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Microchip Technology Inc.

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Microchip is benefiting from robust demand for 8-bit, 16-bit and 32-bit microcontrollers. We believe that Microchip's expanding product portfolio driven by new launches will continue to expand customer base. Additionally, the company expanded collaboration with Amazon Web services to support AWS offerings as well as develop secure cloud system. The company plans to bring in-house more of the assembly and test operations that are currently outsourced, which will ultimately improve gross margin. The heightened capital expenditures also reflect three new buildings that Microchip is constructing in Arizona, India and Germany. These, in turn, will help in reducing cost in the long-haul. Moreover, the company has a positive record of earnings surprises in recent quarters. However, estimates have been stable lately ahead of the company’s Q1 earnings release.


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