Microchip Extends Above-Guidance Sales and Lifts Profit

The Tip Desk · November 5, 2026 · 3 min read

Second-quarter fiscal 2027 net sales reached $1.622 billion, 42.2% above the year-ago quarter, as non-GAAP earnings were $0.97 a share.

Microchip Technology (MCHP), a broadline semiconductor supplier, reported second-quarter fiscal 2027 net sales of $1.622 billion, above the high end of guidance issued on August 6, 2026, whose midpoint was $1.604 billion.

Year-over-year growth accelerated to 42.2% from 38.0% in the June quarter. Sequential growth slowed to 9.2% from 13.2%.

President and Chief Executive Officer Steve Sanghi said the September quarter continued momentum from the start of fiscal 2027, with broad-based growth across end markets driven by industrial and data center applications. He said growth is increasingly supported by new design wins and product innovations.

GAAP net income attributable to common stockholders was $373.6 million, or $0.68 a share, versus $202.0 million, or $0.37 a share, in the June quarter. Non-GAAP earnings were $0.97 a share, above the August guidance range of $0.91 to $0.95. GAAP guidance had been $0.53 to $0.54 a share.

GAAP gross profit was 65.9% of net sales and non-GAAP gross profit 66.5%, up from 63.2% and 63.8% in the June quarter. GAAP operating income was $464.5 million, or 28.6% of net sales. Non-GAAP operating income was $639.9 million, or 39.5% of net sales. Chief Financial Officer Eric Bjornholt said results reflected ongoing operational improvements, with non-GAAP operating expenses growing well below net sales.

Sanghi said bookings remained robust, with book-to-bill well above one. PCIe Gen6 switch and retimer design wins grew to 24, up from 12 at the end of the June quarter after doubling from six at the end of the March quarter.

The company completed acquisitions of Hailo, a provider of accelerated edge AI processors, on September 17, and Vorago Technologies, a provider of radiation-hardened microcontrollers and microprocessors, on October 8.

Cash and short-term investments were $457.0 million at September 30, 2026, versus $240.3 million at March 31. Inventories were $1.117 billion. GAAP cash flow from operations was $419.2 million in the September quarter; free cash flow was $396.1 million.

The company returned about $247.6 million to common stockholders through dividends in the September quarter and declared a 45.5-cent quarterly dividend for the December quarter.

For the quarter ending December 31, 2026, Microchip expects net sales of $1.573 billion to $1.638 billion, a midpoint of down 1% sequentially. Normal seasonality is a 3% to 5% sequential decline. Sanghi said the midpoint represents year-over-year growth of approximately 35.4% and is 5% to 7% better than normal seasonality after about $53 million of infrequent September-quarter revenue items that do not repeat.

Non-GAAP gross margin is guided to 64% to 65% and GAAP gross margin to 62.9% to 63.9%. Non-GAAP diluted earnings are guided at $0.87 to $0.95 a share; GAAP diluted earnings at $0.47 to $0.50. Capital expenditures for the December quarter are expected at about $35 million and approximately $100 million for all of fiscal 2027.

Sanghi said lead times are lengthening across the supply chain and the company is working to expand capacity and secure additional wafer allocation. GAAP guidance excludes any potential gains or charges related to an ongoing evaluation of restructuring activities, including the sale of the Fab 2 wafer fabrication facility in Tempe, Arizona.