Microchip Technology Inc at UBS Global Technology and AI Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Timothy Arcuri - UBS AG - Analyst : Let me start off, Steve, you made an announcement yesterday, took the fourth quarter, took the December quarter to the high end of the range. Can you just speak to what the drivers are of that and what you're seeing in the business? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 7:55PM, MCHP.OQ - Microchip Technology Inc at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : Is there any particular end market that's been stronger? Or has it been broad-based?

Question: Timothy Arcuri - UBS AG - Analyst : I think you talked about customers pulling, even from June into March. Is that what's making March better? Or are these new bookings that are shipping in March? Or is it orders that were in backlog that were supposed to ship in June that are actually pulling into March?

Question: Timothy Arcuri - UBS AG - Analyst : Got it. I think you said November was the best bookings month in three years. Is that what you said?

Question: Timothy Arcuri - UBS AG - Analyst : Okay. Is there any sense, Steve -- so, typically, March is -- I think March is usually up a little bit, seasonally. 1% to 2% is what our math is. You had already said that you expect it to be better than that. This just sits on top of that so you should be quite a bit better than what --

Question: Timothy Arcuri - UBS AG - Analyst : Great. Okay. Let's just talk about the long-term growth rate of the business and what the dynamics are. What do you think changed for customers? Do you think that -- there was some of this backlog aging that you were talking about coming out of last call and it was like -- it was almost as if customers were placing orders on a prospective basis and they weren't sure what was going to happen because of tariff uncertainty or whatever so they were putting orders in the backlog that was longer-dated. What broke in the month of November, do you think?

Question: Timothy Arcuri - UBS AG - Analyst : Brian, can you give us a sense of how big do you think this business can be over time?

Question: Timothy Arcuri - UBS AG - Analyst : How do you win in this market? This is not a market that you participated in much in the past. You're competing with companies who are fairly strong in incumbents? What do you bring --?

Question: Timothy Arcuri - UBS AG - Analyst : So the inflection of that business is more of a 2027 event versus --?

Question: Timothy Arcuri - UBS AG - Analyst : '26, okay? Great. Maybe, Eric, I can ask you about -- I think the goal -- you sold in about $50 million below in (inaudible). Selling was about $50 million below sell-through last quarter. I think the plan was that it would gradually get better but it wouldn't get to parity until maybe June or later in the year, actually. It sounds like maybe distribution gets to parity faster now. Can you just talk about that?

Question: Timothy Arcuri - UBS AG - Analyst : Can you talk about factory loadings? I know you had -- I think you had $51 million in underutilization charges last quarter. You were planning to start to bring the factories back on. Certainly, back end, for sure. But can you talk about the trajectory? It sounds like you're going to turn the factories back on a little more -- a little faster now, actually. LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 7:55PM, MCHP.OQ - Microchip Technology Inc at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : Steve, you talked about product gross margin. I think it was 67.4% last quarter, I want to say. Should we expect it to stay in the 66% to 68% range? Does the Data Center business help maybe bring the product gross margins up?

Question: Timothy Arcuri - UBS AG - Analyst : Great. Steve, what -- if you go back and you look at what you think the business grows at, what the long-term CAGR is of the business, and maybe layering in these new data center opportunities, what do you think -- and it depends on the base because we don't really know what the right base here is because it's shut around so much. But what do you think the long-term CAGR is of your business? LSEG STREETEVENTS | www.lseg.com | Contact Us consent of LSEG. 'LSEG' and the LSEG logo are registered trademarks of LSEG and its affiliated companies. DECEMBER 03, 2025 / 7:55PM, MCHP.OQ - Microchip Technology Inc at UBS Global Technology and AI Conference

Question: Timothy Arcuri - UBS AG - Analyst : Great. And then, with respect to the fab shutdown -- back to you, Eric -- how much does this play, just in terms of where your utilization is going to be? Do you think now, given that the business is actually getting better -- there was some thinking, maybe there might be some more consolidation. But now that the business is actually getting better, like, how do you think about the fab shutdowns and how it helps margins, going forward? Have we seen the impact from it yet?

Question: Timothy Arcuri - UBS AG - Analyst : Yeah. Yeah.

Question: Timothy Arcuri - UBS AG - Analyst : Great. Steve, I want to ask you about China. You have this JV in China to look more like a Chinese company in China, I think you've said. Can you just talk about that? Can you talk about how that's going? I think you've taken your exposure. You often whittle it down to be -- you say, well, by the time that you whittle it down, it's a low- to

Question: Timothy Arcuri - UBS AG - Analyst : How much do you think, Steve, the microcontroller world is still benefiting from Moore's Law? Does that have some effect on limiting the TAM, at all? Can you talk about just how much do you think that the MCU business is actually growing?

Question: Timothy Arcuri - UBS AG - Analyst : Right. But just that treadmill, do you think that that's, in some way, capping the growth of the market, at all?

Question: Timothy Arcuri - UBS AG - Analyst : You don't think so. Maybe you can talk also about your competitive position in that market. I get questions. Some investors perceive you as overexposed to 8-bit. This is not my words. I'm sure that you get the same questions, as you overexposed to 8-bit and underexposed to 32-bit. When you get these questions, how do you respond to them?

Question: Timothy Arcuri - UBS AG - Analyst : Do you think, as you push more aggressively into these new opportunities such as data center, does that increase the amount of OpEx and the amount of R&D that you're going to have to spend?

Question: Timothy Arcuri - UBS AG - Analyst : And then, Steve, last question -- and I asked you this on the call last time -- you still have these LTSAs. Your point was these are still around because it helps you stay connected to the customer. Can you give any tangible examples of maybe a situation where you have a customer sitting in LTSA that you're able to then go and say, well, I can sell you something else because we have this connectivity.

Question: Timothy Arcuri - UBS AG - Analyst : Well, that's great. Well, we're out of time. Thank you to all of you.