efforts.expenses.
Selling, general and administrative expenses for the three months ended DecemberJune 31,30, 20252026 were $168.5$184.3 million, or 14.2%12.4% of net sales, compared to $158.2$159.3 million, or 15.4%14.8% of net sales, for the three months ended DecemberJune 31,30, 2024. Selling, general and administrative expenses for the nine months ended December 31, 2025 were $500.1 million, or 14.7% of net sales, compared to $465.7 million, or 13.6% of net sales, for the nine months ended December 31, 2024.2025. Our goal is to continue to be more efficient with our selling, general and administrative expenses. Selling, general and administrative expenses include salary expenses related to field sales, marketing and administrative personnel, advertising and promotional expenditures and legal expenses as well as costs related to our direct sales force, CEMs and FAEs who work to stimulate demand from sales offices worldwide by assisting customers in the selection and use of our products.
Selling, general and administrative expenses increased $10.3$25.0 million, or 6.5%,15.7%, for the three months ended DecemberJune 31,30, 20252026 over the same period last yearyear. primarilyThe dueincrease toin higher employee compensation costs, including higher share-based compensation. Selling,selling, general and administrative expenses increased $34.4 million, or 7.4%, for the nine months ended December 31, 2025 over the same period last yearwas primarily due to higher employee compensation costs, including higher share-based compensation expenses partially offset by ourlower restructuringcosts efforts.for professional services associated with certain legal matters.
Amortization of acquired intangible assets for the three and nine months ended DecemberJune 31,30, 20252026 was $107.6 million and $323.3$90.0 million, respectively, compared to $122.6 million and $368.3$107.6 million for the three and nine months ended DecemberJune 31,30, 2024, respectively.2025. The primary reason for the decreasesdecrease in acquired intangible asset amortization was due to the use of accelerated amortization methods for assets placed in service in previous fiscal years.
During the three months ended June 30, 2026, we incurred special charges and other, net of $18.9 million, primarily due to legal contingencies of $16.0 million and $2.9 million related to restructuring expenses for the closure of our Tempe, Arizona wafer fabrication facility. During the three months ended June 30, 2025, we incurred special charges and other, net of $22.2 million primarily related to restructuring expenses, including contract exit costs, closure of our Fab 2 wafer fabrication facility in Tempe, Arizona and employee separation costs.
During the three and nine months ended December 31, 2025, we incurred special charges and other, net of $4.8 million and $33.3 million, respectively, primarily related to restructuring expenses, including contract exit costs, closure of our Tempe, Arizona wafer fabrication facility and employee separation costs. During the three and nine months ended December 31, 2024, we incurred special charges and other, net of $3.5 million and $7.6 million, respectively, primarily related to employee severance and the restructuring of existing wafer fabrication operations to increase operational efficiency.
Interest income in the three months ended June 30, 2026 was $1.4 million compared to $4.9 million in the three months ended June 30, 2025.
Interest expense in the three months ended June 30, 2026 was $48.8 million compared to $57.4 million for the three months ended June 30, 2025. The primary reasons for the decrease in interest expense in the three months ended June 30, 2026 compared to the same period last year were lower debt balances and lower interest rates.
Interest income in the three and nine months ended December 31, 2025 was $1.3 million and $9.8 million, respectively, compared to $1.7 million and $6.5 million, respectively, for the three and nine months ended December 31, 2024.
Interest expense in the three and nine months ended December 31, 2025 was $55.9 million and $169.6 million, respectively, compared to $68.7 million and $189.6 million, respectively, for the three and nine months ended December 31, 2024. The primary reason for the decreases in interest expense were lower debt balances in the three and nine months ended December 31, 2025.
Other loss,income, net in the three months ended June 30, 2026 was $3.5$0.5 million andcompared $3.3to $4.6 million other income, net for the three and nine months ended DecemberJune 31,30, 2025, respectively, compared to $9.7 million and $6.0 million for the three and nine months ended December 31, 2024, respectively.2025. The primary reason for the changeschange in other loss,income, net in thesethe periodsthree months ended June 30, 2026 compared to the three months ended June 30, 2025 relates to foreign currency exchange rate fluctuations.
Our provision for income taxes is attributable to U.S. federal, state, and foreign income taxes. A comparison of our effective tax raterates for the ninethree months ended DecemberJune 31,30, 20252026 and DecemberJune 31,30, 20242025 is not meaningful due to changes in the amount of pre-tax income earned, changes in the mix of jurisdictions in which income is earned, and the impact of discrete items relative to the amount of income earned.
We are subject to taxation in many jurisdictions in which we have operations. The effective tax rates that we pay in these jurisdictions vary widely, but they are generally lower than our combined U.S. federal and state effective tax rate. Our domestic blended statutory tax rate in each of the ninethree months ended DecemberJune 31,30, 20252026 and DecemberJune 31,30, 20242025 was approximately 22%.22.0%. The difference in rates applicable in foreign jurisdictions results from a number of factors, including lower statutory rates, tax holidays, financing arrangements and other factors. Our effective tax rate has been and will continue to be impacted by the geographical dispersion of our earnings and losses.
Our foreign tax rate differential primarily relates to our operations in MaltaMalta, taxed at a 35.0% statutory tax raterate, and Irelandin Ireland, taxed at a 12.5% statutory tax rate. The foreign tax rate differential impact from Malta is offset with the effect of the notional interest deduction. Additionally, our Thailand manufacturing operations are currently subject to numerous tax holidays granted to us based on our investment in property, plant, and equipment in Thailand. Our tax holiday periods in Thailand expire at various times in the future; however, we actively seek to obtain new tax holidays, otherwise we will be subject to tax at the statutory tax rate of 20.0%. We do not expect the future expiration of any of our tax holiday periods in Thailand to have a material impact on our effective tax rate.
In May 2023, we received a proposed income adjustment from the Malaysian Inland Revenue Board (IRB) for fiscal 2020. In December 2023, we received a Notice of Assessment from the IRB asserting the same proposed income adjustment. In March 2025, we entered into a Consent Judgment before the High Court, agreeing that the dispute will be heard before the Special Commissioners of Income Tax (SCIT). It was also agreed that the payment on the taxes assessed is stayed and the IRB will pause all enforcement and proceedings against the collection of the taxes assessed until the appeal before the SCIT is concluded. If the adjustment is upheld by the highest court that has jurisdiction over this matter in Malaysia, it could result in income taxes and penalties up to $410.0MYR million.1.9 billion (approximately $474.7 million based on the exchange rate as of June 30, 2026). The disputed amounts largely relate to the characterization of certain assets. The timing of adjudicating this matter is uncertain but could occur in the next 1218 months.
In January 2025, we received several assessments from the German Tax Authorities (GTA) regarding the German extraterritorial taxation of royalty payments between nonresidents (referred to as offshore receipts in respect of intangible property or ORIP) and intellectual property transfers by nonresidents (referred to as extraterritorial capital gains taxation or ETT). If the assessment is upheld, it could result in income taxes and penalties up to $92.0 million. The timing of adjudicating this matter is uncertain but could occur in the next 12 months.
We firmly believe that the IRB andassessment GTA assessments areis without merit and we plan to pursue all available administrative and judicial remedies necessary to resolve thesethe matters.matter. We intend to vigorously defend our position, and we are confident in our ability to prevail on the merits. We regularly assess the likelihood of adverse outcomes resulting from examinations such as these to determine the adequacy of our tax reserves. The ultimate outcome of disputes of this nature is uncertain, and if the IRB or GTA were to prevail on theirits assertions, the assessed tax, penalties, and deficiency interest could have a material adverse impact on our financial position, results of operations or cash flows.
In August 2022, the U.S. government enacted the Inflation Reduction Act into law. The Inflation Reduction Act includes a new corporate alternative minimum tax (Corporate AMT) of 15.0% on the adjusted financial statement income (AFSI) of corporations with average AFSI exceeding $1.00 billion over a three-year period, as well as a 1% excise tax on the net fair market value of stock repurchases made after December 31, 2022. The Corporate AMT was in effect beginning in fiscal 2024. The Inflation Reduction Act did not have a material impact on our tax expense or effective tax rate during the nine months ending December 31, 2025.
The Organisation for Economic Co-operation and Development has introduced a global minimum corporate tax framework (GMT), with phased implementation starting January 1, 2024. While the U.S. has not adopted GMT, severalSeveral countries where we operate have enacted related legislation,legislation. In January 2026, the Organisation for Economic Co-operation and othersDevelopment arepublished expecteda toside-by-side follow.system, Inwhich June 2025, the Group of Seven, comprised of Canada, France, Germany, Italy, Japan, the U.K. and theexcludes U.S. (themulti-national G7), agreed to exclude U.S. Multi-National Entitiesentities from certain aspects of the GMTGMT. (theThe G7side-by-side Statement).system must be transposed into local tax laws for it to become effective, which has yet to occur in most countries where we operate. We will continue to monitor developments around this agreement.guidance, including the transposition of the side-by-side system into local laws. The impact of the GMT for the ninethree months endingended DecemberJune 31,30, 20252026 washas notbeen materialreflected toin our financial results.
OnIn July 4, 2025, the U.S. presidentgovernment signedenacted into law H.R.1 –the One Big Beautiful Bill Act (OBBBA), which includes permanent extensions of certain Tax Cuts and Jobs Act provisions and changes to the international tax framework. The effects of these changes have been recognized in the period ending DecemberJune 31,30, 2025.2026. The impact of OBBBA for the ninethree months ended DecemberJune 31,30, 20252026 was not material to our financial results. We will continue to evaluate the broader implications of OBBBA, including the effects of future regulatory guidance and interpretations.
We had $250.7$272.3 million in cash and cash equivalents at DecemberJune 31,30, 2025,2026, aan decreaseincrease of $521.0$32.0 million from the March 31, 20252026 balance.
Net cash provided by operating activities was $705.1$511.5 million in the ninethree months ended DecemberJune 31,30, 20252026 primarily due to net income of $85.8$229.8 million, adjusted for non-cash and non-operating charges of $707.2$245.7 million and net cash outflowsinflows of $87.9$36.0 million from changes in our operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities in the ninethree months ended DecemberJune 31,30, 20252026 include an increase in accrued liabilities driven by increases in sales related reserves, wage related accruals and accrued interest partially offset by a decrease due to cash refunded to our customers under certain LTSAs, and an increase in income tax payablepayable, dueoffset to tax payments and settlements,by an increase in trade accounts receivable driven primarily by higher revenue including sale of certain of our intellectual property rights, and timing of shipments and collections, a decrease in accrued liabilities primarily due to cash refunded to our customers under certain LTSAs, offset by a decrease in inventories as a result of our efforts to balance manufacturing production, customer demand and inventory levels.collections. Net cash provided by operating activities was $692.2$275.6 million in the ninethree months ended DecemberJune 31,30, 20242025 primarily due to net incomeloss of $154.1$18.6 million, adjusted for non-cash and non-operating charges of $589.5$225.4 million and net cash outflowsinflows of $51.4$68.8 million from changes in our operating assets and liabilities.
Net cash used in investing activities was $143.4$52.0 million in the ninethree months ended DecemberJune 31,30, 20252026 compared to $231.8$36.9 million in the ninethree months ended DecemberJune 31,30, 2024.2025. During the ninethree months ended DecemberJune 31,30, 2025,2026, and the ninethree months ended DecemberJune 31,30, 2024,2025, net investing activities primarily related to capital purchases and investments in other assets.
Our level of capital expenditures varies from time to time as a result of actual and anticipated business conditions. Capital expenditures in the ninethree months ended DecemberJune 31,30, 20252026 were $76.9$13.9 million compared to $111.8$17.9 million in the ninethree months ended DecemberJune 31,30, 2024.2025. Capital expenditures were primarily for the selective expansion of production capacity and the addition of research and development equipment. We have paused most of our factory expansion actions and reduced our planned capital investments through fiscal 2026.2027. Our investments in equipment and facilities during the next 12 months are expected to be at or below $100.0 million. We believe that the capital expenditures anticipated to be incurred over the next 12 months will provide sufficient manufacturing capacity to support the growth of our production capabilities for our new products and technologies and to bring in-house more of the assembly and test operations that are currently outsourced. We expect to finance our capital expenditures through our existing cash balances and cash flows from operations. Despite pausing our expansion activity, we believe that our current inventory and production capacity are adequate to fulfill the projected requirements of our customers. In August 2022, the U.S. government enacted the CHIPS Act to provide billions of dollars of cash incentives and a new investment tax credit to increase domestic manufacturing capacity in our industry. In December 2023, we reached a Preliminary Memorandum of Terms with the U.S. Department of Commerce for $162 million in CHIPS Act grants for two of our U.S. wafer fabrication facilities; however, we have not concluded negotiations with the U.S. Department of Commerce and there can be no assurance that the grants will receive final approval. If we do receive a CHIPS Act grant, the restrictions and operational requirements that are imposed on CHIPS Act grant recipients could add complexity to our operations and increase our costs. We expect to receive the cash benefit associated with the investment tax credit for qualifying capital expenditures in future periods and may apply for other incentives provided by the legislation; however, there can be no assurance that we will receive any such other incentives, what the amount and timing of any incentive we receive will be, as to which other companies will receive incentives and whether the legislation will have a positive or negative impact on our competitive position.
Net cash used in financing activities was $1.08 billion in the nine months ended December 31, 2025 compared to $194.1$427.5 million in the ninethree months ended DecemberJune 31,30, 2024.2026 compared to $443.9 million in the three months ended June 30, 2025. Significant transactions affecting our net financing cash flows included:
MCHP insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 12 filings (5 insiders, 10 trade dates, 578,822 shares, about $52.1M; 4 of these filings say the sales were made under a Rule 10b5-1 trading plan). Net open-market shares: -578,822 (purchases minus sales); net value about -$52.1M.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-01 | Krawczyk Joseph R Ii |
Grant/award | 41 | $60.70 | $2.5K |
| 2026-09-01 | Duvenhage Stephanus |
Grant/award | 123 | $60.70 | $7.5K |
| 2026-09-01 | Bunker Mathew B |
Grant/award | 53 | $60.70 | $3.2K |
| 2026-08-25 | Bjornholt James Eric |
Open-market sale |
4,112 | $75.32 | $309.7K |
| 2026-08-17 | Bjornholt James Eric |
Option exercise | 2,226 | $80.26 | $178.7K |
| 2026-08-17 | Bjornholt James Eric |
Shares withheld for tax | 837 | $80.26 | $67.2K |
| 2026-08-17 | Bjornholt James Eric |
Option exercise | 1,952 | $80.26 | $156.7K |
| 2026-08-17 | Bjornholt James Eric |
Shares withheld for tax | 954 | $80.26 | $76.6K |
| 2026-08-17 | Simoncic Richard J |
Shares withheld for tax | 943 | $80.26 | $75.7K |
| 2026-08-17 | Simoncic Richard J |
Option exercise | 2,226 | $80.26 | $178.7K |
| 2026-08-17 | Simoncic Richard J |
Option exercise | 1,952 | $80.26 | $156.7K |
| 2026-08-17 | Simoncic Richard J |
Shares withheld for tax | 827 | $80.26 | $66.4K |
| 2026-08-17 | Sanghi Steve |
Option exercise | 6,157 | $80.26 | $494.2K |
| 2026-08-17 | Sanghi Steve |
Shares withheld for tax | 2,546 | $80.26 | $204.3K |
| 2026-08-17 | Sanghi Steve |
Shares withheld for tax | 2,903 | $80.26 | $233.0K |
| 2026-08-17 | Sanghi Steve |
Option exercise | 7,020 | $80.26 | $563.4K |
| 2026-08-17 | Bjornholt James Eric |
Shares withheld for tax | 954 | $80.26 | $76.6K |
| 2026-08-17 | Bjornholt James Eric |
Open-market sale | 837 | $80.26 | $67.2K |
| 2026-08-17 | Bjornholt James Eric |
Option exercise | 1,952 | $80.26 | $156.7K |
| 2026-08-17 | Bjornholt James Eric |
Option exercise | 2,226 | $80.26 | $178.7K |
| 2026-08-17 | Rapp Karen Marie |
Option exercise | 3,090 | $80.26 | $248.0K |
| 2026-08-17 | Peng Victor |
Option exercise | 3,090 | $80.26 | $248.0K |
| 2026-08-17 | Little Mitchell R |
Option exercise | 472 | $80.26 | $37.9K |
| 2026-08-17 | Cassidy Richard B. Ii |
Option exercise | 3,090 | $80.26 | $248.0K |
| 2026-08-17 | Chapman Matthew W |
Option exercise | 3,090 | $80.26 | $248.0K |
| 2026-08-17 | Barker Ellen |
Option exercise | 3,090 | $80.26 | $248.0K |
| 2026-08-15 | Sanghi Steve |
Shares withheld for tax | 11,931 | $80.26 | $957.6K |
| 2026-08-15 | Sanghi Steve |
Option exercise | 28,853 | $80.26 | $2.3M |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 252 | $80.26 | $20.2K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 108 | $80.26 | $8.7K |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 638 | $80.26 | $51.2K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 581 | $80.26 | $46.6K |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 776 | $80.26 | $62.3K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 333 | $80.26 | $26.7K |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 1,355 | $80.26 | $108.8K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 274 | $80.26 | $22.0K |
| 2026-08-15 | Simoncic Richard J |
Option exercise | 1,222 | $80.26 | $98.1K |
| 2026-08-15 | Simoncic Richard J |
Shares withheld for tax | 360 | $80.26 | $28.9K |
| 2026-08-15 | Simoncic Richard J |
Option exercise | 849 | $80.26 | $68.1K |
| 2026-08-15 | Simoncic Richard J |
Shares withheld for tax | 114 | $80.26 | $9.1K |
| 2026-08-15 | Simoncic Richard J |
Option exercise | 269 | $80.26 | $21.6K |
| 2026-08-15 | Simoncic Richard J |
Shares withheld for tax | 518 | $80.26 | $41.6K |
| 2026-08-15 | Simoncic Richard J |
Shares withheld for tax | 298 | $80.26 | $23.9K |
| 2026-08-15 | Simoncic Richard J |
Option exercise | 702 | $80.26 | $56.3K |
| 2026-08-15 | Sanghi Steve |
Shares withheld for tax | 11,931 | $80.26 | $957.6K |
| 2026-08-15 | Sanghi Steve |
Option exercise | 28,853 | $80.26 | $2.3M |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 776 | $80.26 | $62.3K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 581 | $80.26 | $46.6K |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 252 | $80.26 | $20.2K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 274 | $80.26 | $22.0K |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 1,355 | $80.26 | $108.8K |
| 2026-08-15 | Bjornholt James Eric |
Option exercise | 638 | $80.26 | $51.2K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 108 | $80.26 | $8.7K |
| 2026-08-15 | Bjornholt James Eric |
Shares withheld for tax | 333 | $80.26 | $26.7K |
| 2026-08-15 | Krawczyk Joseph R Ii |
Shares withheld for tax | 285 | $80.26 | $22.9K |
| 2026-08-15 | Krawczyk Joseph R Ii |
Option exercise | 231 | $80.26 | $18.5K |
| 2026-08-15 | Krawczyk Joseph R Ii |
Shares withheld for tax | 99 | $80.26 | $7.9K |
| 2026-08-15 | Krawczyk Joseph R Ii |
Option exercise | 485 | $80.26 | $38.9K |
| 2026-08-15 | Krawczyk Joseph R Ii |
Shares withheld for tax | 208 | $80.26 | $16.7K |
| 2026-08-15 | Krawczyk Joseph R Ii |
Option exercise | 757 | $80.26 | $60.8K |
Well-known investors holding MCHP (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Dodge & Cox | 2026-06-30 | 5,533,359 | $504.6M | 0.26% | Reduced 10% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 2,239,669 | $199.2M | 0.07% | Added 70% |
| Two Sigma Investments | 2026-06-30 | 1,919,271 | $175.0M | 0.13% | Added 85% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 2,323,949 | $150.2M | — | Sold out |
| D. E. Shaw & Co. | 2026-06-30 | 1,458,336 | $133.0M | 0.08% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,290,382 | $117.7M | 0.07% | Added 60% |
| Renaissance Technologies | 2026-06-30 | 1,045,956 | $95.4M | 0.13% | Added 3589% |
| Two Sigma Investments | 2026-06-30 | 743,151 | $57.0M | 0.04% | Added 61% |
| Millennium Management (Israel Englander) | 2026-06-30 | 508,875 | $46.4M | 0.03% | Added 3% |
| D. E. Shaw & Co. | 2026-06-30 | 0 | $27.9M | 0.02% | No change |
| Bridgewater Associates | 2026-06-30 | 275,882 | $25.2M | 0.1% | Added 853% |
| Soros Fund Management | 2026-06-30 | 227,800 | $20.8M | 0.27% | New position |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 0 | $11.6M | 0.02% | New position |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 145,000 | $11.1M | 0.02% | No change |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 121,487 | $11.1M | 0.03% | Added 52% |
| Millennium Management (Israel Englander) | 2026-06-30 | 0 | $11.0M | 0.01% | No change |
| D. E. Shaw & Co. | 2026-06-30 | 40,000 | $3.1M | 0.0% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 0 | $3.0M | 0.0% | No change |
| Semper Augustus (Chris Bloomstran) | 2026-06-30 | 2,418 | $220.5K | 0.02% | New position |
| Millennium Management (Israel Englander) | 2026-06-30 | 3,654 | $210.0K | — | Sold out |