SAN FRANCISCO--Microchip Technology Inc. reported Thursday (Nov. 4) revenue had decreased 9.1 percent sequentially in its fiscal second quarter, scraping in just below analysts' expectations, but meeting the street’s predictions for non-GAAP profits at 46 cents per share.
The American manufacturer of microcontroller, memory and analog semiconductors said it had earned $79.3 million, or 40 cents per share, down from the $103 million, or 55 cents per share, it had earned in the same quarter last year.
Revenue was also down 11 percent year over year to $340.6 million from $382.3 million, but in line with analyst estimates.
Microchip blamed the decreases and weakness in its results on the macro economic climate.
“Our September quarter results are consistent with what others in the industry have reported,” CEO Steve Sanghi said in a statement.
“The poor economic conditions are impacting the broader semiconductor industry as can be seen from the earnings reports over the past few weeks. The overall macroeconomic environment is weak and the Christmas build season did not materialize as expected during the quarter. We saw broad-based weakness across all sales channels in all geographies,” he continued.
Microchip also slightly readjusted its net income guidance for the December quarter, but still remained within analyst estimates at the high end, predicting revenue ranging from $316.8 million to $340.6 million. Analyst predictions are for $337.6 million.
The firm said it also believed its shipment rates would drop in December, as customers use up excess inventory, a process it hopes will have ended by the time the firm announces its March quarter results.
According to Microchip's COO Ganesh Moorthy, the microcontroller business was down 11.2 percent sequentially, for both 8-bit and 16-bit product lines.
“Our 16-bit business was down 14.9 percent sequentially, and about flat for the year ago quarter,” Moorthy said.
The company said it shipped 43,000 development tools in the September quarter and that cumulatively it had now shipped over 1.2 million development tools, 30% of which were shipped in just the last 2 years.
Microchip also noted the shipment of its 10 billionth cumulative microcontroller in September to Samsung Electronics.
“The shipment was for a Samsung product that utilized our 32-bit microcontroller, the PIC32, exemplifying the continued acceptance and design win of the PIC32 by leading global brand names like Samsung Electronics,” said Moorthy.
Microchip’s analog business dropped just 0.7 percent sequentially, with Moorthy noting it had “performed exceptionally well in the current environment.” The COO put the resilience of the analog business unit down to Microchip’s “strategy to focus not only on attaching to our microcontrollers, but also to other microcontrollers as well as other devices like DSPs, FPGAs and ASICs that require analog around them.”
The memory business unit –comprised of Microchip’s Serial E-squared and Superflash memory products- didn’t fare quite as well, dropping 12.6 percent sequentially.
Giving an update on the Thailand floods, Moorthy said the firm’s 2 assembly and test factories “continued to operate normally thanks to the heroic actions of our local team, who have braved personal challenges in order to keep our operations running and our customers served.”
The firm, which employs 3000 people in Thailand, said employee safety remained the number 1 priority. 200 Microchip employees have reportedly lost their homes to the severe flooding.