10-QPeriod: Q3 FY2026

MICROCHIP TECHNOLOGY INC Quarterly Report for Q3 Ended Dec 31, 2025

Filed February 5, 2026For Securities:MCHPMCHPP

Summary

Microchip Technology Incorporated (MCHP) reported results for the third quarter of fiscal year 2026, ending December 31, 2025. The company saw a sequential increase in net sales compared to the prior quarter, driven by customers working through inventory corrections and new design wins entering production. While the nine-month period showed a slight year-over-year decrease in net sales, the company indicated an improving business environment. Gross profit margins improved year-over-year for the quarter, benefiting from a favorable product mix and licensing revenue, though higher unabsorbed capacity charges presented a headwind. The company continues its strategy of developing smart, connected, and secure embedded control solutions, expanding into the 64-bit mixed-signal microprocessor market. Significant debt obligations remain, but the company reported adequate liquidity and is actively managing its inventory and production levels.

Financial Highlights

56 data points
Beta

Revenue

$1.19B

59.6% Gross Margin

Net Income

$62.70M

5.3% Net Margin

EPS (Diluted)

$0.06

Total Assets

$14.33B

Cash & Equivalents

$250.70M

Free Cash Flow

$318.90M

Financial Statements
Beta
Revenue$1.19B
Cost of Revenue$479.10M
Gross Profit$706.90M
R&D Expenses$274.30M
SG&A Expenses$168.50M
Operating Expenses$555.20M
Operating Income$151.70M
Net Income$62.70M
EPS (Basic)$0.06
EPS (Diluted)$0.06
Shares Outstanding (Basic)540.80M
Shares Outstanding (Diluted)545.50M

Key Highlights

  • 1Net sales increased 15.6% sequentially to $1,186.0 million for the three months ended December 31, 2025, compared to the prior year's quarter, indicating a recovering business environment.
  • 2Gross profit margin improved to 59.6% for the quarter, up from 54.7% in the prior year quarter, driven by product mix and licensing revenue.
  • 3The company repurchased $1.56 billion worth of stock under its ongoing repurchase program, with $1.56 billion remaining available.
  • 4Research and development expenses increased by 11.4% for the quarter, reflecting continued investment in new products and process technologies.
  • 5The company reported $250.7 million in cash and cash equivalents as of December 31, 2025, a decrease from the prior quarter.
  • 6Outstanding debt stood at $5.39 billion as of December 31, 2025, with no outstanding borrowings under the revolving credit facility.
  • 7The company is navigating significant tax matters, including ongoing examinations and potential liabilities in Malaysia and Germany, which could materially impact financial results if unfavorable outcomes occur.

Frequently Asked Questions

Microchip Technology Inc. reported a 15.6% increase in net sales to $1,186.0 million for the three months ended December 31, 2025, compared to the same period in the prior year. This increase was attributed to customers reducing excess inventory and the ramp-up of new product designs.

As of December 31, 2025, Microchip had $5.39 billion in outstanding debt. The company had $250.7 million in cash and cash equivalents, which was a decrease from the previous quarter. There were no outstanding borrowings under the revolving credit facility at the end of the period.

Key risks include ongoing tax examinations and potential liabilities in foreign jurisdictions (Malaysia and Germany), which could materially impact financial results. Additionally, the company faces risks related to global economic conditions, intense competition in the semiconductor industry, supply chain disruptions, and cybersecurity threats. The significant amount of outstanding debt also presents a financial risk.

The company is actively managing inventory levels, which decreased to $1.06 billion at December 31, 2025, down from $1.29 billion at March 31, 2025. Most factory expansion activities remain paused as part of a business recovery plan to reduce inventory. The company believes its current inventory and production capacity are adequate to meet projected customer demand.