Microchip Technology Incorporated · NASDAQ:MCHP

Microchip Technology — Investor Presentation (December 2017)

32 slides from Microchip Technology's investor presentation, December 2017

  1. Slide 1: Microchip 2.0

    Microchip 2.0 Steve Sanghi, CEO Ganesh Moorthy, COO Eric Bjornholt, CFO ©December 2017

  2. Slide 2: Business Update

    Business Update  Net sales for Q3FY18 expected to be flat to down 4%  Operating profit for Q3FY18 expected to be between 38.4% and 39.2%  Non GAAP EPS for Q3FY18 expected to be between $1.30 to $1.40 per share  Due to our capacity investment efforts, Microchip’s inventory position is improving r

  3. Slide 3: Microchip 1.0

    MICROCHIP 1.0 1. Consistent growth 2. Perennial market share gains 3. High margin business model 4. Shareholder friendly with consistently increasing dividends and free cash flow 5. Successful M&A strategy ©December 2017 3

  4. Slide 4: Annual Net Sales Growth

    Annual Net Sales Growth 4000 3900 3800 3700 3600 108 consecutive quarters of profitability! 3500 3400 3300 3200 3100 MCU Analog Memory Licensing MMO 3000 2900 2800 2700 2600 $ Million 2500 2400 2300 2200 2100 2000 1900 1800 1700 1600 1500 1400 1300 1200 1100 1000 900 800 700 600 500 400 300 200 100

  5. Slide 5: Total MCU (8/16/32) Market Share %

    Total MCU (8/16/32) Market Share % % ©December 2017 5

  6. Slide 6: Worldwide Microcontroller Market Share

    Worldwide Microcontroller Market Share 2003 2008 2009 2010 2012 2014 2015 2016 No. Rank Rank Rank Rank Rank Rank Rank Rank 1 Renesas Renesas Renesas Renesas Renesas Renesas Renesas Renesas 2 Motorola NEC NEC Freescale Freescale Freescale NXP NXP 3 NEC Freescale Freescale Samsung Infineon ST-Micro ST

  7. Slide 7: Analog Yearly Revenue (k$)

    Analog Yearly Revenue (k$) $1,000,000 $950,000 $900,000 $850,000 $800,000 $750,000 $700,000 $650,000 $600,000 $550,000 $500,000 $450,000 $400,000 $350,000 $300,000 $250,000 $200,000 $150,000 $100,000 $50,000 $0 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 RR ©

  8. Slide 8: Expanding Our Solutions Through Acquisitions

    Expanding Our Solutions Through Acquisitions HI-TECH Roving Networks Supertex Development Tools Advanced Silicon Bluetooth® & High-Voltage Analog & Motor Drive Mixed-Signal Products Compiler Embedded Wi-Fi® Products ZeroG Micrel Low-Power Hampshire Embedded LSS Novocell Analog, mixed-signal, Wi-Fi®

  9. Slide 9: Microchip 2.0: Be The Very Best Embedded Control Solutions Company Ever

    Microchip 2.0 Be The Very Best Embedded Control Solutions Company Ever ©December 2017 9

  10. Slide 10: Microchip 2.0

    MICROCHIP 2.0 1. Total System Solution in Embedded Control 2. Leading customer preference to design with our MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex target with multiple leverage drivers 6. End market mix skewed to Industrial and Automot

  11. Slide 11: Microchip 2.0

    MICROCHIP 2.0 1. Total System Solution in Embedded Control 2. Leading customer preference to design with our MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex target with multiple leverage drivers 6. End market mix skewed to Industrial and Automot

  12. Slide 12: SNMPV3/HTTPS Gateway

    SNMPV3/HTTPS Gateway Micrel Classic Microchip DSC1001 SST MEM’s 24MHz Oscillator WINC1000 Atmel System Supply SPI PIC32MZ2048EFG144 Harmony 2.04 MIIM KSZ8041 MIC5219-3.3YMM Wolf SSL Ethernet ECC508 SQI I2C SST26VF016B SQI Flash 24AA256 MPFS file system ©December 2017 12

  13. Slide 13: Inverter Display Module

    Inverter Display Module Micrel Classic Microchip DSC1001 MCP1650 SST MEM’s 24MHz Backlight Oscillator Controller Atmel PWM Parallel Analog LCC FIRMWARE EBI/PMP RGB Driver PIC32MZ2048EFG100 Vsync USART USART Harmony Seger Hsync Pclk Power Host SQI GPIO I2C GPIO Inverter SQI I2C INT SYNC LCD Display w

  14. Slide 14: Wireless Fire Alarm

    Wireless Fire Alarm Classic Micrel Microchip SST Battery PIC16F1828 AC/DC Atmel ATECC508A Power Control Crypto Auth 2 x RS485 AC/DC and Bat Charge RE 12Vdc MIC5302 Battery I2C UART LDO MIC2238 3.3Vdc RE46C113 RE46C800 MCP32016 Com. Stack SMOKE CO IO Expander I2C I2C ASF 5.0Vdc FREERTOS ATSAMD10D14A

  15. Slide 15: Base Station

    Base Station Micrel Classic Microchip MIC5219 MCP16301 WINC1500 SST WiFi Radio Buck 5V Regulator Regulator Atmel SPI SPI UART UART UART PIC32MX170F512 SPI SPI SPI Main CPU PIC32MX795F512 Ethernet Bridge BASE STATION FIRMWARE Radio SQI RMII SQI RMII MCP1700 MCP1700 Regulator SST26VF064B Regulator LAN

  16. Slide 16: GigE Switch

    GigE Switch Micrel Classic Microchip Atmel ATECC508A ATSAMA5D33 Crypto Element MPU DSC1101 125 MHz MEMS PL902171 Oscillator Jitter Blocker KSZ9477 MIC826 7-Port Gigabit Reset Switch Generator MIC25041 3.3V Buck MCP1826 2.5V Regulator Linear Regulator MCP1826 1.8V Linear Regulator MIC23303 Switching

  17. Slide 17: Cash Dispenser Machine

    Cash Dispenser Machine Classic 2 x ATA6561 Microchip CAN SMSC PMIC Atmel CAN 0/1 i/f I/F to PC or FPGA SPI AT24MAC02 USART SDIO SAMA5D28 AT24LC02 x 2 Cache Memory: 32kB I + 32kB D EMAC LAN8710 10/100 Secure Back-up area USB USB2513 6 x MCP6002 32-Bit DDR Controller 256M DDR3 SDCARD 4GB EMMC ©Decembe

  18. Slide 18: Microchip 2.0

    MICROCHIP 2.0 1. Total System Solution in Embedded Control 2. Leading customer preference to design with our MCUs 3. Multiple growth drivers 4. Record gross margin target with multiple drivers 5. Record low opex target with multiple leverage drivers 6. End market mix skewed to Industrial and Automot

  19. Slide 19: Which 8-bit chip families would you consider for your next embedded project?

    19 Which of the following 8-bit chip families would you consider for your next embedded project? Microchip PIC 46% 39% Atmel AVR 43% 34% STMicroelectronics ST6, ST7, ST8 18% 19% Freescale HC 13% 17% TI TMS370, 7000 13% 10% Intel 80xx, '251 11% 10% NXP/Philips P80x, P87x, P89x 10% 13% Atmel 80xx 10%

  20. Slide 20: Which 16-bit chip families would you consider for your next embedded project?

    20 Which of the following 16-bit chip families would you consider for your next embedded project? Microchip PIC24 / dsPIC 45% 38% TI MSP430* 42% 43% STMicroelectronics ST9, ST10* 22% 21% Freescale HC16 15% 19% Intel 8086, '186, '286 11% 11% Renesas RL78 11% 12% Freescale HC12 10% 12% Renesas R8C 9%

  21. Slide 21: Which 32-bit chip families would you consider for your next embedded project?

    21 Which of the following 32-bit chip families would you consider for your next embedded project? SiLABS Precision32 (ARM) 5% STMicro STM32 (ARM) 30% Qualcomm (any) 5% Microchip PIC 32-bit (MIPS) 20% Energy Micro EFM32 4% Microsemi SmartFusion2 SoC FPGA (Cortex-M3) 4% Xilinx Zynq (with dual ARM Cort

  22. Slide 22: What's most important when choosing a microprocessor?

    22 What’s most important when choosing a microprocessor? 68% 67% 65% 25% 26% 27% 7% 8% 8% The chip itself The ecosystem surrounding the chip The chip's supplier/vendor (software, tools, support, etc.) 2017 (N = 719) 2015 (N = 960) 2014 (N = 1304) 2017 Embedded Markets Study © 2017 Copyright by Aspen

  23. Slide 23: Which vendor has the best ecosystem for your needs?

    23 Which vendor has the best ecosystem for your needs? (Unaided Open End) Microchip or Atmel (Microchip) 14% Texas Instruments (TI) 14% ST Microelectronics 11% NXP/Freescale/Qualcom 11% Xilinx 5% Intel, Intel Altera 5% ARM 4% Digi-Key 4% Cypress Semiconductor 2% Renesas 2% Arrow 2% 2017 (N = 328) Un

  24. Slide 24: Multiple Growth Drivers

    Multiple Growth Drivers 1. Microcontroller market growth and share gains 2. Analog growth and attach opportunity 3. Wireless and Wired Connectivity – IoT 4. Security 5. Automotive Networking, HMI, Access Control, Lighting and Body Electronics 6. Technology licensing ©December 2017 24

  25. Slide 25: Revenue by End Market

    Revenue by End Market Communi- Defense & cation Aerospace 5% 2% Computing 9% Industrial 35% Consumer 24% Automotive 25% ©December 2017 25

  26. Slide 26: Non-GAAP Net Sales

    Non-GAAP Net Sales $4,000,000 $3,750,000 $3,500,000 $3,250,000 $3,000,000 $2,750,000 17.9% CAGR $2,500,000 $2,250,000 $2,000,000 $1,750,000 $1,500,000 $1,250,000 $1,000,000 $750,000 $500,000 $250,000 $0 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 *RR FY18 * Run rate for FY18 represent Q1 + Q2 FY18

  27. Slide 27: Non-GAAP Net Income and Diluted EPS Growth

    Non-GAAP Net Income and Diluted EPS Growth $1,400,000 $7.00 $1,300,000 $1,200,000 $6.00 $1,100,000 $1,000,000 $5.00 $900,000 $800,000 $4.00 $700,000 $600,000 $3.00 $500,000 $400,000 $2.00 $300,000 $200,000 $1.00 $100,000 $0 $0.00 FY12 FY13 FY14 FY15 FY16 FY17 *RR FY18 Non-GAAP Net Income $ Non-GAAP

  28. Slide 28: Free Cash Flow as a % of Revenue

    Free Cash Flow as a % of Revenue $1,400,000 42.0% $1,300,000 39.0% $1,200,000 36.0% $1,100,000 33.0% $1,000,000 30.0% $900,000 27.0% $800,000 24.0% $700,000 21.0% $600,000 18.0% $500,000 15.0% $400,000 12.0% $300,000 9.0% $200,000 6.0% $100,000 3.0% $0 0.0% FY12 FY13 FY14 FY15 FY16 FY17 * RR FY18 Fr

  29. Slide 29: EBITDA and Net Leverage

    EBITDA and Net Leverage $500,000 3.50 $450,000 3.15 $400,000 2.80 $350,000 2.45 $300,000 2.10 $250,000 1.75 $200,000 1.40 $150,000 1.05 $100,000 0.70 $50,000 0.35 $0 0.00 Q1FY17 Q2FY17 Q3FY17 Q4FY17 Q1FY18 Q2FY18 Q3FY18 fcst EBITDA $ Net Leverage * EBITDA as calculated in accordance with Microchip’s

  30. Slide 30: Financial Results, Guidance and Long-Term Model

    Financial Results, Guidance and Long-Term Model Actual Results Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18 Net Sales $844.0 $873.8 $881.2 $902.7 $972.1 $1,012.1 Gross Profit $471.1 $499.9 $509.7 $534.7 $587.2 $617.8 Gross Margin 55.8% 57.2% 57.8% 59.2% 60.4% 61.0% Operating Expenses $240.0 $233.

  31. Slide 31: Summary

    Summary  A consistent revenue grower and market share gainer with multiple growth drivers  High margin business model and shareholder friendly  Inventory position improving from planned capacity additions resulting in improvement in lead times  Some capacity challenges to persist through the mid

  32. Slide 32: Thank You!

    MICROCHIP Thank You!

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