Microchip Technology (MCHP Quick QuoteMCHP - Free Report) recently announced a $300-million investment for expanding its operations in India, one of the world’s fastest-growing semiconductor industry hubs.

Per a report, India's semiconductor market is expected to reach $64 billion by 2026, nearly triple its 2019 size. The country now accounts for 20% of the total global design workforce.

To leverage on the development, Microchip started making significant strategic commitments to grow operations in India and benefit from its increasingly important role in the global semiconductor industry.

It’s 2,500 employees in India are vital to the company’s semiconductor design and development, sales and support, IT infrastructure and application engineering operations. They support corporate initiatives, serve 2,000 customers in the region and contribute to solutions for various industries.

Microchip Technology Incorporated Price and Consensus

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Microchip’s planned investments include — upgrading its facilities in Bangalore, Chennai and Hyderabad; expanding and enhancing its engineering labs; accelerating hiring; sponsoring technical groups; supporting academic institutions and programs; and launching various CSR programs.

Microchip Faces Stiff Competition

Per an article by Gartner, the global semiconductor industry is expected to decline by 11.2% in 2023, due to softness in end-market demand, oversupply of chips and price erosion. The memory market is projected to total $92.3 billion, down 35.5% in the rest of 2023.

Microchip, which operates in a similar industry have been affected by macroeconomic challenges, increasing lead time, stiff competition and supply-chain constraints. Unfavourable movement in exchange rates continue to affect the top line and undermine its growth potential.

It faces stiff competition in the semiconductor market from players like Broadcom (AVGO Quick QuoteAVGO - Free Report) , Intel (INTC Quick QuoteINTC - Free Report) and Micron Technology (MU Quick QuoteMU - Free Report) .

Per an article by Gartner, Intel held the second-largest global market share in semiconductors by revenues with 9.7% in 2022. Broadcom and Micron held 4% and 4.6% in 2022, respectively.

Microchip’s shares have underperformed the Zacks Computer and Technology sector in the year-to-date period. While MCHP’s shares have gained 29.1%, the sector has increased 37.3%.

Shares of Broadcom, Intel and Micron Technology have increased 56.7%, 27.2% and 27.8% year to date, respectively.

Microchip Leverages on Strong Product Pipeline to Aid Prospects

Despite a weak industry and economic challenges, Microchip has been benefiting from a robust product pipeline and consistent strength in its analog and microcontroller businesses. Its dominance in 8,16 and 32-bit microcontrollers and strategic acquisitions have been major tailwinds.

Microchip expects the strong demand, collaborations and innovative product pipeline to drive the top line in the rest of 2023.

This Zacks Rank #3 (Hold) company projects net sales of $2.255-$2.322 billion for first-quarter fiscal 2024. Non-GAAP earnings are anticipated between $1.63 per share and $1.65 per share. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for fiscal first-quarter revenues is pegged at $2.29 billion, indicating growth of 16.55% from the year-ago quarter’s reported figure.

The consensus mark for earnings is unchanged at $1.61 per share in the past 30 days, indicating a year-over-year growth of 17.52%.