Microchip Technology is seeing growing traction for its next-generation connectivity products in data center applications, with PCIe Gen6 design wins doubling sequentially during its fiscal first quarter of 2027.
The company exited the June quarter with 12 PCIe Gen6 connectivity design-win programs, up from six at the end of the March quarter. Management said the increase reflects growing momentum across data center and connectivity applications.
PCIe Gen6 is designed to support increasingly demanding computing and networking environments where processors, accelerators, storage and other hardware require significantly higher-speed connections. That makes the technology increasingly relevant to data centers supporting AI and other compute-intensive workloads.
The design-win momentum comes as Microchip’s broader semiconductor business rebounds. Fiscal first-quarter net sales increased 38% year-over-year and 13.2% sequentially to $1.485 billion, exceeding the midpoint of the company’s previous guidance of $1.456 billion.
Microchip generated GAAP operating income of $336.8 million and GAAP net income attributable to common shareholders of $202 million. Non-GAAP net income reached $438.6 million, or $0.76 per diluted share, compared with $154.7 million, or $0.27 per share, a year earlier.
Underlying operating indicators also improved. Inventory days declined to 175 from 185 at the end of March, distribution sell-through increased meaningfully, and bookings remained strong with a book-to-bill ratio well above 1. Non-GAAP gross margin expanded sequentially to 63.8%.
Microchip is expecting the recovery to continue. The company forecasts September-quarter revenue growth of 7% to 9% sequentially, which at the midpoint would represent approximately 40.6% year-over-year growth.
The company is balancing that recovery with continued capital discipline. Microchip reduced net debt by approximately $170 million during the June quarter and expects fiscal 2027 capital expenditures of approximately $100 million. Most factory expansion initiatives remain paused, although the company is selectively adding manufacturing and R&D equipment.
KEY QUOTES:
“We also saw PCIe Gen6 connectivity design wins double sequentially from six programs at the end of the March quarter to 12 programs exiting the June quarter, reflecting growing momentum in data center and connectivity applications.”
“As we enter the September quarter, improving demand trends, healthy bookings activity, stronger customer engagement, and increasing traction in growth-oriented applications continue to reinforce our confidence in the direction of the business.”
Steve Sanghi, President and CEO of Microchip Technology
“Higher factory utilization, lower underutilization charges, and disciplined expense management drove meaningful sequential improvements in profitability and cash generation during the quarter.”
Eric Bjornholt, Corporate SVP and CFO of Microchip Technology
