Microchip Technology (NASDAQ:MCHP) is close to concluding a prolonged inventory correction as it positions for growth in markets including data centers, aerospace and defense, automotive systems, and industrial markets. Speaking at TD Cowen’s 54th annual TMT conference, CEO Steve Sanghi indicated that customer purchasing patterns are stabilizing following a unique post-COVID semiconductor cycle, with customer counts rising by thousands.
As of the end of the most recent March quarter, Microchip’s inventory days declined from a peak of 266 days a year ago to 185 days, largely due to a decrease in overstock. The company aims to reach a target range of 130 to 150 days. Additionally, Sanghi revealed that Microchip has six design wins for its new Gen 6 PCIe switch, which boasts advanced technology and significant cost efficiency, with production set for the end of the current quarter.
In the aerospace and defense sectors, Microchip expects strong demand driven by aircraft production and defense system production increases. The company also anticipates growth in automotive, aligning with inventory normalization and new design wins, particularly as the industry shifts toward software-defined vehicles.
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