US chipmaker Microchip lifts Q3 profit, revenue outlook

Microchip Technology raised its profit and revenue forecasts for Q3, citing stronger-than-expected bookings.

The US-based chipmaker now expects adjusted earnings per share of 40 cents, the upper end of its earlier projection.

Microchip also said net sales are set to reach the high end of its previous forecast range of US$1.1 billion to US$1.2 billion.

The new outlook suggests about 1% sequential growth and a 12% rise year-on-year.

Shares rose 2.3% in after-hours trading following the announcement.

CEO Steve Sanghi said bookings and backlog improved in November and are expected to continue rising into the next quarter.

🔗 Source: Reuters

🧠 Food for thought

Implications, context, and why it matters.

November bookings improved, which lines up with a book-to-bill above 1.0 in July (orders divided by shipments; above 1.0 means orders outpace deliveries) 1. Tariff pull-ins in Q1 2026 were mid to high single-digit millions 1. Guidance now lifts across industrial, aerospace and defense 1.
The gap between distribution sell-in to sell-through (shipments to distributors vs sales to end customers) fell from $103 million in March to $49.3 million in the June quarter (Q1 FY2026) 1. The outlook calls for 12% year-over-year growth, which beats the ~6-6.5% sequential industry pace as the firm gained microcontroller unit (MCU) share in June 2025, with demand rising in data centers and AI infrastructure 1.

For OEM and EMS teams, Microchip lead times (the wait between placing an order and receiving parts) moved to 6-12 weeks 1. Industry averages run 13-14 weeks, with some like STMicroelectronics at 28 weeks 2. The company urged customers to keep 12-16 weeks of backlog (firm orders in the system) to avoid shortages 1. Distributors should watch allocation notices (vendor limits on quantities shipped) for ATMEGA AVR and PIC18F MCUs (popular families used in embedded systems), where quoted waits reach 20-30 weeks 2.
Microchip will lift wafer starts (launching new silicon lots into fabrication) in December 1, yet relief will lag. A $300 million India capacity build will not help right away 2. Current bottlenecks sit in back-end packaging, substrates and lead frames, which scale slower than fab capacity 1. Near-term supply stays tight as automotive and industrial automation pull demand 2 3.