SAN FRANCISCO — Riding on the combined strength of acquisitions and organic growth, Microchip Technology Inc., a provider of microcontroller, mixed signal, analog, and flash IP, reported record net sales of $1.931 billion for the fiscal year ended March 31, 2014. In a conference call, Microchip reported its 2014 results were up 22.1% year-over-year, as fourth-quarter earnings increased 14.7% from 2013.
“We had a very large organic growth and also gained market share in each product line. Growth was also aided by the acquisition of Standard Microsystems Corp., which added some revenue,” Microchip CEO Steve Sanghi told EE Times. “If you do a backward look on Microchip, we’ve been growing in spades. We were a $60 million company in 1990 and have had enormous market share growth.”
Microchip also reported “record fiscal year net sales” of 8-bit, 16-bit, and 32-bit microcontrollers but did not provide exact figures. The company’s continued focus on 8- and 16-bit technology is unlike other vendors and might be its winning financial ticket, says analyst Tom Starnes.
“In many ways, the competition has almost abandoned 8-bit, and yet, Microchip has seemed to continue to evolve 8-bit and 16-bit, and I think that has helped them,” says Starnes, an advisor with Strategy Sanity. “Microchip is able to not only pick up what the other guys are kind of leaving on the table, but to be a very favored vendor for the smaller kind of products.”
Extremely low-power microcontrollers have contributed to the company’s success, a Microchip spokesman said. Additionally, new analog, and 16-bit and 32-bit technologies have helped increase the company’s customer base.
“We’re the only company that supports all of 8-, 16-, and 32-bit microcontrollers with one integrated development environment. That’s been a key differentiator for us,” the spokesman told us.
Starnes pointed to Microchip’s “consistent strategy and execution,” as well as Sanghi’s steady hand, as a linchpin for success. An “elbowing” strategy of expanding beyond MCUs to peripheral chips has allowed Microchip to remain profitable even in hard times.
“If you look at a customer’s board, we occupy the socket where the microcontroller goes, then what else is around it,” Sanghi said. “If there are other competitors around us selling analog products, sensors... our strategy is essentially to elbow them out to build or acquire those product lines. We’ve done 15 acquisitions in the past few years.”
Part of the company’s success is aligned with the maker community, said Starnes. “In many ways that is a significant type of customer -- the distribution type of customers buying in smaller quantities. Microchip has done a good job in providing support for boards, has good application notes, and service from sales people.”
— Jessica Lipsky, Associate Editor, EE Times