QUOTE AND NEWS
Clusterstock  Oct 16  Comment 
Advanced Micro Devices just announced it will cut staff by 7% and take $70 million in charges, and now the stock is tanking. In after hours trade on Thursday, shares of AMD were down about 6%.  Along with its third quarter earnings, AMD...
SeekingAlpha  Oct 15  Comment 
By Bret Jensen: There is no other way to say this - it is getting flat out ugly in the market right now. Ebola, plunging oil prices, Europe on the brink of another recession, big sell-offs in the energy sector, small caps, miners, etc…..take...
SeekingAlpha  Oct 15  Comment 
By Shock Exchange: CSR, which recently rejected a $2.5 billion takeover offer from Microchip Technology (NASDAQ:MCHP), was just acquired by Qualcomm, Inc (NASDAQ:QCOM) for $2.5 billion. CSR designs computer chips and components used in mobile...
SeekingAlpha  Oct 14  Comment 
By Russ Fischer: The semiconductor stocks have been hit hard; the Philadelphia Semiconductor Index (NASDAQ:SOXX) is down over 11% in the past three trading days. Intel (NASDAQ:INTC) was down over 8% in those three days. Memory companies SanDisk...
Market Intelligence Center  Oct 14  Comment 
The semiconductor space has been the sweet spot in the overall technology space this year. About 57.8% of technology earnings growth came from semiconductor electronics (with 80% beating earnings), followed by 31.8% growth in miscellaneous...
Wall Street Journal  Oct 10  Comment 
Microchip Technology, an Arizona maker of computer chips, issued an earnings warning, fueling concern that the semiconductor sector is headed for a downturn.
Benzinga  Oct 10  Comment 
Toward the end of trading Friday, the Dow traded down 0.10 percent to 16,642.17 while the NASDAQ tumbled 1.33 percent to 4,319.94. The S&P also fell, dropping 0.34 percent to 1,921.68. Leading and Lagging Sectors Non-cyclical consumer...
Forbes  Oct 10  Comment 
In afternoon trading on Friday, Technology & Communications stocks are the worst performing sector, showing a 2.5% loss. Within the sector, Microchip Technology (NASD: MCHP) and Avago Technologies (NASD: AVGO) are two of the day's laggards,...
Motley Fool  Oct 10  Comment 
The specialty chipmaker has fallen hard in the wake of an industry-wide warning.
StreetInsider.com  Oct 10  Comment 
The following is a list of notable articles to help get you through the lunch hour: Emerald Oil (EOX) Continues Seeing Downside on Volume -> Read this! Micron, Microchip Are Apples & Oranges; Summit Research Defends Semis (MU) (MCHP) (FORM)...




 

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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