Microchip Technology reported fiscal second‑quarter 2026 results on November 6, 2025, with net sales of $1.140 billion—up 6 % from the prior quarter and down 2 % from the same period a year earlier. GAAP net income attributable to common shareholders was $13.9 million, translating to a diluted EPS of $0.03. Non‑GAAP EPS, which excludes one‑time items and restructuring charges, reached $0.35, beating the consensus estimate of $0.33–$0.34 by roughly $0.02 per share.
The 6 % sequential rise in revenue was driven by stronger demand in Microchip’s high‑margin semiconductor segments, offsetting a modest decline in legacy product sales. Inventory normalization—evidenced by a sharp drop in inventory days—has reduced the impact of over‑stocking from the previous year, allowing the company to convert more sales into cash. Year‑over‑year, the 2 % decline reflects lingering softness in certain end‑markets, but the sequential improvement signals a gradual recovery in the broader semiconductor landscape.
Gross margin held steady at 55.9 % GAAP, while non‑GAAP gross margin expanded to 56.7 %. Operating income reached $88.9 million, a 7.8 % margin on sales, and non‑GAAP operating income climbed to $277.2 million, a 24.3 % margin. The margin stability is largely attributable to disciplined cost management and a favorable product mix that leans toward higher‑margin AI and data‑center chips, counterbalancing the lower‑margin legacy lines.
Management provided new guidance for fiscal third quarter 2026, projecting net sales of $1.109 billion to $1.149 billion and non‑GAAP EPS of $0.34 to $0.40. The guidance represents a modest sequential lift in revenue and a slight tightening of the EPS range, reflecting confidence in continued demand for high‑growth AI and enterprise products while acknowledging that macro‑economic uncertainty may temper growth. The guidance also signals that the company expects inventory levels to remain near normal, supporting margin maintenance.
CEO Steve Sanghi highlighted the company’s “continued momentum in our recovery” and noted that the introduction of the first 3 nm PCIe Gen 6 switch for AI and enterprise data‑center applications positions Microchip to capture a growing market segment. He also emphasized ongoing inventory normalization and cost‑control initiatives, underscoring the company’s focus on sustaining profitability as demand gradually rebounds.
Analysts had forecasted revenue of $1.137 billion and non‑GAAP EPS of $0.33–$0.34. Microchip’s actual revenue of $1.140 billion and non‑GAAP EPS of $0.35 beat expectations by $0.003 billion and $0.01 per share, respectively. The beat reflects the company’s ability to execute on its cost‑control plan and to capitalize on the high‑margin AI product pipeline, while the modest revenue miss relative to the upper end of analyst estimates highlights the need for continued demand growth to reach full‑year targets.
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