MCHP, Microchip Technology Incorporated
With over 35 years of technology leadership, our broad product portfolio offers a Total System Solution for our customers that can provide a large portion of the silicon requirements in their applications.
Read top to bottom, the owner's questions in the order an owner asks them: what the business is, whether the record holds, whether it survives and is any good, and what you would be paying. New to the questions? Start with the Method.
The business in brief
read the 10-K →What this business is and what moves its needle, read from the numbers in its filings. The quantitative detail is in the sections below; the verdict is left to you.
- What it is
- Revenue is Mixed-signal Microcontrollers (50%), Analog (28%) and Other (22%).
- Situation
- Cyclical. margins collapse repeatedly across the cycle, a single year misleads; look at normalized, through-cycle earnings and the balance sheet at the trough.
- What moves the needle
- Engagement and pricing power, not factories. What decides it: whether the gross margin holds as the business scales, how much of the profit is paid out to employees as stock, and whether revenue keeps compounding.
- Is it a good business?
- Return on capital has rarely cleared the cost of capital (median 5%, above 15% in 2 of 10 years). The steadier read is owner earnings: roughly 30% of revenue reaches owners as cash, consistently. The cycle and the balance sheet decide this one, so weigh the worst year against the median, and read the 10-K.
Every line here is arithmetic from the company's own filings, not a model's opinion, and each figure appears in full in the sections below.
Where the money comes from
read the 10-K →Semiconductor products is 97% of revenue, so this is largely a single-segment business.
- Semiconductor products97%$4.5B
- Technology licensing3%$164M
From the segment footnote of the company's own 10-K. Shares are of total revenue; the profit bar shows each segment's share of segment operating profit, before unallocated corporate costs.
The record, 2017–2026
realized figures from each filing, no estimates| 2017’17 | 2018’18 | 2019’19 | 2020’20 | 2021’21 | 2022’22 | 2023’23 | 2024’24 | 2025’25 | 2026’26 | TTMTTMMar 2026 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| RevenueRevenue | $3.4B | $4.0B | $5.3B | $5.3B | $5.4B | $6.8B | $8.4B | $7.6B | $4.4B | $4.7B | $4.7B |
| Gross marginGross mgn | 52% | 61% | 55% | 61% | 62% | 65% | 68% | 65% | 56% | 58% | 58% |
| Operating marginOp. mgn | 8.1% | 23.5% | 13.4% | 12.3% | 18.4% | 27.1% | 36.9% | 33.7% | 6.7% | 10.4% | 10.4% |
| Net incomeNet inc. | $165M | $255M | $356M | $571M | $349M | $1.3B | $2.2B | $1.9B | ($500K) | $230M | $230M |
| EPS (diluted)EPS | $0.34 | $0.50 | $0.69 | $1.11 | $0.65 | $2.27 | $4.02 | $3.48 | $-0.00 | $0.42 | $0.42 |
| Owner earningsOwner earn. | — | $1.2B | $1.4B | $1.5B | $1.8B | $2.5B | $3.1B | $2.6B | $772M | $871M | $871M |
| Owner earnings marginOE mgn | — | 30.5% | 27.0% | 28.0% | 33.5% | 36.3% | 37.1% | 34.2% | 17.5% | 18.5% | 18.5% |
| ROICROIC | 5% | 9% | 5% | 4% | 7% | 12% | 19% | 17% | 1% | 4% | 4% |
| Cash & investmentsCash+inv | $1.3B | $2.2B | $431M | $403M | $282M | $319M | $234M | $320M | $772M | $240M | $246M |
| Net debt / (cash)Net debt | $1.6B | $872M | $9.9B | $9.1B | $8.6B | $7.4B | $6.2B | $5.7B | $4.9B | $5.3B | $5.3B |
| Book value / shareBVPS | $6.79 | $6.43 | $10.32 | $10.90 | $9.86 | $10.42 | $11.69 | $12.15 | $13.17 | $11.80 | $11.80 |
Owner’s Scorecard
Will it survive?
- AdequateOperating income $490M ÷ interest expense $221M
Comfortable in a normal year, but below the margin of safety Graham looked for. Worth checking how stable the coverage has been across a full cycle.
- How heavy is the debt? 11.2×HighTotal debt $5.5B ÷ operating income $490M
Years of operating profit it would take to repay all debt. A first read, not a credit rating: it's gross debt (not netted against cash) over EBIT (not EBITDA), and a cyclical year distorts it.
- Debt, net of cash $5.3BHeavy net debtCash $240M − debt $5.5B
Netting $240M of cash and short-term investments against $5.5B of debt leaves $5.3B owed, about 10.7× a year's operating profit, versus the gross figure above. Net debt is the leverage figure that matters; the gross ratio above ignores the cash already set against it. Strategic or illiquid investments aren't counted here.
- Capital-hungryDSO 69 + DIO 190 − DPO 38 days
Days cash is tied up between paying suppliers and collecting from customers. Lower is better; a long cycle means growth itself eats cash.
Is it a good business?
- Below averageNOPAT $412M ÷ invested capital $11.7B (debt + equity − cash)
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; below ~8% the company may destroy value as it grows. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Cash machineOwner Earnings $871M = operating cash $962M − capex $91M
What an owner could take out without starving the business. That's 18% of revenue. Treating stock comp as the real expense it is (less $255M of SBC) leaves $616M. Honest caveat: capex here blends maintenance and growth, so steady-state Owner Earnings may run higher (see capex vs. depreciation).
- Cash-backedCash from ops $962M ÷ net income $230M
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Returns most of itDividends + buybacks $984M ÷ Owner Earnings $871M
Of $871M Owner Earnings, $984M (113%) went back to shareholders, $984M dividends, $0 buybacks. Returning most of it signals a mature cash machine; reinvesting most could mean a long runway, or empire-building. The split doesn't say which; the return earned on it (see ROIC) does.
- Investing or harvesting? 0.13×HarvestingCapex $91M ÷ depreciation $689M
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Durability & moat, 2017–2026
A moat is a high return that doesn’t fade, reinvested at high returns. Here is what the record says, judgments, not another chart of the numbers.
- Profitable years 9 of 10
Lost money in 1 year(s), look at what happened there before trusting the average.
- Return on capital ≥ 15% 2 of 10 yrs
A moat shows up as a high return on invested capital that holds year after year, not one good vintage.
- Operating margin 8% (FY2017) → 10% (FY2026)
Margins widened over the record, pricing power intact or improving.
- Reinvestment, incremental ROIC 12%
Reinvested capital earned only a modest return, growth is getting expensive.
- Owner earnings growth −5%/yr
Free cash to owners shrank about 5% a year over the record.
- Worst year 2025 · 6.7% op. margin
Stayed profitable even in its hardest year, the resilience that survives recessions.
- Dividend record rising
Paid and raised the dividend across the record, the continuity Graham prized.
Solvent is not the same as cheap; growing is not the same as good. These are vital signs, not a verdict, the judgment is yours, and the filing is one click away.
How the cash was used, 2018–2026
Over the record, the business generated $17.8B of operating cash, and how management split it is, as Buffett insists, the job that matters most. Here it reads as a balanced allocator, splitting cash between the business, owners, and the balance sheet.
- Reinvested$2.0B · 11%
- Dividends$2.9B · 16%
- Buybacks$2.5B · 14%
- Retained (debt / cash)$10.5B · 59%
It reinvested $2.0B (11%) back into the business and returned $5.3B (30%) to owners, $2.9B in dividends, $2.5B in buybacks. Total debt rose $2.4B across the span.
Buybacks are gross of stock issued to employees; net of that, the real return to owners is lower (see Management & pay). And the mix alone doesn't grade management, what matters is the return earned on the dollars reinvested (see incremental ROIC in the durability report).
Management & pay
read the proxy →Two questions Buffett actually asks about pay: is stock compensation, a real expense, whatever the income statement pretends, quietly large, and is the top wildly out of line with the floor. He's no populist about it; he just wants pay that's rational and earned, and comp committees that aren't lapdogs.
- CEO pay ratio457:1
What the chief earns for every dollar the median employee makes, per the 2025 proxy. A high ratio isn't proof of anything, some businesses are genuinely top-heavy in scarce skill, but a runaway figure is where Buffett starts asking whether the board is doing its job or just keeping the chair company.
- Stock-based compensation$255M
The slice of the business handed to employees in shares this year, 5% of revenue, equal to 52% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. And note the trap, the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
Graham’s defensive-investor test
3 of 6 metGraham gave the defensive investor seven numerical criteria in The Intelligent Investor. Here they are, run mechanically on the filings, his framework, not our verdict. Meeting them is a floor of safety, not a reason to buy; missing one is no veto, since many fine modern businesses fail his strictest liquidity tests by design. The worth is in seeing exactly where a company stands against the canon, every number sourced.
- Adequate size PassRevenue ≥ $2B · $4.7B
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity PassCurrent ratio ≥ 2× · 2.09×
Current assets at least twice current liabilities, near-term bills covered without touching the business. Strict by design: many cash-rich modern firms run leaner and miss it, holding their cushion in longer-dated securities.
- Conservative debt MissDebt ≤ working capital · $5.5B vs $1.2B WC
Graham's rule that borrowings not exceed net current assets. Capital-heavy and buyback-heavy firms routinely fail it, read it next to interest coverage, not alone.
- Earnings stability NearA profit every year (10-yr record) · 1 loss year
Graham wanted earnings in each of the past ten years, the stability a defensive owner leans on.
- Dividend record MissUninterrupted dividends · 3 of 10 yrs
An unbroken dividend was Graham's mark of durability. He wanted twenty years; the filings show about ten, and a single suspension breaks the streak. Non-payers, many fine modern compounders, fall outside his defensive net by design.
- Earnings growth PassEarnings +33% over the record · +175%
At least a third more earnings than a decade ago, averaging three years at each end. Net income (not per-share), so stock splits don't distort it, buybacks and dilution show up in the share-count line instead.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Earnings are $0.42/share and book value $11.80/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Graham would be the first to say a checklist is a starting point, not an answer. These are his defensive, bargain-hunter's tests, the cigar-butt lens. Buffett and Munger grew past it, paying fair prices for wonderful businesses; that lens lives in the moat and owner-earnings work above, and both still matter. Clearing Graham’s tests earns a closer look; failing them earns harder questions, not a dismissal.
What the price implies
reverse-DCFA price is the one input we don't pull, you bring it. Type today's close (read it off any broker or quote site) and see the owner-earnings growth you'd have to believe to justify it, set beside what Microchip Technology Incorporated has actually delivered. Nothing is stored; the number stays in your browser.
Enter a price above to run it.
Graham capped the multiple at 15×; Buffett and Munger let that rule go, a wonderful business can deserve 50× if the thesis holds. Read it as the bargain-hunter's floor, not a ceiling on good sense.
The discount rate is your interest rate, what a dollar years from now is worth today, anchored to the long-term Treasury yield (~4–5% today, plus whatever premium you want for risk). Drag it toward the risk-free rate and watch how much growth the price suddenly “needs”: interest rates are gravity on valuations.
Owner earnings $871M on 545M diluted shares; net debt $5.3B. This is a lens, not a price target, it says what you'd have to believe, not what the company is worth, and it runs on one year of (noisy) owner earnings at assumptions you can see and change.
What the filing emphasizes, FY2026
read the 10-K →Each year a 10-K must name what could go wrong, in the company's own words. Here are the ones Graham and Buffett would stop on, each set against the figure from the same filings that bears on it, anchored to a period you can find in the record above. We point; the judgment is yours.
- Customer concentrationMD&A
Who the revenue leans on. When one buyer is a large slice of sales, that buyer holds the pricing power, and its troubles become the company's.
“In fiscal 2026, we derived 47% of our net sales through distributors compared to 53% of our net sales from customers serviced directly by us.”
From the recordRevenue exposed (TTM)$4.7B - Pricing power & competitionMD&A
Whether the company sets its price or takes it. Durable pricing power is the surest mark of a moat; price competition is the surest mark there isn't one.
“Intense competition in the markets we serve may lead to pricing pressures, reduced sales or reduced market share.”
From the recordOperating margin10.4% now (TTM), off a 36.9% peak (FY2023) - Supplier & input dependenceMD&A
A choke point upstream. A sole or limited supplier can dictate terms, and a single shortage can stop the line.
“We generally seek to have multiple sources of supply for our raw materials and services, but, in some cases, we may rely on a single or limited number of suppliers.”
From the recordGross-margin cushion (TTM)58% - Concentrated dependenceMD&A
What the whole business leans on, a product, a platform, a partner. Concentration cuts both ways, and the filing is where management has to admit it.
“Historically, since a significant portion of our revenue is from international sales and consumer markets, our business generates stronger revenues in the first half of our fiscal year and comparatively weaker revenues in the second half of our fiscal year.”
From the recordOwner-earnings margin at stake (TTM)18% - Debt terms & refinancingRisk Factors
The fine print behind the debt. Covenants and near-term maturities decide who is really in control when a year goes badly.
“The Credit Agreement also permits the Company, subject to certain conditions, to add one or more incremental term loan facilities and/or increase the revolving loan commitments up to $ 1.00 billion subject, in each case, to the receipt of additional commitments from existing and/or new lenders and p…”
From the recordBalance sheet (TTM)$5.3B heavy net debt · interest covered 2.2× - Litigation & contingenciesRisk Factors
Claims an owner inherits. Most disclosure is boilerplate; this fires only on an actual matter, a named suit, a settlement, a contingency, a number.
“As of March 31, 2026, the Company's estimate of the aggregate potential liability for legal matters that is possible but not probable is approximately $ 25.0 million in excess of amounts accrued.”
A judgment, not a number, weigh it against the filing yourself. - Cyclicality & demandMD&A
How the business behaves when the economy turns. A cyclical earns its keep across the whole cycle, not at the peak.
“We have sought to reduce our exposure to this industry cyclicality by selling proprietary products, that cannot be quickly replaced, to a geographically diverse customer base across a broad range of market segments.”
From the recordWorst year on record6.7% operating margin (FY2025)
What changed, FY2026 vs FY2025
read the 10-K →Most of a 10-K is boilerplate carried over verbatim; the signal is in what's new. These lines appear this year and weren't there last, figure updates filtered out, so only the language shift remains.
- “Our ability to design, develop and timely introduce competitive products and processes - including those implementing new technologies such as AI, or complying with new governmental restrictions regarding implementation of new technologies - may be affected by how quickly we and our customers adapt …”
- “The Chinese government may also re-initiate the suspended antidumping investigation into imports of analog chips originating in the United States and aggressively enforce the new regulation intended to combat the extraterritorial application of foreign trade controls, sanctions and other measures, w…”
- “Future sales into U.S. or foreign government projects are subject to uncertain government appropriations and national defense policies and priorities, including the budgetary process, changes in the timing and spending priorities, the impact of any past or future government shutdowns, contract termi…”
- “In the U.S., the EU, and China, there are various current and proposed regulatory frameworks relating to cybersecurity, AI development, and the deployment of automation and AI in products, services and operations, including the EU AI Act, China's generative AI regulations, and various current or pro…”
- “There were no repurchases of common stock in the fiscal year ended March 31, 2026, compared to approximately 1.0 million shares of common stock repurchased for a total cost of $ 89.6 million in the fiscal year ended March 31, 2025, including the 1% excise tax on stock repurchases enacted by the Infl…”
Classic text analysis over the filing itself, no model wrote a word of this, and every quote is the company's own.
Peers, Semiconductors
The same industry, side by side on owner economics, compare, don't rank by a single number.● marks best in the group.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| TXNTexas Instruments Incorporated | $17.7B | 57% | 34.1% | 19% | 15% |
| NXPINXP Semiconductors N.v. | $12.3B | 55% | 24.8% | 13% | 20% |
| ADIAnalog Devices Inc | $11.0B | 61% | 26.6% | 6% | 39% |
| MRVLMarvell Technology, Inc | $8.2B | 51% | 16.1% | 7% | 17% |
| ONON Semiconductor Corporation | $6.0B | 33% | 1.4% | 1% | 24% |
| MCHPMicrochip Technology Incorporated | $4.7B | 58% | 10.4% | 4% | 18% |
| SWKSSkyworks Solutions, Inc. | $4.1B | 41% | 12.2% | 8% | 27% |
| MPWRMonolithic Power Systems Inc | $2.8B | 55% | 26.1% | 24% | 24% |