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Steve Sanghi, CEO Ganesh Moorthy, COO
Eric Bjornholt, CFO ©November 2017
Microchip 2.0
2 ©November 2017
Business Update Net sales and earnings guidance from earnings call reconfirmed.
Due to our capacity investment efforts, lead times for many products improving. Overall lead times continue to be in a range of 4 to 20 weeks
Longer lead time challenges to be corrected by the middle of calendar year 2018
Continuing with Microchip 2.0 - Total system solutions - Smart, connected and Secure
3 ©November 2017
MICROCHIP 1.0
1. Consistent growth 2. Perennial market share gains 3. High margin business model 4. Shareholder friendly with consistently increasing
dividends and free cash flow 5. Successful M&A strategy
4 ©November 2017
0100200300400500600700800900
1000110012001300140015001600170018001900200021002200230024002500260027002800290030003100320033003400350036003700380039004000
FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18RR
MCU Analog Memory Licensing MMO
Annual Net Sales Growth $
Mill
ion
108 consecutive quarters of profitability!
5 ©November 2017
Total MCU (8/16/32) Market Share %
%
6 ©November 2017
Worldwide Microcontroller Market Share
Based on dollar shipment volume 2003-2016, Source: Gartner and Microchip
2003 2008 2009 2010 2012 2014 2015 2016 No. Rank Rank Rank Rank Rank Rank Rank Rank 1 Renesas Renesas Renesas Renesas Renesas Renesas Renesas Renesas 2 Motorola NEC NEC Freescale Freescale Freescale NXP NXP 3 NEC Freescale Freescale Samsung Infineon ST-Micro ST-Micro Microchip 4 Matsushita Infineon Samsung Microchip Microchip Microchip Microchip ST-Micro 5 Infineon Samsung Microchip Atmel ST-Micro NXP Infineon TI 6 Fujitsu Microchip TI TI TI TI TI Infineon 7 Toshiba ST-Micro Infineon Infineon Atmel Infineon Atmel Cypress 8 Microchip TI ST-Micro ST-Micro NXP Atmel Cypress Samsung 9 Samsung Fujitsu Fujitsu Fujitsu Fujitsu Spansion Samsung CEC Huada 10 ST-Micro NXP NXP NXP Samsung Samsung CEC Huada Toshiba 11 Atmel Toshina Atmel Toshiba Toshiba Cypress Datang Si Labs 12 TI Atmel Toshiba Denso Cypress Toshiba Toshiba Denso 13 Sanyo Panasonic Panasonic Cypress Denso Denso Denso Datang 14 Philips Denso Denso Panasonic Panasonic Datang Si Labs SH Fudan 15 Intel Sony Cypress Sony Sony Si Labs SHIC Panasonic 16 Sony Cypress Sony Datang Si Labs CEU-Huada Tongfang Holtek 17 Micronas Intel Datang JSC Sitronics CEC Huada Panasonic Panasonic Nuvoton 18 Oki Micronas Intel Si-Labs Melfas SHIC Holtek Unigroup 19 Sunplus Winbond Si-Labs Intel JSC Tongfang Winbond Maxim 20 Winbond Si-Labs Rohm INSIDE Holtek Nationz
7 ©November 2017
Analog Yearly Revenue (k$)
$0$50,000
$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$550,000$600,000$650,000$700,000$750,000$800,000$850,000$900,000$950,000
$1,000,000
FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18RR
8 ©November 2017
2008 2009 2010 2011 2012 2013 2014
Expanding Our Solutions Through Acquisitions
Hampshire Touch Screen
Controllers
Security & Life Safety ASICs
Low-Power Embedded
Wi-Fi®
High-Density Flash & IP
Motor Drive Products
Development Tools Compiler
Assembly & Test Capacity
Expansion
LSS High-Speed
ADCs
3D Gesture Capture & Proximity Detect
Bluetooth® & Embedded Wi-Fi®
MOST®, USB, Ethernet, Wireless Audio
& PC Controllers
Non-volatile Memory IP
Equalizer & Coaxial
Transceiver Products
High-Voltage Analog & Mixed-Signal Products
Bluetooth® Low Energy
2015
Analog, mixed-signal, timing & power management
HI-TECH
ZeroG
Advanced Silicon Roving Networks
Novocell
Supertex
Micrel
R&E International
SST
MMT
Ident
SMSC
EqcoLogic
ISSC
2016
Microcontrollers, Wireless, Touch,
Automotive, Security
& Memory
Atmel
9 ©November 2017
Microchip 2.0
Be The Very Best Embedded Control Solutions Company Ever
10 ©November 2017
MICROCHIP 2.0
1. Total System Solution in Embedded Control 2. Leading customer preference to design with our
MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex target with multiple leverage
drivers 6. End market mix skewed to Industrial and
Automotive 7. New LT model with industry leading operating
profits
11 ©November 2017
MICROCHIP 2.0
1. Total System Solution in Embedded Control 2. Leading customer preference to design with our
MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex target with multiple leverage
drivers 6. End market mix skewed to Industrial and
Automotive 7. New LT model with industry leading operating
profits
12 ©November 2017
SNMPV3/HTTPS Gateway
PIC32MZ2048EFG144 Harmony 2.04
Wolf SSL
KSZ8041 Ethernet
MIC5219-3.3YMM
WINC1000
24AA256
SST26VF016B SQI Flash
MPFS file system
DSC1001 MEM’s 24MHz
Oscillator
MIIM
I2C SQI
SPI
ECC508
System Supply
Micrel
SST
Classic Microchip
Atmel
13 ©November 2017
Inverter Display Module
PIC32MZ2048EFG100 Harmony Seger
Host Inverter
LCD Display w/ ITO Layer
EBI/PMP Parallel
RGB
SQI GPIO GPIO I2C
USART USART
Touch Controller
I2C
LCC FIRMWARE
RX lines
Analog Driver
INT SYNC
Vsync Hsync Pclk
SQI
SST26VF016B SQI Flash
Graphics Pages
MCP1650 Backlight Controller
PW
M
DSC1001 MEM’s 24MHz
Oscillator
Micrel
SST
Classic Microchip
Atmel
MIC4576-3.3WU Ripple Blocker
3.3V
Power
14 ©November 2017
Wireless Fire Alarm
ATSAM4E16CA
Interface
Sensor Control
I2C MCP32016 IO Expander I2C
UART
SPI GPIO GPIO MAC
GPIO Keyboard
KSZ8081 10/100MHz PHY
MAC
ASF FREERTOS
INT SYNC
SPI
SST26VF064B SQI Flash Event Log
2 x RS485 U
AR
T
ATECC508A Crypto Auth
Micrel
SST
Classic Microchip
Atmel
SEGMENTS DIPLAY
PIO GPIO
SYNC
INT
I2C
UART
ATSAMD10D14A
Com. Stack
SPI
SPI
AT86TF212B 900MHz TRX
30dBm PA/LNA
Power Control AC/DC and Bat Charge
PIC16F1828
AC/DC
Smoke Detector
ATSAMD10D14A
Com. Stack
SPI
SPI
AT86TF212B 900MHz TRX
RE46C113 SMOKE
RE46C800 CO
Battery MIC5302 LDO
MIC2238
12Vdc
Battery
3.3Vdc 5.0Vdc
ATECC508A Crypto Auth
RE
15 ©November 2017
Base Station
PIC32MX170F512 Main CPU
Radio
UART UART
SQI
SPI SPI
BASE STATION FIRMWARE
RMII
SQI
SST26VF064B SQI Flash
Font Storage
WINC1500 WiFi Radio
S
PI
MCP1700 Regulator
Micrel
SST
Classic Microchip
Atmel
LAN8720A
Ethernet PHY
SPI
RM
II
PIC32MX795F512 Ethernet Bridge
MCP1700 Regulator
MIC5219
5V Regulator
SPI
MCP16301
Buck Regulator
UART
16 ©November 2017
GigE Switch
KSZ9477 7-Port Gigabit Switch
ATSAMA5D33 MPU
Micrel
Classic Microchip
Atmel
MIC25041 Buck
Regulator
ATECC508A Crypto
Element
MIC23303 Switching Regulator
MCP1826 Linear Regulator
DSC1101 125 MHz MEMS
Oscillator
MCP1826 Linear Regulator
PL902171 Jitter
Blocker
3.3V 2.5V
1.8V
1.2V
MIC826 Reset
Generator
17 ©November 2017
Cash Dispenser Machine
or
Cache Memory: 32kB I + 32kB D
256M DDR3
AT24MAC02
2 x ATA6561 CAN
SAMA5D28
32-Bit DDR Controller
CAN 0/1 i/f
SPI USART SDIO
LAN8710
Secure Back-up area
EMAC 10/100
PMIC
FPGA
USB2513 USB
AT24LC02 x 2
SDCARD 4GB EMMC
6 x MCP6002
I/F to PC
Classic Microchip
Atmel
SMSC
18 ©November 2017
MICROCHIP 2.0
1. Total System Solution in Embedded Control 2. Leading customer preference to design with our
MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex target with multiple leverage
drivers 6. End market mix skewed to Industrial and
Automotive 7. New LT model with industry leading operating
profits
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
19
46%
43%
18%
13%
13%
11%
10%
10%
9%
9%
9%
8%
7%
3%
2%
2%
2%
2%
39%
34%
19%
17%
10%
10%
13%
8%
12%
11%
10%
9%
4%
2%
2%
1%
3%
2%
Microchip PICAtmel AVR
STMicroelectronics ST6, ST7, ST8Freescale HC
TI TMS370, 7000Intel 80xx, '251
NXP/Philips P80x, P87x, P89xAtmel 80xxRenesas H8
CypressPSoC 1 (M8C) / PSoC 3 (8051)Xilinx PicoBlaze (soft core)
SiLabs 80xxZilog Z8, Z80, Z180, eZ80Digi / Rabbit 2000, 3000
ParallaxToshiba
Infineon XC800, C500Maxim 80xx
2017 (N = 462)
2015 (N = 695)
Which of the following 8-bit chip families would you consider for your next embedded project?
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
20
45%
42%
22%
15%
11%
11%
10%
9%
6%
5%
4%
4%
3%
38%
43%
21%
19%
11%
12%
12%
7%
5%
3%
5%
6%
5%
Microchip PIC24 / dsPIC
TI MSP430
STMicroelectronics ST9, ST10
Freescale HC16
Intel 8086, '186, '286
Renesas RL78
Freescale HC12
Renesas R8C
AMD 186, '188
Zilog Z180, Z380
Maxim
Infineon XE166, XC2000, XC166, C166
Other2017 (N = 412)
2015 (N = 621)
*
*
Which of the following 16-bit chip families would you consider for your next embedded project?
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
21
30%
20%
17%
17%
16%
16%
14%
14%
13%
12%
12%
11%
11%
11%
11%
10%
9%
8%
8%
7%
7%
6%
6%
STMicro STM32 (ARM)
Microchip PIC 32-bit (MIPS)
Xilinx Zynq (with dual ARM Cortex-A9)
Freescale i.MX (ARM)
NXP LPC (ARM)
FreescaleKinetis (ARM/Cortex-M4/M0)
Atmel SAMxx (ARM)
TI Sitara (ARM)
Intel Atom, Pentium, Celeron, Core 2, Core iX
Altera (Intel FPGA) SoC-FPGA (with dual ARM Cortex-A9)
Arduino
Altera (Intel FPGA) Nios II (soft core)
TI SimpleLink (ARM)*
TI TM4Cx (ARM)
Atmel (AVR32)
Atmel AT91xx/ATSAMxx (ARM)
Cypress PSOC 4 ARM Cortex-M0/PSoC 5 ARM Cortex-M3
Renesas RX
Broadcom (any)
TI C2000 MCUs
Xilinx MicroBlaze (soft-core)
NVIDIA Tegra
TI Hercules (ARM)
2017 (N = 617)
Which of the following 32-bit chip families would you consider for your next embedded project?
5% 5% 4% 4% 4% 4% 4% 4% 4% 4% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1%
4%
SiLABS Precision32 (ARM)Qualcomm (any)
Energy Micro EFM32Microsemi SmartFusion2 SoC FPGA (Cortex-M3)
Infineon XMC4000 (ARM)AMD Fusion, Athlon, Sempron, Turion, Opteron, Geode
Atmel AT91xxFreescalePowerQUICC
Renesas RH850Freescale PowerPC 55xx
Microsemi FPGA (Cortex-M1, softcore)Freescale PowerPC 5xx, 6xx
Intel ItaniumFreescale Vybrid (ARM)Freescale 68K, ColdFire
Microsemi SmartFusion SoC FPGA (Cortex-M3)IBM PowerPC 4xx, 7xx
Infineon XMC1000 (ARM Cortex-M0)Marvell
Infineon TricoreXilinx Virtex-5 (with PowerPC 405)
Infineon AURIX (TriCore-based)Cirrus Logic EP73xx, EP93xx (ARM)
AMD Alchemy (MIPS)SPARC (any)
Xilinx Virtex-4 (with PowerPC 405)Spansion (formerly Fujitsu) FM3 (ARM)
Infineon TriCoreInfineon TriCore-based 32-bit families AUDO MAX
AMCC PowerPC 4xxOther (please specify)
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
22
25%
68%
7%
26%
67%
8%
27%
65%
8%
The chip itself The ecosystem surrounding the chip(software, tools, support, etc.)
The chip's supplier/vendor
2017 (N = 719) 2015 (N = 960) 2014 (N = 1304)
What’s most important when choosing a microprocessor?
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
23
14%
14%
11%
11%
5%
5%
4%
4%
2%
2%
2%
2%
Microchip or Atmel (Microchip)
Texas Instruments (TI)
ST Microelectronics
NXP/Freescale/Qualcom
Xilinx
Intel, Intel Altera
ARM
Digi-Key
Cypress Semiconductor
Renesas
Arrow
Silicon Labs2017 (N = 328) Unaided
(Unaided Open End)
Which vendor has the best ecosystem for your needs?
24 ©November 2017
Multiple Growth Drivers
1. Microcontroller market growth and share gains 2. Analog growth and attach opportunity 3. Wireless and Wired Connectivity – IoT 4. Security 5. Automotive Networking, HMI, Access Control,
Lighting and Body Electronics 6. Technology licensing
25 ©November 2017
Revenue by End Market
Industrial35%
Automotive25%
Consumer24%
Computing9%
Communi-cation
5%
Defense & Aerospace
2%
26 ©November 2017
Non-GAAP Net Sales
$0$250,000$500,000$750,000
$1,000,000$1,250,000$1,500,000$1,750,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000
FY09
FY10
FY11
FY12
FY13
FY14
FY15
FY16
FY17
*RR
FY1
8
17.9% CAGR
* Run rate for FY18 represent Q1 + Q2 FY18 actual results multiplied by two
27 ©November 2017
Non-GAAP Net Income and Diluted EPS Growth
$0.00
$1.00
$2.00
$3.00
$4.00
$5.00
$6.00
$7.00
$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000
$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000
FY12
FY13
FY14
FY15
FY16
FY17
*RR
FY1
8
Non-GAAP Net Income $ Non-GAAP Diluted EPS
* Run rate for FY18 represent Q1 + Q2 FY18 actual results multiplied by two
28 ©November 2017
Free Cash Flow as a % of Revenue
0.0%3.0%6.0%9.0%12.0%15.0%18.0%21.0%24.0%27.0%30.0%33.0%36.0%39.0%42.0%
$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000
$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000
FY12
FY13
FY14
FY15
FY16
FY17
* RR
FY1
8
Free Cash Flow $ Free Cash Flow as a % of Sales
* Run rate for FY18 represent Q1 + Q2 FY18 actual results multiplied by two. Free cash flow = operating cash flow minus capital expenditures.
29 ©November 2017
EBITDA and Net Leverage
0.000.350.701.051.401.752.102.452.803.153.50
$0$50,000
$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000
Q1F
Y17
Q2F
Y17
Q3F
Y17
Q4F
Y17
Q1F
Y18
Q2F
Y18
Q3F
Y18
fcst
EBITDA $ Net Leverage* EBITDA as calculated in accordance with Microchip’s Credit Facility. Net leverage excludes 2037 convertible debt, consistent with Credit Facility
30 ©November 2017
Financial Results, Guidance and Long-Term Model
Microchip does not utilize a GAAP long-term model. All figures in long-term model are non-GAAP. Excludes share-based compensation, acquisition related charges, non-recurring items. A reconciliation of our GAAP to non-GAAAP results is available at www.microchip.com.
Q3 FY18 GuidanceNet Sales $971.7 - $1,012.1Gross Margin % 61.0% -61.4%Operating Expense % 22.2% to 22.6%Operating Margin 38.4% to 39.2%Diluted EPS $1.30 - $1.40
Long Term ModelRevenue Growth 7% - 9%Gross Margin 62.5%Operating Expenses 22.5%Operating Margin 40.0%
Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18Net Sales $844.0 $873.8 $881.2 $902.7 $972.1 $1,012.1Gross Profit $471.1 $499.9 $509.7 $534.7 $587.2 $617.8Gross Margin 55.8% 57.2% 57.8% 59.2% 60.4% 61.0%Operating Expenses $240.0 $233.6 $220.6 $213.6 $222.9 $227.3Operating Income $231.1 $266.3 $289.1 $321.2 $364.3 $390.5Operating Margin 27.4% 30.5% 32.8% 35.6% 37.5% 38.6%Net Income $194.0 $219.6 $246.5 $276.9 $319.1 $344.1Diluted EPS $0.84 $0.94 $1.05 $1.16 $1.31 $1.41EBITDA $264.1 $298.8 $321.3 $356.5 $395.6 $422.5
Actual Results
31 ©November 2017
Summary A consistent revenue grower and market share gainer with multiple
growth drivers High margin business model and shareholder friendly Lead times improving from planned capacity additions Capacity challenges to persist through the middle of calendar year
2018 before lead times are normal. Premium long-term non-GAAP financial model to 62.5% gross
margin, 22.5% operating expenses and 40% operating income. Executing on Microchip 2.0- Total system solutions- Smart,
connected and Secure.
Thank You!