QUOTE AND NEWS
Market Intelligence Center  Jan 21  Comment 
The patented option trade-picking algorithms behind MarketIntelligenceCenter.com's Artificial Intelligence Center have selected a covered call trade on Microchip Technology Inc (MCHP) that includes 3.98% downside protection. Sell one contract of...
Benzinga  Jan 12  Comment 
Microchip Technology Inc. (NASDAQ: MCHP) and Texas Instruments Incorporated (NASDAQ: TXN) were named Top Picks by Citi on Monday. Analysts led by Christopher Danely believed the two companies “have the best combination of capital allocation,...
Market Intelligence Center  Jan 8  Comment 
The patented algorithms that power MarketIntelligenceCenter.com's Artificial Intelligence Center found a trading opportunity with Microchip Technology Inc (MCHP) that should provide a 5.11% return in just 99 days. Sell one Apr. '15 call at the...
Forbes  Dec 30  Comment 
Investors in Microchip Technology, Inc. (NASD: MCHP) saw new options become available this week, for the February 2015 expiration. At Stock Options Channel, our YieldBoost formula has looked up and down the MCHP options chain for the new February...
Motley Fool  Dec 24  Comment 
Microchip Technologies offers one of the richest dividend yields in the semiconductor sector. But is it the real deal, or just a flash in the pan?
Benzinga  Dec 2  Comment 
Shares of Microchip Technology Inc. (NASDAQ: MCHP) are trending up slightly after hours Tuesday. The increase in share price is a result of the company raising its guidance. The company raised its third quarter EPS guidance from $0.59-0.64...
Market Intelligence Center  Dec 2  Comment 
Microchip Technology Inc (MCHP) presents a trading opportunity that offers a 4.94% return in just 136 days. A covered call on Microchip Technology at the $44.00 level expiring on Apr. '15 offers an assigned return rate of 4.94% or 13.25%...
Forbes  Oct 31  Comment 
The best performing sector as of midday Friday is the Technology & Communications sector, up 1.8%. Within the sector, Analog Devices (NASD: ADI) and Microchip Technology (NASD: MCHP) are two large stocks leading the way, showing a gain of 5.2% and...
Forbes  Oct 31  Comment 
In early trading on Friday, shares of Microchip Technology (MCHP) topped the list of the day's best performing components of the S&P 500 index, trading up 8.3%.  Year to date, Microchip Technology has lost about 0.5% of its value.




 

Microchip Technology (NASDAQ: MCHP) makes analog microcontrollers, memory, and other electronic components for embedded systems, which are small, low-power computers designed to perform specific tasks. The company primarily competes in the microcontroller market.

MCHP primarily competes with STMicroelectronics and Atmel.[1] In April 2009, Microchip Technology acquired R&E International, a privately-held developer of integrated circuits. [2]

Business Overview

Business & Financial Metrics[3]

In FY2010, MCHP generated a net income of $217 million on revenues of $947.7 million. This represents an 11.6% decrease in net income and a 4.9% increase in total sales from FY2009, when the company earned $245.6 million on $903. million in total revenues.

Business Segments[4]

MCHP operates through one reportable segment that engages in the design, development, manufacture, and marketing of semiconductors.

Microcontrollers (81.0% of FY2010 sales)

Microcontrollers are essentially computers condensed to a single chip, containing a processor, memory, and a input/output interface. MCHP produces microcontrollers under its PIC brand name. PIC microcontrollers are designed for high performance, low power and cost effectiveness. MCHP microcontrollers use a dual-bus architecture, which has separate pathways for data and instruction, making them faster than the majority of other microcontroller products on the market that tend to use single-bus architectures. MCHP manufactures products in the 8-bit, 16-bit, and 32-bit microcontroller markets and has the largest market share in the 8-bit market.[5] The 8-bit microcontroller is the smallest and most popular of the three, as an estimated 55% of all computers use 8-bit microcontrollers.[6] The 16-bit and 32-bit microcontrollers are more computationally powerful and physically bigger.

MCHP also makes the Development Tools that system designers use to program PIC microcontrollers. These tools are hardware products that let these designers program MCHP's microcontrollers and other electronics products.

Memory Products (8.5% of FY2010 sales)

Memory products consist of Serial EEPROMs (Electrically Erasable Programmable Read-Only Memory), which are useful in embedded devices because they do not require power to keep data stored. MCHP is the largest manufacturer of EEPROMs.

Analog and Interface Products (10,5% of FY2010 sales)

Analog and Interface Products consist of MCHP's power management, linear, mixed-signal, thermal management and interface products, which number over 500. Its line of mixed-signal products primarily includes data converters that convert data from analog to digital or vice versa. Linear products refer to Microchip's products that transfer either analog or digital data, without any conversions.[7]

IMAGE:MCHP-Segments2009.jpg[4]

Key Trends and Forces

Microchip's business has suffered from decreasing demand for its products

Products in the semiconductor industry tend to have short shelf lives, with their selling prices decreasing rapidly over the course of their existence. In the case of Microchip, the average selling prices of its microcontroller and analog and interface products remained relatively constant, but average selling prices of its memory products and non-proprietary analog and interface products have decreased.

Weak U.S. Dollar benefits Microchip's international sales

Because MCHP reports its revenues in U.S. dollars but most of its business is international, it is affected by exchange rates. When the value of the dollar depreciates, MCHP's international sales grow in dollar terms. From 2006-2008, the dollar depreciated relative to the Euro and Japanese Yen.[8][9]

Competitors

  • Atmel (ATML) competes with all three of MCHP's segments and is most notably successful for its business in the smart card market.[10][11]
  • STMicroelectronics (STM) manufactures a wide variety of products in its 3 segments: application specific product group, industrial and multi-segment group, and flash memory group. In the application specific product group, STM competes with Microchip in the production of mixed signal and power technologies. STM's industrial and multi-segment group, on the other hand, competes with MCHP in the production of microcontrollers and memory products.[12][13]

References

  1. MCHP Press Release, 8 Apr 2090
  2. MCHP 2009 10-K pg. F-3  
  3. 4.0 4.1 MCHP 2009 10-K pg. 31  
  4. Wikipedia: 8-bit
  5. EUR to USD Exchange Rates
  6. USD to JPY Exchange Rates
  7. Wikinvest: Atmel
  8. Atmel: Products
  9. Wikinvest: STMicroelectronics
  10. STMicroelectronics: Company Profile
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