Microchip Technology shows signs of recovery after steep declines. The semiconductor company's 2024-2025 revenue drops were driven by excess customer inventories following its Preferred Supply Program, but distributor inventories are now normalizing. All major product segments including MCU, analog, and FPGA are delivering double-digit year-over-year growth. Management is guiding for 29.8 percent year-over-year growth in Q4 FY2026, signaling strengthening demand momentum. Gross and net margins are expected to recover as utilization improves across manufacturing operations. However, high leverage remains a significant risk that could limit the company's ability to pursue acquisition-driven growth strategies going forward.
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