Revenue Growth Driven by Demand Recovery
The 38% increase in net sales was primarily due to increased demand after customers reduced excess inventory levels, as well as new customer design win activity entering production.
Source: 10-Q Item 2 MD&A
Computed from published fixed rules, not a model's judgement — though one input, the count of high-severity risks, comes from the AI analysis below.
Not investment advice and not a price target: it scores the quarter's fundamentals, not the stock. Full methodology →
AI Takeaway
Microchip Technology's first quarter of fiscal 2027 saw a sharp recovery, as net sales grew at the fastest rate in recent quarters, lifted by customers replenishing inventories and new product ramps. Gross margin expanded nearly ten percentage points, benefiting from a $68.6 million reduction in inventory reserves and a $9.6 million boost from higher-margin licensing revenue. The turnaround drove operating income to a solid profit after last year's near break-even, while net income swung to a substantial gain. Management noted that uncertainty remains around global trade policies and the final resolution of its Malaysian tax dispute, which could cost up to $475 million if lost.
Revenue
$1.48B
+38.05% YoY
EPS (Diluted)
$0.37
+511.11% YoY
Gross Margin
63.2%
+9.6 pts YoY
Operating Income
$336.8M
+949.22% YoY
Source: SEC XBRL
Microchip Technology (MCHP) reported Q1 FY2027 revenue of $1.48B, up 38.0% year over year. Operating margin was 22.7%, up 19.7 points from 3.0% a year earlier. Operating cash flow was $511.5M, up 85.6% year over year. MCHP's fiscal Q1 FY2027 corresponds to calendar Q2 2026.
Last 4 quarters: 4 beats
| Quarter | Actual EPS (USD) | Consensus (USD) | Result |
|---|---|---|---|
| Mar 2026 | 0.57 | 0.52 | Beat +10.6% |
| Dec 2025 | 0.44 | 0.42 | Beat +4.7% |
| Sep 2025 | 0.35 | 0.34 | Beat +2.6% |
| Jun 2025 | 0.27 | 0.24 | Beat +11.8% |
2 reported segments · SEC XBRL
Segment revenue totals $1.48B, which is the $1.48B of consolidated revenue on the income statement. The profit column adds up to the consolidated figure as well.
Profit above is reported as gross profit, the measure MCHP itself discloses in this filing. Each company chooses its own measure here, so these margins are not comparable with another company's.
Compiled by AI from 10-Q Item 2 of this filing
The 38% increase in net sales was primarily due to increased demand after customers reduced excess inventory levels, as well as new customer design win activity entering production.
Source: 10-Q Item 2 MD&A
Gross profit increased by $362.2 million, with favorable impacts of $68.6 million from lower inventory reserve charges and $9.6 million from higher licensing revenue, along with lower unabsorbed capacity charges.
Source: 10-Q Item 2 MD&A
Inventory days decreased to 175 days at June 30, 2026 from 185 days at March 31, 2026, and distributor inventory held steady at 25 days, reflecting improved balance between production and demand.
Source: 10-Q Item 2 MD&A
The company completed the closure of its Tempe, Arizona wafer fabrication facility (Fab 2) in May 2025, transferring process technologies to other fabs with ample expansion space.
Source: 10-Q Item 2 MD&A
A proposed income adjustment from the Malaysian Inland Revenue Board for fiscal 2020 could, if fully upheld, result in taxes and penalties up to MYR 1.9 billion (approximately $474.7 million).
Source: 10-Q Item 2 MD&A
Compiled by AI from this SEC filing · 3 high, 2 medium, 0 low
With 76% of net sales to foreign customers, including 19% to China, Microchip is highly exposed to geopolitical tensions, trade restrictions, and retaliatory actions. China's recent antidumping investigation on U.S. analog semiconductors and new regulations could restrict market access or impose additional tariffs, potentially reducing demand and revenue.
Source: 10-Q Item 1A Risk Factors
Approximately 67% of net sales come from products fabricated at outside foundries, and a significant portion of assembly and testing is outsourced. Any disruption, capacity constraint, or price increase from these third parties could materially impact production, costs, and operating results.
Source: 10-Q Item 1A Risk Factors
A tax assessment from the Malaysian Inland Revenue Board for fiscal 2020 relates to asset characterization and could result in up to MYR 1.9 billion ($474.7 million) in taxes and penalties if fully upheld. The case is being contested, but an adverse outcome could have a material financial impact.
Source: 10-Q Item 2 MD&A
U.S. tariffs on raw materials and equipment, along with potential retaliatory actions like China's antidumping investigation, could raise manufacturing costs and reduce demand. While some tariff refunds are being processed, the trade policy environment remains uncertain and may adversely affect operations.
Source: 10-Q Item 1A Risk Factors
The semiconductor industry relies on rare earth materials and other inputs from concentrated sources; export restrictions or geopolitical tensions could limit availability, increase costs, and disrupt production schedules, affecting both Microchip and its customers.
Source: 10-Q Item 1A Risk Factors
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue $B | 1.48 $B | 1.08 $B | +38.05% |
Cost of Revenue $M | 545.80 $M | 498.80 $M | +9.42% |
Gross Profit $M | 938.90 $M | 576.70 $M | +62.81% |
Operating Income $M | 336.80 $M | 32.10 $M | +949.22% |
Net Income $M | 229.80 $M | -18.60 $M | +1335.48% |
EPS (Basic) $ | 0.37 $ | -0.09 $ | +511.11% |
EPS (Diluted) $ | 0.37 $ | -0.09 $ | +511.11% |
R&D Expense $M | 308.90 $M | 255.50 $M | +20.90% |
SG&A Expense $M | 184.30 $M | 159.30 $M | +15.69% |
Answers draw on this SEC filing and the data on this page
Expected release date, analyst estimates & what to watch
Microchip Technology (MCHP) delivered a strong fiscal year 2026 recovery, with revenue growing 7.1% to $4.71B, operating income surging 65.4% to $490.1M, and net income swinging to $230.0M from near breakeven, driven by improved gross margins and operational leverage.
MCHP reported significant improvements in Q3 FY2026 with a 15.6% increase in revenue and a return to profitability, driven by strong operational performance and cost management.
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