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Microchip Technology (MCHP): Company Profile, Stock Price, News, Rankings

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Microchip Technology

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Greetings, and welcome to the Microchip's Q3 Fiscal twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce you to your host, Steve Sanghi, CEO.

Thank you, operator, and good afternoon, everyone. During the course of this conference call, we will be making projections and other forward looking statements regarding future events or the future financial performance of the company. We wish to caution you that such statements are predictions and that actual events or results may differ materially. We refer you to our press release of today as well as our recent filings with the SEC that identify important risk factors that may impact Microchip's business and results of operations. In attendance with me today are Rich Simonsac, Microchip's COO Eric Bjornholt, CFO and Sajid Doudi, Head of Investor Relations.

I will comment on our restructuring and my observations since returning to Microchip as CEO. Eric will go over our third quarter fiscal year twenty twenty five financial performance and Rich will then review some product line updates. I will then provide an overview of the current business environment in our fourth quarter fiscal year twenty twenty five guidance. We will then be available to respond to specific investor and analyst questions. Since I returned as Microchip's CEO on 11/18/2024, I have spent a significant amount of time evaluating key aspects of Microchip's business.

At the UBS conference on December 3, I described a nine points plan to evaluate Microchip and make changes where needed to set the company on a course to achieve its previous premium status of performance. We're setting up an investor and analyst call on the morning of March 3 to provide you with a comprehensive update on that nine point plan. Today, I'll give you an interim report on several aspects of that plan. The first action was to resize our manufacturing footprint. After analysis, we have decided to close our 10P fab known as Fab two.

Currently, we are in the process of building the material to provide the buffer required before we transfer the processes and products to our other two fabs. 70% of this product is already qualified at these other fabs. Our other two fabs, namely Fab four in Gresham, Oregon and Fab five in Colorado Springs are working on rotating time off schedules. This reduces the capacity, but leaves the fabs in a position to ramp capacity when needed on a very short notice. In our backend facilities in Thailand and Philippines, we're managing capacity by taking shutdown days and reducing the number of employee hours and days of work.

In the rest of our smaller plants worldwide, there is a plan for each plant based on the specific demand in each plant. Some of them are running at capacity, while others are working short end weeks. The second action was to reduce our inventory. Our inventory at the December 2024 was two sixty six days, up from two forty seven days at the September 2024. Our target inventory is 130 to 150.

On March 3, I will project out for you the inventory reduction plan as an example from December 2024 to the end of fiscal year twenty twenty six, which is 03/31/2026. We are currently expected to be able to reduce our inventory balance by approximately $250,000,000 which will liberate cash from this inventory reduction. The third action was a review of our mega trends and TSS and recommend any changes. I will provide an update on this topic on March 3. The fourth action was business unit by business unit deep dive.

This is still underway, but I already know that we will reorganize some of our business units for greater efficiency and synergy. In the process, we will combine a few groups together. The fifth action was a review of Microchip's channel strategy. I have reviewed our channel strategy and we have made two changes. First, when we give a demand creation registration to a distributor on a design socket, we historically have kept that demand creation flag forever.

Going forward, we will change that flag to demand fulfillment after a given number of years. This will incentivize the distributor to present our new products to customers instead of sitting on a higher margin and exposing the socket to competitors. The second change is we had been providing industry high fulfillment margins for distributors. We have lowered the fulfillment margins which will bring it to a level that is still on the higher end of what our competitors provide. The sixth point of evaluation was to strengthen our customer relationships.

We have targeted the top 1,000 customers with an urgent focus on the two fifty six customers. Many of them have already been approached and visited or the customers visited us. We are giving customers a chance to communicate candidly with us showing empathy and care and then engaging with them to support them on their new designs. Our goal is to put our customers first and win their hearts and design opportunities with our products, technologies, support and care. Points seven and eight were our long term business model and operating expenses.

I will provide an update on these topics on March 3. The ninth and final area was the Chips Act activity. We are currently paused waiting for the new administration to restaff the Chips office. We will then reengage when the time is right. With that, I will pass it to Erik Bjornhoert.

Thanks, Steve, and good afternoon, everyone. We are including information in our press release and in this conference call on various GAAP and non GAAP measures, we have posted a full GAAP to non GAAP reconciliation on the Investor Relations page of our website at www.microchip.com and included reconciliation information in our earnings press release, which we believe you will find useful when comparing our GAAP and non GAAP results. We've also posted a summary of our outstanding debt and our leverage metrics on our website. I will now go through some of the operating results, including net sales, gross margin and operating expenses. Other than net sales, I will be referring to these results on a non GAAP basis, which is based on expenses prior to the effects of our acquisition activities, share based compensation and certain other adjustments as described in our earnings press release and in the reconciliations on our website.

Net sales in the December were $1,026,000,000 which was down 11.8 sequentially. We have posted a summary of our net sales by product line and geography on our website for your reference. On a non GAAP basis, gross margins were 55.4% including capacity underutilization charges of $42,700,000 as we are aggressively managing production activities to adjust to challenging business conditions. Operating expenses were at 34.9% of net sales and operating margin was 20.5%. Non GAAP net income was $107,300,000 and non GAAP earnings per diluted share was $0.2 Please note that our operating expenses increased in the December and will further increase in the March due to a predominant portion of our employees coming off the pay cut that we had been on for about nine months in the late November, early December '20 '20 '4 timeframe.

The full quarterly impact of this is reflected in our operating expense guidance for the March. On a GAAP basis in the December, gross margins were 54.7%. Total operating expenses were $530,500,000 and included acquisition and tangible amortization of $122,600,000 special charges of $3,500,000 and share based compensation of $42,000,000 and $4,300,000 of other expenses. The GAAP net loss was $53,600,000 resulting in a loss per share of $0.1 Our non GAAP cash tax rate was 19.9% in the December. We currently expect our non GAAP cash tax rate to be approximately 14.5% for the fourth quarter of fiscal year twenty twenty five, which is modestly higher than our previously forecasted 13% tax rate.

This is a result of expected overpayments in two of our larger tax jurisdictions, which will have the impact of reducing our fiscal year twenty twenty six tax rate as we are calculating this on a cash basis. Our non GAAP cash tax rate is exclusive of the transition tax and any tax audit settlements related to taxes accrued in prior fiscal years. Our inventory balance at 12/31/2024 was $1,356,000,000 which was up $16,700,000 from the end of the September 2024 quarter. We had two sixty six days of inventory at the end of the December which was up nineteen days from the prior quarter's level. At the midpoint of our March 2025 quarterly guidance, we would expect both inventory dollars and inventory days to decrease from the 12/31/2024 levels.

We also continue to invest in building inventory for long lived high margin products, whose manufacturing capacity is being end of life by our supply chain partners and these last time buys represented eighteen days of inventory at the December. Inventory at our distributors in the December was at thirty seven days and was down three days from the prior quarter's level. Distribution took down their inventory holdings in the December as distribution sell through was $118,000,000 higher than distribution sell in. Our cash flow from operating activities was $271,500,000 in the December. Our adjusted free cash flow was $244,600,000 in the December.

As of December 31, our consolidated cash and total investment position was $586,000,000 which is higher than normal due to the timing of the maturity dates of some of our commercial paper that did not occur until early January, which was used to pay down debt after the end of the December. We retired $665,500,000 in convertible bonds that matured in November 2024. In the December, we also issued $1,000,000,000 in investment grade bonds with a 4.9% coupon maturing in March of twenty twenty eight and $1,000,000,000 in investment grade bonds with a 5.05% coupon maturing in February 2030. We use the proceeds of these bond offerings to retire our $750,000,000 term loan and pay down a portion of our commercial paper balance. Our next debt maturity is a $1,200,000,000 bond maturing in September 2025.

The debt issuance this past quarter will give us ample room to retire our September 2025 bond with our line of credit or commercial programs. As a result, we have taken the refinancing risks off the table for the $1,200,000,000 maturity. Our net debt increased by $33,600,000 in the December. Our adjusted EBITDA in the December was $274,900,000 and 26.8% of net sales. Our trailing twelve month adjusted EBITDA was $1,640,000,000 Our net debt to adjusted EBITDA was $3.78 at 12/31/2024, up from $1.27 at 12/31/2023.

Capital expenditures were $18,100,000 in the December. Our expectation for capital expenditures for fiscal year twenty twenty five is about $135,000,000 and we expect fiscal year twenty twenty six capital expenditures to be lower than that as we have a lot of capacity to grow back into as well as capital that we purchased during the up cycle that has not been placed in service yet. Depreciation expense in the December was $40,400,000 I will now turn it over to Rich, who will provide some commentary on our product line innovations in the December. Rich?

Thank you, Eric, and good afternoon, everyone.

Our strategic investments continue to strengthen our position across key growth markets. In our core microcontroller business, we introduced a new generation of 64 bit RISC V processors featuring advanced AI capabilities, integrated time sensitive networking and next generation security. These processors deliver exceptional reliability for factory automation and secure data processing applications, particularly where real time communication is critical. Initial customer response has been strong with promising design win momentum across industrial and aerospace and defense sectors. We expanded our Wi Fi portfolio with 20 new products, expanding microcontrollers and plug and play modules, helping customers simplify robust, secure wireless connectivity and accelerate time to market.

We also introduced a new Smart Touch controller with an industry standard interface, making it simpler for manufacturers to implement water tolerant touch solutions in their products. For high speed wired connectivity, we continue strengthening our automotive networking portfolio with ASA Motion Link technology, enabling next generation software defined vehicles with high speed data exchange between systems. Our innovative technology is currently being evaluated by several leading global automotive manufacturers. Our FPGA portfolio achieved two notable milestones. We earned the highest level of space certification for our radiation hardened chips, strengthening our position in critical space missions and released a new sensor connectivity solution for NVIDIA's Holoscan platform, enabling AI applications in medical imaging and industrial automation.

These developments reinforce our commitment to providing comprehensive solutions across our target markets, while making it easier for customers to implement advanced capabilities in their next generation products, demonstrating our ability to simplify advanced technological implementation for our customers. With that, I will pass the call to Steve for comments about our business and guidance going forward. Steve?

Thank you, Rich. As Eric described in his prepared remarks, our December net sales were $1,026,000,000 down 11.8% sequentially and down 41.9 from a year ago quarter. As we continue to navigate through a very large inventory correction following a post COVID super cycle. We saw continued broad based weakness in the December, our revenue from our microcontroller, analog, SPGA and other businesses were all down sequentially. Geographically, our business was down sequentially in all major geographies of Americas, Europe and Asia.

Now let's get into our guidance for the March. We believe substantial inventory destocking has occurred at our customers, channel partners and their downstream customers. Everyone would like me to call the last quarter as a bottom. However, in our view, the inventory at our customers, channel partners and their downstream customers has not fully corrected yet. Our bookings remain low, although the current quarter bookings are running at a higher rate than in the December.

Our backlog started out lower for the March than it was at the start of the December. So we have a lot of turns to take for the March and the visibility remains low. Taking all these factors into account, we expect our net sales for the March to be between $920,000,000 and $1,000,000,000 We expect our non GAAP gross margin to be between 5254% of sales. We expect non GAAP operating expenses to be between 37.740.5% of sales. We expect non GAAP operating profit to be between 11.516.3% of sales.

We expect our non GAAP diluted earnings per share to be between $0.05 and $0.15 We are laser focused on our nine point plan. The megatrends and customer portion of that plan entails aggressively winning designs at the customers and then pulling them through the funnel to generate growth. We believe that as the remaining excess inventory is consumed at our customers and distributors, we are well positioned to provide above market growth in our net sales. Now let me provide update on our capital return program for shareholders. We are essentially returning 100% of our adjusted free cash flow to investors in the form of dividends right now.

Due to depressed net sales, our adjusted free cash flow is currently less than our dividend and in certain quarters we have had to make higher bond interest payments and tax payments. Bond interest payments are made every six months. So every other quarter this impacts our adjusted free cash flow and results in our dividend exceeding our adjusted free cash flow. As we begin to liberate cash from our inventory coupled with very low capital expenditures, we expect to bring the free cash flow above the dividend. In future quarters, we intend to use the excess cash to bring our borrowings back down to at least the levels they were at before our dividend exceeded our adjusted free cash flow.

With that, operator, will you please poll for questions?

Thank you. We will now be conducting a question and answer session. Thank you. Our first question comes from the line of Vivek Arya with Bank of America Securities. Please proceed.

Thanks for taking my question. Steve, I appreciate your comments and I realize visibility is limited. But you mentioned inventory remains elevated at customers and channel partners. Could you share with us where the hotspots are by end market or by the kind of product? Is it like worse than industrial or microcontrollers, etcetera?

And do you think that this is the inventory issue specific to microchip? Or do you think those customers and channel partners have kind of excess inventory from your competitors also because many of them seem to be indicating a lower level of concern than you are indicating?

So, I think the answer to your first part of your question, which is by end markets or by product line, the inventory is high pretty much across the board and it's not different by end markets. What it is different is slightly by direct or distribution. Our distribution customers inventory is getting lot closer to where they historically would be. And if just in the quarter past, our sell in revenue was $118,000,000 lower than our sell through revenue. On GAAP, we report on sell in, but distribution sold out $118,000,000 more.

And they've been doing this kind of number for the last few quarters. So the distribution inventory is getting a lot closer to getting corrected. But the direct inventory as customers is still high and part of that reason is when the supply was really tight, we were serving our large direct customers sometime preferentially over the broad based distribution customers. So, and the number two reason for our customers having higher inventory is that we dismantled our non cancellable program called PSP two quarters or so later than our competitors did. So therefore, we continue to ship for two more quarters and when the business had eventually fell at our customers, they had higher inventory of our products than potentially our competitors.

Stephen, just as a follow-up, what would you say is the earnings power for Microchip over the next year? In fiscal in this last fiscal year, with the March guidance, it's about $1.3 ish or so. So even if we start assuming some level of seasonal rebound over at some point over the next several quarters, should we be thinking $2.03 dollars What is the kind of earnings power right in the medium term for the company? Because I imagine you are justifiably prioritizing cash flow and you will probably keep fab utilization low and then the need to get OpEx back to a reasonable level, right, would also influence. So just how do you think about earnings power for the company over the next year to two years or so?

Well, you're right on all that, but putting numbers around it, I don't really have it. We don't guide that far out. Well, I'll pass it on to Eric and see if he has something to add.

Well, Steve is right. We guide a quarter at a time. We are working through Steve's nine point plan and obviously he's talked a lot about what we're doing in manufacturing. OpEx in the long term business model that is still to be set and we've got some more work to do on that and we'll share more details with the analyst and investor community on March 3. So it's hard to answer that question, I think as you knew when you asked it.

And we think we are positioned as Steve's prepared remarks said for above market growth, but we need to get through this inventory correction to start seeing the benefits of that. And we've got a lot of confidence in our long term business and what it can drive from an operating margin perspective and cash flow perspective, but we're not quite out of this yet.

Thank you. Our next question comes from the line of Blayne Curtis with Jefferies. Please proceed.

Hey, good afternoon. Two questions. I just want to ask, I know you don't want to forecast the revenue slow back, but maybe can you walk us through the gross margin a bit? Because I think it stepped down more obviously, you said days and dollars would come down in inventory, but is there some level that you want to get to give us some reference as to how long this may be depressed before it comes back with revenue?

So I think on March 3, we'll give you some data on inventory depletion and rightsizing our factories and all that with which you may be able to model the question you asked and the question Vivek asked. We don't really have it today. But what I would like to highlight is, even for the current quarter, we're guiding a gross margin of midpoint of 53%. Many of our competitors don't do that in good times. So that's extremely good gross margin.

Now operating expense at about 39.1%, it was the midpoint of what we guided today. So it's quite high compared to our historical and that's driven by really adding a lot of people at the top of the cycle when assumption was the business just keeps going. So we have a correction there to do and I'll be able to talk to you more about it again on March 3. And the gross margin of 53% is with very, very low factory utilization that we're running today. And you know where the gross margins historically have been.

There's absolutely no reason why gross margins do not return to a historical number, not the historical high, which was really at the peak of the cycle and had expedite charges and price increases and all that in, but leaving that timeframe out, we should be able to get to our historical gross margins. And with correcting the operating expenses, you should have really a beautiful P and L, which I'll give it to you as a long term target on March 3.

Thanks. And then I wanted to ask you on the growth side. That's always been a debate for the company. I'm just kind of curious your renewed perspective here coming back. You mentioned some moves with the distribution channel to kind of incentivize demand creation.

Do you think when you said the company can outgrow the market, is that going to be a work in progress or you think that's what it is today and these moves would kind of add to that?

I don't know if I can separate those two. I think our megatrends design wins are higher than a non megatrend design win. I think we have shared some data in the past with you. There are about 2x the normal. So we also went through an environment during super cycle of COVID where all customers, engineers were doing is trying to find alternate parts or really fit whatever product we had available for them into their design and re qualifying them.

So kind of not much new designs happened for a couple of years. Our customers are reengaged doing new designs. They are in various parts of the funnel and when they go to production, that really a model will show that our business grows from that. And then the other thing is the inventory depletion both at the customers and channels. And when that inventory depletes, then customers start buying their full consumption rate, then that will increase revenue.

Combine those two together, we don't really have any concerns about the long term future. It's just we got to get through this. I think we're getting close, but industry has been saying getting close for about a year. So I don't want to really spell out any quarter to be the bottom, but we ought to be getting quite close.

Thank you. Our next question comes from the line of Harsh Kumar with Piper Sandler. Please proceed.

Yes. Hey, Steve, good to see you back. I had a quick question on OpEx. Sounds like from the answer you just gave to Blaine, I think you said that OpEx will come down from the current level in absolute dollars. Is that a fair assumption?

That's my clarification question. And then on the nine point program that you have, are you assuming that things or the environment will stay the same or are you baking in some level of recovery at some point in time this year or next year? It's got to come back at some point in time, but I'm curious if you're baking that in your assumption or just keeping the environment the same?

We are baking it in our assumption. The growth will be result of some return of business and the inventory is depleted plus our efforts into winning new designs with all the new products we have introduced in the last three, four years, many customers are sitting on significant designs, but they didn't complete them or launch them in an environment when they had a lot of inventory.

Understood. I had another question, maybe not so easy, but could you take me through the process of how your organization would even try to gauge the correct level of channel inventory or direct inventory in this kind of an environment where things are dynamic, they're moving around, mostly going down, but still moving around a lot. I'm more curious about the process to understand how you would try to get to the right answer here.

So, I think historically over twenty, twenty five years, our channels on the average worldwide would have an inventory which is about 2.5 to 2.7 x what they ship out to their customers in a given quarter. And it kind of really stayed in that window 2.5 to three. There have been very few occasions when the inventory was much higher than that. One happened soon after the Microsemi acquisition, when we consolidated the numbers, Microsemi inventory was closer to four and ours was lower. And then that we aggressively brought it down.

So it can change, but in general it is in that. And we see no reason why distributor inventory would come back down to below three.

And I think when you're saying that Steve, you mentioned 2.5 times what they ship in a quarter, it's really two point five to three months of inventory based on what they're shipping out.

Thank you. Our next question comes from the line of Toshiya Hari with Goldman Sachs. Please proceed.

Hi. Thank you so much for taking the question. Steve, it sounds like you've been spending quite a bit of time with customers over the past two months since your return. I'm curious what the feedback has been to you and the company, any common threads and how do you plan on responding to some of the customer asks going forward? What do you need to do to regain any lost trust, if you will?

So, I'm going to hand that question to Rich Simonsac. He has talked to more customers than I have. I've been spending a lot of time on the business units and the factories and customers also when they come to us, but I may add something, but let him give the basic answer. Go ahead, Rich.

So we've been spending a lot of time in front of customers and mainly what customers are dealing with today is trying to digest the inventory that they have and dealing with the weaker markets. So we've been spending time with our distributors, our catalog houses, and our customer relationships are in pretty good shape. Where we're losing or not losing, but where we have some tough customer relationships, so where they're sitting on quite a bit of inventory from PSP program or upset about some of the price increases that took place during the COVID period. But I think a lot of customers suffered from that from other semiconductor suppliers. So we're trying to do is work with them, understand where they're upset on some of those customers, and then and see what we can do going forward.

I don't think there's anything magic here other than us working together to find good win wins going forward. I think as we went through the customer relationships, we degraded. And where we have those that degraded and our worst accounts where they had degraded was those two fifty six that Steve highlighted. And out of the abundance of customers we have, we're going to work on those two fifty six where we've degraded that relationship.

No customer is telling us, go away, you're having horrible anything like that. I think our products are good, our tools are good, our service and support has been world class over the years and many of these customers, we have a multi decade relationship. So it's kind of just there's a lot they got hurt, some of them got hurt during the super cycle one way or the other either with pricing or not getting enough product or getting too much product and have inventory And just hurt feelings have to be soothed and time heals and discussion and talk heals and we're largely getting those customers back designing with us.

Great. Thank you. And then as a quick follow-up, maybe on pricing, calendar 2024, where did blended ASPs for you all land roughly? And how should we think about 2025 and sort of the forward path? I think many of your peers have said something along the lines of they expect pricing to revert to pre pandemic patterns, which is down low single digits.

Are you thinking about pricing the same way or could it be a little bit different for you guys? Thank you.

So, my sense is that short term, yes, what the competitors are doing is correct. But I'm not sure it returns to a price drop every year because pre pandemic microchip wasn't giving a year over year price decrease. Our costs don't go down year over year. Many of the costs go up and through efficiency gains and yield improvements and others, you got to get back to your margin. So, the price drops every year was really think of the past.

But short term, I think, we increased prices quite a bit over the past three, four years and some price reduction in the low to mid single digits near term is appropriate.

Thank you. Our next question comes from the line of Vijay Rakesh with Mizuho Securities. Please proceed.

Hi, thanks, Steve. And just a quick question. As you look at your different segments, autos, industrial, consumer, etcetera, is there a way to tell us what the split is and how they're done year on year?

So we break out our end markets once a year, DJ. We do that at the end of the fiscal year, which will end in March. So we'll provide more color on that probably in the kind of early May timeframe when we release our year end earnings. So don't have it to share today. Really all end markets have been weak.

We've highlighted a few things that have been stronger over this period of time and not a whole lot of change there, right? But overall, industrial automotive has been weak. That's consistent with what you're hearing from everybody else.

Got it. And then on the inventory side, is there any risk of inventory of Solasence or write down given you are seeing some disintermediation with other solutions, I guess? Thanks.

So we've been taking pretty significant inventory reserve charges and so those have been reflected in the gross margin and our expectation for gross margin this quarter. We've got a lot of inventory sitting on the balance sheet and revenue has been falling and backlog has been falling. So with low visibility and lower revenue and a high level of inventory, that's just the place we're in right now. But Steve's talked about the actions that we're taking to reduce inventory in dollars and days. And I think we've got a good plan in place to do that.

And so as we move forward, not saying necessarily this quarter as there are gross margin guidance is down, but as we move forward, those charges should reduce as the inventory balance comes down and hopefully we see a better revenue environment.

Thank you. Our next question comes from the line of Chris Danley with Citi. Please proceed.

Hey, thanks guys. I guess question for SteveRich. Steve, as you've been there for three months now, is there anything you see that's gone wrong that is not fixable? And then if youRich could just spend some time on your assessment of Microchip's competitive positioning and how you feel that that is, let's say versus couple of years ago? Thanks.

So, I haven't found anything that is not fixable. I think rice pricing the factories is fixable and we're in the process of doing so. The high inventory is fixable and we're in the process of doing so. As we're doing these various business unit by business unit reviews, some business units have flourished, some of the others have atrophied and we need to move some things around to put our resources, take them away from lower performing business units and put them in the high performing business units. So some optimization needs to be done.

So that is fixable. There are we we compete in lot of different businesses, microcontrollers, analog, data center, automotive, aerospace and defense and all that. And in any business in it or any end market, you will find that we should have this product or this feature, we don't have it yet, somebody else has it. And internal discussion would be how we can plug that gap. But at the same time, we have products with some differentiating features that our competitors don't.

But no, I haven't found anything that is not fixable. But anytime you find a product hole, it does take two years of development to plug that hole. So I think, but in general, I haven't really found anywhere, any major problem that is not fixable, but it takes time to fix some of these things.

Okay. And the competitive positioning question? Then I'll go away.

Yes. I think in our analysis of that, in our surveys of that, in our discussions with our distributors, the feedback we're getting, we're predominantly holding our own in that competitive positioning. It's still we're still working through it. I think what's confusing right now because of inventory, you lose visibility in terms of where some of those customers are when you have a large swath of customers. Microchip has about 120,000 customers.

So obviously, we can't touch 120,000, but we're touching all of the focus ones and dedicated ones that we have. And the relationships are still strong. And we have customers that are still coming through and working with us. So I don't see anything majorly broken on that customer front. We

on relationships, but there's nothing fundamentally broken. Like I said earlier, I think most customers were just unhappy about how the whole COVID period went and how they built up inventory. We did find, which was quite fascinating, our smaller customers, medium and smaller customers, when material was finally available to them, instead of buying one year or twelve months, they may have bought twenty four months. So they bought a little bit extra on the smaller and medium customers. And so it really varies.

And so it really varies depending on the market and the customer base.

Microchip Technology Q3 2025 Earnings Call Transcript | Fortune

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Microchip Technology (MCHP) Q3 2025 Earnings Call Transcript

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