{"schemaVersion":1,"research":true,"symbol":"mchp","name":"Microchip Technology","topic":"moat","path":"/stock/mchp/moat","status":"published","version":3,"updatedAt":"2026-10-18T00:03:49.563Z","locked":false,"publicFairValue":false,"fairValue":null,"moat":{"verdict":"narrow","summary":"Microchip has a narrow moat supported by reusable development tools, compatibility within product families, proprietary embedded products and monetized technology licenses. Relatively stable proprietary-product prices and realized design wins support a current advantage. Competitive price declines, cancellable orders and inventory-driven demand swings limit its strength. The passages do not establish a durable cost advantage, network effects or efficient scale.","advantages":[{"mechanism":"switching_costs","claim":"Customers can preserve investments in learning and development tools when migrating within Microchip's portfolio. This creates practical switching friction, supported indirectly by design wins entering production and relatively stable microcontroller prices; actual customer switching costs are not quantified.","durability":"Tool reuse and product-family compatibility can sustain an advantage across successive designs. The passages establish current functionality but do not quantify customer tenure or the duration of design commitments.","risks":"Customers generally lack minimum purchase obligations and can cancel orders. Realized backlog cancellations show that design dependence does not guarantee purchase volumes. Competing technology and customer redesigns can reopen supplier selection.","invalidation":"The thesis would weaken materially if customers stopped preserving tools and learning across product generations, design-win conversions persistently deteriorated after inventory normalization, or proprietary microcontroller prices declined persistently without compensating product value.","competitors":[],"evidenceIds":["e1","e2","e3","e4"],"counterEvidenceIds":["e5","e6","e7","e8"]},{"mechanism":"intangible_assets","claim":"Proprietary embedded products and licensed non-volatile-memory technology provide differentiated intellectual property with demonstrated commercialization. Stable pricing across important proprietary product groups and actual licensing revenue support an advantage beyond merely owning patents.","durability":"Existing licensing revenue and reported historical pricing stability support an established advantage. Continued durability depends on useful new products and enforceable intellectual property; patent lives and license renewal economics are undisclosed.","risks":"Microchip reports competitive pricing declines even in some proprietary lines and alleges cloning or reverse engineering. Royalty disputes have occurred. Neither leadership assertions nor prospective AI-related wins establish exceptional durability.","invalidation":"Persistent pricing erosion across core proprietary products, sustained loss of licensing revenue from reduced technology adoption, or inability to enforce economically important intellectual property would invalidate this advantage.","competitors":[],"evidenceIds":["e3","e9","e10","e11"],"counterEvidenceIds":["e7","e12","e13","e14"]}],"evidence":[{"id":"e1","sourceId":"filing-1","location":"Business / Development Tools / preservation of customer learning and tools","excerpt":"Customers moving from entry-level designs to those requiring real-time emulation are able to preserve their investment in learning and tools as they migrate to future mixed-signal microcontroller devices in our portfolio."},{"id":"e2","sourceId":"filing-1","location":"Business / Competition / compatibility and competitive factors","excerpt":"We currently compete principally on the basis of the technical innovation and performance of our embedded control products, including the following product characteristics: •performance and specifications •analog, digital and mixed-signal functionality and level of functional integration •field programmability •memory density •low power consumption •extended voltage ranges •reliability 10 Table of Contents •security and functional safety •packaging alternatives •comprehensive suite of development tools We believe that other important competitive factors in the embedded control market include: •our broad product portfolio offers a Total System Solutions through a combination of hardware, software and services •ease of use •functionality of application development systems •hardware, software and tool compatibility within product families to increase migration flexibility •dependable delivery, quality and availability •technical and innovative service and support •time to market •total solution cost •availability of easy to adopt reference designs and documentation We believe that we compete favorably with other companies on all of these factors, but if we are unable to compete successfully in the future, our business could be harmed."},{"id":"e3","sourceId":"filing-2","location":"Risk Factors / historical product-group selling-price outcomes","excerpt":"The average selling prices of our mixed-signal microcontroller, FPGA products, and proprietary products in our analog product line have remained relatively constant over time, while average selling prices of our memory and non-proprietary products in our analog product line have declined over time."},{"id":"e4","sourceId":"filing-2","location":"MD&A / microcontroller sales growth and production design wins","excerpt":"Net sales of our mixed-signal microcontroller products increased 38.8% in the three months ended June 30, 2026 compared to the three months ended June 30, 2025 primarily due to increased demand after customers reduced excess inventory levels as well as new customer design win activity entering production."},{"id":"e5","sourceId":"filing-2","location":"Risk Factors / customer purchase commitments and cancellation rights","excerpt":"Further, except for a few LTSAs that are still in place, the customer contracts that we enter into generally do not require any specified level of purchases and allow customers to cancel orders or terminate the contract with limited restrictions."},{"id":"e6","sourceId":"filing-2","location":"Risk Factors / realized backlog pushouts and cancellations","excerpt":"Also, many of our customers felt the effects of slowing economic activity and increasing business uncertainty, and customer requests to push-out or cancel backlog and our accommodation of their requests increased in the fourth quarter of fiscal 2023 and continued throughout fiscal 2024 and fiscal 2025."},{"id":"e7","sourceId":"filing-2","location":"Risk Factors / realized competitive pricing declines","excerpt":"We have experienced, and may experience in the future, pricing declines in certain of our proprietary product lines, primarily due to competitive conditions."},{"id":"e8","sourceId":"filing-2","location":"Risk Factors / competition, customer redesigns and product development","excerpt":"Our ability to compete successfully depends on a number of factors, including, but not limited to: •changes in demand in the markets that we serve and the overall rate of growth or contraction of such markets, including but not limited to the automotive, personal computing and consumer electronics markets; •our success in designing and manufacturing new products including those implementing new technologies, including AI, or complying with new governmental restrictions regarding implementation of new technologies; •the rate at which customers incorporate our products into their applications and the success of such applications; •product introductions by our competitors or by us in response to actions taken by our competitors; •our ability to obtain adequate foundry and assembly and test capacity and supplies at acceptable prices; •our ability to ramp production and increase capacity as needed, at our wafer fabrication and assembly and test facilities; •the quality, performance, reliability, features, ease of use, pricing and diversity of our products; •the rate at which the markets that we serve redesign and change their own products, including in response to market changes caused by developing technologies such as AI and other market forces; •the number, nature and success of our competitors in a given market; •our ability to protect our products and processes by effective utilization of intellectual property rights; •our ability to address the needs of our customers; •our ability to attract and retain talent, including talent with expertise in developing areas such as AI; and •general market and economic conditions."},{"id":"e9","sourceId":"filing-1","location":"Business / non-volatile-memory technology licensing","excerpt":"We license our Non-Volatile Memory technologies to foundries, integrated device manufacturers and design partners throughout the world for use in the manufacture of their advanced mixed-signal microcontroller products, gate array, RF, analog and neuromorphic compute products that require embedded non-volatile memory."},{"id":"e10","sourceId":"filing-2","location":"Note 3 / segment sales, cost of sales and gross profit","excerpt":"The following tables include net sales, cost of sales and gross profit for each segment (in millions): Three Months Ended June 30, 2026 Semiconductor products Technology licensing Total Net sales $ 1,442.1 $ 42.6 $ 1,484.7 Cost of sales 545.8 — 545.8 Gross profit $ 896.3 $ 42.6 $ 938.9 Three Months Ended June 30, 2025 Semiconductor products Technology licensing Total Net sales $ 1,042.5 $ 33.0 $ 1,075.5 Cost of sales 498.8 — 498.8 Gross profit $ 543.7 $ 33.0 $ 576.7 Note 4."},{"id":"e11","sourceId":"filing-2","location":"MD&A / realized microcontroller pricing stability","excerpt":"However, the overall average selling prices of our mixed-signal microcontroller products have remained relatively stable in recent periods due to the proprietary nature of these products."},{"id":"e12","sourceId":"filing-1","location":"Business / Competition / issuer allegations of copying and reverse engineering","excerpt":"We also compete with a number of companies that we believe have copied, cloned, pirated or reverse engineered our proprietary product lines in such countries as China and Taiwan."},{"id":"e13","sourceId":"filing-2","location":"Risk Factors / royalty disputes","excerpt":"From time to time, we or our licensees have contested the amount of royalty payments and related claims have resulted and could result in significant legal fees and require significant attention from our management."},{"id":"e14","sourceId":"filing-1","location":"Business / Competition / industry price erosion and technological change","excerpt":"Competition The semiconductor industry is intensely competitive and has historically been characterized by price erosion and rapid technological change."},{"id":"e15","sourceId":"filing-2","location":"Risk Factors / historical higher-feature products and cost pass-through","excerpt":"In the past, we have moderated average selling price declines in many of our proprietary product lines by introducing new products with more features and higher prices and we were able to pass cost increases on to our customers in the form of higher price for our products."},{"id":"e16","sourceId":"filing-2","location":"Risk Factors / LTSA cancellation rights following price increases","excerpt":"Under certain LTSAs, customers may cancel orders in the event of price increases."},{"id":"e17","sourceId":"filing-1","location":"Revenue recognition / significant negotiated distributor price reductions","excerpt":"The Company's sales price to its distributors may be higher than the amount that the distributors will ultimately owe the Company because distributors often negotiate price reductions after purchasing the products from the Company and such reductions are often significant."},{"id":"e18","sourceId":"filing-2","location":"Market Risk / recent inflation outcomes","excerpt":"Inflation Risk Inflation has not had a material adverse impact on our operating results in recent periods."},{"id":"e19","sourceId":"filing-3","location":"CEO letter / non-GAAP gross-margin recovery and its drivers","excerpt":"As conditions normalized, our profitability improved meaningfully: non-GAAP gross margin moved from 52% at the trough in the fourth quarter of fiscal 2025 to approximately 62% by fiscal 2026 year-end, driven by the normalization of inventory reserve charges and improvement in underutilization charges."},{"id":"e20","sourceId":"filing-2","location":"Risk Factors / realized borrowing to finance dividends","excerpt":"In several recent quarters, we have used borrowings to finance a portion of our quarterly dividend payments and we may do so again in future periods."},{"id":"e21","sourceId":"filing-2","location":"Risk Factors / outstanding debt at June 30, 2026","excerpt":"As of June 30, 2026, the principal amount of our outstanding indebtedness was $5.40 billion."},{"id":"e22","sourceId":"filing-1","location":"Stockholders' Equity / fiscal 2024–2026 realized share repurchases","excerpt":"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 Inflation Reduction Act of 2022 (Inflation Reduction Act), and 11.9 million shares of common stock repurchased for a total of cost $988.9 million in the fiscal year ended March 31, 2024."},{"id":"e23","sourceId":"filing-1","location":"Stockholders' Equity / preferred-stock financing proceeds","excerpt":"As a result of the transaction, the Company received cash proceeds of $1.45 billion, net of underwriting fees and other issuance costs."},{"id":"e24","sourceId":"filing-1","location":"Stockholders' Equity / preferred-stock cumulative dividend terms","excerpt":"Dividends are cumulative at an annual rate of 7.50% on the liquidation preference of $1,000.00 per share of Series A Preferred Stock and may be paid in cash, shares of the Company's common stock or a combination of cash and shares of common stock."},{"id":"e25","sourceId":"filing-1","location":"Stockholders' Equity / mandatory preferred-stock conversion terms","excerpt":"The following table provides the conversion rate per share of our Series A Preferred Stock, subject to certain anti-dilution adjustments: Applicable Market Value of Common Stock Conversion Rate per share of Series A Preferred Stock Greater than $62.4766 16.0060 shares of common stock Equal to or less than $62.4766 but greater than or equal to $50.9996 Between 16.0060 and 19.6080 shares of common stock, determined by dividing $1,000 by the applicable market value Less than $50.9996 19.6080 shares of common stock Unless earlier converted, each share of Series A Preferred Stock will automatically convert on March 15, 2028, into between 16.0060 shares and 19.6080 shares of the Company's common stock, depending on the applicable market value of the common stock and subject to certain anti-dilution adjustments described in the certificate of designations governing the Series A Preferred Stock (Certificate of Designations)."},{"id":"e26","sourceId":"filing-1","location":"Share-Based Compensation / granted PSU performance conditions","excerpt":"For the performance-based PSUs, the number of shares of the Company's common stock expected to vest will range from 0% to 200% of the target grant amount based on the Company's two-year or three-year cumulative non-GAAP operating margin percentage."},{"id":"e27","sourceId":"filing-1","location":"Share-Based Compensation / actual PSU grants, forfeitures and vesting","excerpt":"PSUs share activity is set forth below: Number of Shares Weighted Average Grant Date Fair Value Nonvested shares at March 31, 2023 380,870 $ 69.51 Granted 123,747 $ 77.61 Forfeited (2,883) $ 100.20 Vested — $ — Nonvested shares at March 31, 2024 501,734 $ 71.33 Granted 183,304 $ 71.92 Forfeited (207,481) $ 72.21 Vested (159,293) $ 70.71 Nonvested shares at March 31, 2025 318,264 $ 71.45 Granted 289,499 $ 61.79 Forfeited (77,372) $ 67.22 Vested (74,989) $ 80.18 Nonvested shares at March 31, 2026 455,402 $ 64.34 The aggregate intrinsic value of PSUs outstanding at March 31, 2026 was $29.4 million, calculated based on the closing price of the Company's common stock of $64.61 per share on March 31, 2026."},{"id":"e28","sourceId":"filing-3","location":"Proxy / disclosed governance and compensation practices","excerpt":"Key highlights of our governance practices include: Accountability •Annual election of all directors •Majority voting in uncontested director elections •Lead independent director •Annual Board and committee self-evaluation •Annual Say-on-Pay vote •Anti-hedging, anti-short sale and anti-pledging policies •Stock ownership requirement for directors, officers and other senior employees Stockholder Rights •Proxy access •No stockholder rights plan •No dual-class share structure •No Board members are over-boarded •Board succession planning and refreshment •CEO and executive officer succession planning •At least 75% of Board members must be independent •Periodic reviews of committee charters, code of business conduct and ethics, and corporate governance guidelines •The Audit Committee is responsible for overseeing cybersecurity and artificial intelligence matters, while the Nominating, Governance and Sustainability Committee oversees issues related to sustainability, environmental concerns, and human capital Compensation Practices •Emphasis on performance-based metrics COMPENSATION DISCUSSION AND ANALYSIS HIGHLIGHTS Compensation Policies and Practices Our commitment to responsible financial and risk management is embedded in the design of our executive compensation program, as reflected in the following policies and practices: What We Do What We Don’t Do Compensation Committee comprised 100% of independent directors No repricing of stock options Balance short- and long-term incentives, cash and equity, and fixed and variable pay elements No dividends or dividend equivalents on unearned awards Performance-based awards are approximately 60% of the quarterly evergreen RSU grants to the CEO and approximately 50% of the quarterly evergreen RSU grants to all other executive officers No pledging or hedging of Microchip securities Require one-year minimum vesting for awards granted under the Amended and Restated 2004 Equity Incentive Plan, subject to certain exceptions No perquisites or excessive severance benefits Solicit an annual advisory vote on executive compensation No executive pension plans or company contributions to supplemental retirement plans Maintain stock ownership guidelines No dual class stock; all of our common stock is voting 2026 Proxy Statement 8 Table of Contents CEO PAY — KEY TAKEAWAYS •CEO compensation reflects a clear pay-for-performance structure, with approximately 60% of long-term incentives tied to multi-year performance metrics aligned with stockholder value creation."},{"id":"e29","sourceId":"filing-3","location":"Proxy / 2025 say-on-pay result and shareholder engagement","excerpt":"Contacted Engaged Individual Director Participation Contacted top 32 stockholders representing approximately 60% of our outstanding shares Engaged with 11 stockholders representing approximately 31% of our outstanding shares Compensation Committee Chair participated in 100% of stockholder engagement calls Process Steps Taken Understand Following the 2025 say‑on‑pay vote (45.65% support), we reviewed proxy advisor input and conducted outreach to top stockholders to better understand concerns regarding executive compensation and disclosure."},{"id":"e30","sourceId":"filing-3","location":"Proxy / implemented compensation and disclosure changes","excerpt":"Incorporate We implemented compensation and disclosure enhancements, including changes to CEO equity structure and expanded proxy disclosure, as reflected in our 2026 proxy statement."},{"id":"e31","sourceId":"filing-3","location":"Compensation Discussion and Analysis / actual quarterly operating results and bonus payouts","excerpt":"2026 Proxy Statement 53 Table of Contents Performance Metric (1) Target Quarterly Measurement Q1 FY26 Q2 FY26 Q3 FY26 Q4 FY26 Target Target % of Bonus Target Target % of Bonus Target Target % of Bonus Target Target % of Bonus Sequential net sales growth 5.00% 20.00% 5.00% 20.00% 0.00% 20.00% 3.50% 20.00% Non-GAAP gross profit percentage 60.00% 15.00% 56.00% 15.00% 58.00% 15.00% 60.00% 15.00% Non-GAAP operating expenses as a percentage of net sales 32.00% 15.00% 33.00% 15.00% 33.00% 15.00% 32.00% 15.00% Non-GAAP operating income as a percentage of net sales 28.00% 15.00% 23.00% 15.00% 25.00% 15.00% 28.00% 15.00% Non-GAAP diluted net income per common share $0.24 15.00% $0.33 15.00% $0.37 15.00% $0.50 15.00% Discretionary N/A 20.00% N/A 20.00% N/A 20.00% N/A 20.00% MICP Total N/A 100.00% N/A 100.00% N/A 100.00% N/A 100.00% Performance Metric (1) Actual Results Q1 FY26 Q2 FY26 Q3 FY26 Q4 FY26 Actual Bonus Payout % Actual Bonus Payout % Actual Bonus Payout % Actual Bonus Payout % Sequential net sales growth 10.82% 58.80% 6.04% 26.93% 4.00% 46.67% 10.56% 67.07% Non-GAAP gross profit percentage 54.34% (6.22)% 56.66% 17.48% 60.49% 24.34% 61.62% 21.08% Non-GAAP operating expenses as a percentage of net sales 33.68% 6.60% 32.37% 18.15% 32.00% 20.00% 31.05% 19.76% Non-GAAP operating income as a percentage of net sales 20.66% (3.35)% 24.29% 18.23% 28.49% 23.73% 30.57% 21.43% Non-GAAP diluted net income per common share $0.27 28.17% $0.35 21.09% $0.44 34.95% $0.57 29.50% Discretionary N/A 16.00% N/A 20.12% N/A 37.42% N/A 41.16% MICP Total(2) N/A 100.00% N/A 122.00% N/A 187.11% N/A 200.00% (1)During fiscal 2026, all of the elements of our internal performance and executive and employee compensation metrics were based on net sales and non-GAAP operating results."},{"id":"e32","sourceId":"filing-3","location":"Appendix / fiscal 2026 GAAP and non-GAAP profit reconciliation","excerpt":"RECONCILIATION OF GAAP GROSS PROFIT TO NON-GAAP GROSS PROFIT (in millions, except percentages) Fiscal Year 2026 Gross profit, as reported $ 2,721.1 Share-based compensation expense 34.9 Non-GAAP gross profit $ 2,756.0 GAAP gross profit percentage 57.7 % Non-GAAP gross profit percentage 58.5 % RECONCILIATION OF GAAP OPERATING INCOME TO NON-GAAP OPERATING INCOME (in millions, except percentages) Fiscal Year 2026 Operating income, as reported $ 490.1 Share-based compensation expense 255.4 Professional services associated with certain legal matters 21.9 Amortization of acquired intangible assets(1) 431.1 Special charges and other, net 39.7 Non-GAAP operating income $ 1,238.2 GAAP operating income as a percentage of net sales 10.4 % Non-GAAP operating income as a percentage of net sales 26.3 % (1) Amortization of acquired intangible assets consists of core and developed technology and customer-related acquired intangible assets in connection with business combinations."},{"id":"e33","sourceId":"filing-2","location":"Controls and Procedures / management conclusion on disclosure controls","excerpt":"Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that our disclosure controls and procedures were effective to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act (i) is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure."},{"id":"e34","sourceId":"filing-2","location":"MD&A / analog sales growth and production design wins","excerpt":"Net sales from our analog product line increased 29.9% in the three months ended June 30, 2026 compared to the three months ended June 30, 2025, primarily due to increased demand due to a portion of our customer base having reduced excess inventory levels as well as new customer design win activity entering production."},{"id":"e35","sourceId":"filing-2","location":"Risk Factors / customer negotiating leverage over contract terms","excerpt":"Certain customer contracts differ from our standard terms of sale due to the negotiating leverage held by the customer."},{"id":"e36","sourceId":"filing-3","location":"Equity plan appendix / share-reserve increase subject to shareholder approval","excerpt":"“Incumbent Directors” shall mean directors who either (A) are Directors as of the date this 1 On May 19, 2026, the Company’s board of directors approved an amendment to the plan to add 12,000,000 shares of common stock to the plan subject to stockholder approval at the Annual Meeting to be held on August 18, 2026 and such amendment is reflected in this version of the plan."}],"changes":["No comparable previous version."],"limitations":["Assessment uses only the supplied issuer passages. Sources retain dateKind filed: filing-1 May 21, 2026; filing-2 August 6, 2026; filing-3 July 6, 2026.","Competition passages disclose generic competitor categories without naming direct competitors. Names appearing in biographies, distribution relationships or supply-disruption examples do not establish competitor coverage; competitor arrays are therefore empty.","Switching friction is supported by tool reuse and compatibility, but customer switching expenditures, cohort retention, design lifetimes and market-share comparisons are missing.","Pricing stability and historical cost pass-through are issuer-reported outcomes. Mix effects and higher-feature replacement products prevent treating them as quantified like-for-like price increases.","Margin recovery partly reflects inventory-reserve and factory-utilization normalization. It does not independently establish a moat or resilience through a full cycle.","Proxy evidence supports assessment of actual compensation and governance practices, but detailed beneficial ownership is absent. The proposed 12 million-share plan increase was subject to shareholder approval; adoption is not established.","Detailed cash-flow and capital-expenditure outcomes are incomplete. Borrowing-funded dividends and preferred financing are realized evidence; future debt reduction and prospective product wins remain expectations."],"qualityAssessments":[{"category":"moat","checks":[{"criterion":"structural_advantage","grade":3,"rationale":"Reusable customer tools and learning, proprietary-product pricing stability and monetized technology licenses jointly support an established structural advantage. Relative superiority over specific rivals is not demonstrated.","evidenceIds":["e1","e2","e3","e9","e10"]},{"criterion":"durability","grade":2,"rationale":"Product-family migration and historical price stability suggest persistence, but competitive proprietary-product price declines and ongoing technology changes constrain durability. No defensible duration is quantified.","evidenceIds":["e1","e3","e7","e8"]},{"criterion":"customer_dependency","grade":2,"rationale":"Tool reuse and production design wins indirectly support customer dependence. Cancellable orders, limited purchase commitments and realized cancellations show substantial customer flexibility; no retention rate is disclosed.","evidenceIds":["e1","e4","e5","e6","e34"]},{"criterion":"erosion_resilience","grade":2,"rationale":"Core proprietary prices have remained relatively stable and historical cost increases were passed through, but other product prices declined and some proprietary lines suffered competitive erosion. Resilience is meaningful but uneven.","evidenceIds":["e3","e7","e12","e15"]}]},{"category":"pricing_power","checks":[{"criterion":"realized_pricing","grade":2,"rationale":"Stable microcontroller, FPGA and proprietary analog prices and historical cost pass-through demonstrate some pricing power. Memory and non-proprietary analog declines, proprietary-line erosion and significant distributor discounts make the overall outcome mixed.","evidenceIds":["e3","e7","e15","e17"]},{"criterion":"retention","grade":2,"rationale":"Tool-investment preservation and renewed demand with design wins entering production provide indirect evidence of continued customer engagement. Inventory normalization explains part of growth, and realized cancellations prevent a stronger retention conclusion.","evidenceIds":["e1","e4","e6","e34"]},{"criterion":"margin_resilience","grade":2,"rationale":"Gross profit recovered and recent inflation reportedly had no material adverse effect. However, the preceding margin trough and recovery driven partly by reserve and utilization normalization establish cyclicality rather than strong through-cycle protection.","evidenceIds":["e10","e18","e19","e32"]},{"criterion":"contractual_freedom","grade":1,"rationale":"Customers generally can cancel without specified purchase commitments; certain LTSAs permit cancellation following price increases. Significant distributor discounts and customer leverage over terms limit Microchip's practical pricing discretion.","evidenceIds":["e5","e16","e17","e35"]}]},{"category":"strong_management","checks":[{"criterion":"capital_discipline","grade":1,"rationale":"Stopping repurchases provides some restraint, but borrowing to fund dividends while carrying $5.40 billion of debt is adverse evidence. The preferred financing adds a 7.50% cumulative dividend and mandatory conversion exposure. Incomplete cash-flow data limit assessment, and planned debt reduction is not a realized outcome.","evidenceIds":["e20","e21","e22","e23","e24","e25"]},{"criterion":"incentive_alignment","grade":2,"rationale":"Granted multi-year performance PSUs, actual forfeitures and vesting, ownership requirements and anti-hedging policies support alignment. Reliance on non-GAAP metrics, discretionary bonus components and the 45.65% say-on-pay support indicate material concerns. Ownership amounts are unavailable; proposed additional plan shares are not treated as approved.","evidenceIds":["e26","e27","e28","e29","e31","e32","e36"]},{"criterion":"execution","grade":3,"rationale":"Actual sequential fiscal 2026 revenue growth, improving operating results and subsequent microcontroller and analog growth with design wins entering production support strong recent execution. These are indirect operating measures of execution, partly aided by inventory normalization; non-GAAP improvements exceed GAAP profitability and do not establish exceptional long-term performance.","evidenceIds":["e4","e10","e31","e32","e34"]},{"criterion":"governance","grade":2,"rationale":"Annual director elections, majority voting, a lead independent director and no dual-class structure are substantive safeguards. Shareholder engagement and implemented compensation changes show responsiveness, but weak prior say-on-pay support tempers the assessment. Management's effective-controls conclusion is supporting disclosure, not independent proof of exceptional oversight.","evidenceIds":["e28","e29","e30","e33"]}]}],"qualityPolicy":"quality-scores-2","basisHash":"f26af502823287590957fec4306a7ce5935a5f655563da088ebacf18516845fc","updatedAt":"2026-10-18T00:03:49.563Z","sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/827054/000082705426000016/mchp-20260331.htm","publishedAt":"2026-05-21","sha256":"e44f02f48226895fd753d9af284411c28c6456c10a1a426b16ec947261f4f668","dateKind":"filed"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/827054/000082705426000038/mchp-20260630.htm","publishedAt":"2026-08-06","sha256":"1dcd6aced356b9433178972fbc434612d5c3ada53d91545f025573d7a66ef3b1","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/827054/000082705426000026/mchp-20260701.htm","publishedAt":"2026-07-06","sha256":"4246a78e231c1123f6bd95679c7bd427e1733b5175bbb740d9b48a0af0ba5f5e","dateKind":"filed"}],"model":"gpt-6.1-sol","providerId":"codex:d1932f95b13c9693db0e2d645d70e11ba8ed5afdb834399c822d6d4d7bf7e0ce","usage":{"input_tokens":52887,"cached_input_tokens":20992,"cache_write_input_tokens":0,"output_tokens":3674,"reasoning_output_tokens":144}},"signals":[{"period":"2022","end":"2022-03-31","values":{"gross_margin":65.2347930624991,"operating_margin":27.116656159744316,"roic":11.78152071431571,"fcf_margin":36.25034819451979,"sbc_revenue":3.0817047603688663},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2023","end":"2023-03-31","values":{"gross_margin":67.52106367094457,"operating_margin":36.92511879791911,"roic":18.444635227731876,"fcf_margin":37.14790192802209,"sbc_revenue":2.0192683707206083},"issues":{"software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2024","end":"2024-03-31","values":{"gross_margin":65.43670753431834,"operating_margin":33.6765168186105,"roic":16.53969897094799,"fcf_margin":34.15592580949387,"sbc_revenue":2.325002619721262},"issues":{"peg":"TTM earnings per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","pfcf_growth":"TTM FCF per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2025","end":"2025-03-31","values":{"gross_margin":56.06824790985097,"operating_margin":6.731643038894947,"roic":null,"fcf_margin":17.541348600508904,"sbc_revenue":4.098509632860778},"issues":{"pe":"Trailing earnings is zero or negative, so this ratio is undefined.","peg":"TTM earnings per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","pfcf_growth":"TTM FCF per diluted share growth is zero or negative; a growth-adjusted multiple requires positive growth.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roic":"NOPAT is undefined under this method: pretax profit must be positive and the effective tax rate must be between 0 and 100%.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}},{"period":"2026","end":"2026-03-31","values":{"gross_margin":57.73482421336274,"operating_margin":10.398676030638008,"roic":3.4890259134606403,"fcf_margin":18.480405677791687,"sbc_revenue":5.418938702764634},"issues":{"peg":"Prior-year TTM earnings per diluted share is zero or negative; a growth-adjusted multiple is undefined.","software_capex":"Separately disclosed software and intangible investment is unavailable in the extracted statements for this period.","roiic":"Invested capital did not increase versus the prior year. ROIIC requires a positive increase.","roic_wacc":"Enter a WACC assumption from 0 to 100%."}}],"sources":[{"id":"filing-1","url":"https://www.sec.gov/Archives/edgar/data/827054/000082705426000016/mchp-20260331.htm","publishedAt":"2026-05-21","sha256":"e44f02f48226895fd753d9af284411c28c6456c10a1a426b16ec947261f4f668","dateKind":"filed"},{"id":"filing-2","url":"https://www.sec.gov/Archives/edgar/data/827054/000082705426000038/mchp-20260630.htm","publishedAt":"2026-08-06","sha256":"1dcd6aced356b9433178972fbc434612d5c3ada53d91545f025573d7a66ef3b1","dateKind":"filed"},{"id":"filing-3","url":"https://www.sec.gov/Archives/edgar/data/827054/000082705426000026/mchp-20260701.htm","publishedAt":"2026-07-06","sha256":"4246a78e231c1123f6bd95679c7bd427e1733b5175bbb740d9b48a0af0ba5f5e","dateKind":"filed"}],"history":[{"version":3,"updatedAt":"2026-10-18T16:35:43.872Z","verdict":"narrow","value":null},{"version":2,"updatedAt":"2026-10-18T02:27:49.793Z","verdict":"narrow","value":null},{"version":1,"updatedAt":"2026-10-18T02:18:02.026Z","verdict":null,"value":null}],"hasRequested":false,"requestStatus":"completed","researchIssue":null,"archivedMoat":null,"scope":"supported_catalog"}