Microchip Technology Incorporated (NASDAQ:MCHP) Q1 2024 Earnings Call Transcript

And it will be a huge growth driver for Microchip.

Steve Sanghi : Good to hear from you Janet. This is Steve.

Janet Ramkissoon: Hi. Nice to hear from you Steve. But just one quick follow-up if I may. Given the capability that is made possible by this new architecture, and its ability to integrate analog and digital functionality in a very effective way, shouldn’t this also be, have positive implications for gross margins on these products above corporate average?

Ganesh Moorthy: So, I wouldn’t place the RISC-V architecture as the reason for the gross margin or the performance of the product line. The product line is an enormously complex product. It comes with lots of software, lots of tools, a lot of application information that we put together. How we put it all together and turn it from a complex capability to an easy-to-use solution is what determines design wins, revenue growth, gross margins, customer adoption, etcetera. So it’s much, much more than anything about RISC-V alone or any other core for that matter.

Steve Sanghi : The product line’s gross margins are definitely well above corporate average, but as Ganesh said, they are not because of the RISC-V. It’s because of the overall architecture of the FPGA, the tools, the value we provide, and the markets we sell into.

Janet Ramkissoon: Thanks very much guys. I appreciate it.

Ganesh Moorthy: Great. You’re welcome. Were we able to get Will back?

Operator: Yes. William Stein, your line is open again.

William Stein : Great. I’ll try to do a shorter preamble and just say, Microchip is clearly experiencing this down cycle later than others. I think it’s pretty clear it’s because you’ve had these – the PSP and other flavors of NCNR, and you’ve been clear that you’re allowing customers to reschedule and not so flexible on the cancellations. If we look at number guidance, I’m guessing that if you told every customer that wanted to reschedule or cancel, no, then you would have had higher revenue or had higher guidance. Likewise, if you allowed everyone to…

Operator: Unfortunately, it looks like his line has dropped again.

Steve Sanghi : We have no idea why the lines are dropping. Will can just call us back after the call, and we’ll take his question.

Ganesh Moorthy: Where there other questions or other callers that are still in the queue?

Operator: No, there are no more questions in queue.

Steve Sanghi : Close it out then.

Ganesh Moorthy: Okay. Well, thank you everyone for attending today and for your questions. And we have follow-up meetings with many of you as well. But I look forward to talking to you either at those calls or in the many events we will be at during the course of this quarter. So, thank you.