Investor Presentation December 2017.120117 · 2020. 11. 20. · ©December 2017 2 Business Update...

Steve Sanghi, CEO Ganesh Moorthy, COO

Eric Bjornholt, CFO ©December 2017

Microchip 2.0

2 ©December 2017

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 resulting in a reduction in lead times for many products. Overall lead times continue to be in a range of 4 to 20 weeks

We do not expect for all of our longer lead time challenges to be corrected until the middle of calendar year 2018

Long-term non-GAAP financial model is now 62.5% gross margin, 22.5% operating expenses and 40% operating profit

Continuing with Microchip 2.0 - Total system solutions - Smart, connected and Secure

3 ©December 2017

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

4 ©December 2017

0100200300400500600700800900

1000110012001300140015001600170018001900200021002200230024002500260027002800290030003100320033003400350036003700380039004000

FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18RR

MCU Analog Memory Licensing MMO

Annual Net Sales Growth $

Mill

ion

108 consecutive quarters of profitability!

5 ©December 2017

Total MCU (8/16/32) Market Share %

%

6 ©December 2017

Worldwide Microcontroller Market Share

Based on dollar shipment volume 2003-2016, Source: Gartner and Microchip

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-Micro Microchip 4 Matsushita Infineon Samsung Microchip Microchip Microchip Microchip ST-Micro 5 Infineon Samsung Microchip Atmel ST-Micro NXP Infineon TI 6 Fujitsu Microchip TI TI TI TI TI Infineon 7 Toshiba ST-Micro Infineon Infineon Atmel Infineon Atmel Cypress 8 Microchip TI ST-Micro ST-Micro NXP Atmel Cypress Samsung 9 Samsung Fujitsu Fujitsu Fujitsu Fujitsu Spansion Samsung CEC Huada 10 ST-Micro NXP NXP NXP Samsung Samsung CEC Huada Toshiba 11 Atmel Toshina Atmel Toshiba Toshiba Cypress Datang Si Labs 12 TI Atmel Toshiba Denso Cypress Toshiba Toshiba Denso 13 Sanyo Panasonic Panasonic Cypress Denso Denso Denso Datang 14 Philips Denso Denso Panasonic Panasonic Datang Si Labs SH Fudan 15 Intel Sony Cypress Sony Sony Si Labs SHIC Panasonic 16 Sony Cypress Sony Datang Si Labs CEU-Huada Tongfang Holtek 17 Micronas Intel Datang JSC Sitronics CEC Huada Panasonic Panasonic Nuvoton 18 Oki Micronas Intel Si-Labs Melfas SHIC Holtek Unigroup 19 Sunplus Winbond Si-Labs Intel JSC Tongfang Winbond Maxim 20 Winbond Si-Labs Rohm INSIDE Holtek Nationz

7 ©December 2017

Analog Yearly Revenue (k$)

$0$50,000

$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000$550,000$600,000$650,000$700,000$750,000$800,000$850,000$900,000$950,000

$1,000,000

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18RR

8 ©December 2017

2008 2009 2010 2011 2012 2013 2014

Expanding Our Solutions Through Acquisitions

Hampshire Touch Screen

Controllers

Security & Life Safety ASICs

Low-Power Embedded

Wi-Fi®

High-Density Flash & IP

Motor Drive Products

Development Tools Compiler

Assembly & Test Capacity

Expansion

LSS High-Speed

ADCs

3D Gesture Capture & Proximity Detect

Bluetooth® & Embedded Wi-Fi®

MOST®, USB, Ethernet, Wireless Audio

& PC Controllers

Non-volatile Memory IP

Equalizer & Coaxial

Transceiver Products

High-Voltage Analog & Mixed-Signal Products

Bluetooth® Low Energy

2015

Analog, mixed-signal, timing & power management

HI-TECH

ZeroG

Advanced Silicon Roving Networks

Novocell

Supertex

Micrel

R&E International

SST

MMT

Ident

SMSC

EqcoLogic

ISSC

2016

Microcontrollers, Wireless, Touch,

Automotive, Security

& Memory

Atmel

9 ©December 2017

Microchip 2.0

Be The Very Best Embedded Control Solutions Company Ever

10 ©December 2017

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

Automotive 7. New LT model with industry leading operating

profits

11 ©December 2017

MICROCHIP 2.0





profits

12 ©December 2017

SNMPV3/HTTPS Gateway

PIC32MZ2048EFG144 Harmony 2.04

Wolf SSL

KSZ8041 Ethernet

MIC5219-3.3YMM

WINC1000

24AA256

SST26VF016B SQI Flash

MPFS file system

DSC1001 MEM’s 24MHz

Oscillator

MIIM

I2C SQI

SPI

ECC508

System Supply

Micrel

SST

Classic Microchip

Atmel

13 ©December 2017

Inverter Display Module

PIC32MZ2048EFG100 Harmony Seger

Host Inverter

LCD Display w/ ITO Layer

EBI/PMP Parallel

RGB

SQI GPIO GPIO I2C

USART USART

Touch Controller

I2C

LCC FIRMWARE

RX lines

Analog Driver

INT SYNC

Vsync Hsync Pclk

SQI


Graphics Pages

MCP1650 Backlight Controller

PW

M

DSC1001 MEM’s 24MHz

Oscillator

Micrel

SST

Classic Microchip

Atmel

MIC4576-3.3WU Ripple Blocker

3.3V

Power

14 ©December 2017

Wireless Fire Alarm

ATSAM4E16CA

Interface

Sensor Control

I2C MCP32016 IO Expander I2C

UART

SPI GPIO GPIO MAC

GPIO Keyboard

KSZ8081 10/100MHz PHY

MAC

ASF FREERTOS

INT SYNC

SPI

SST26VF064B SQI Flash Event Log

2 x RS485 UA

RT

ATECC508A Crypto Auth

Micrel

SST

Classic Microchip

Atmel

SEGMENTS DIPLAY

PIO GPIO

SYNC

INT

I2C

UART

ATSAMD10D14A

Com. Stack

SPI

SPI

AT86TF212B 900MHz TRX

30dBm PA/LNA

Power Control AC/DC and Bat Charge

PIC16F1828

AC/DC

Smoke Detector

ATSAMD10D14A

Com. Stack

SPI

SPI

AT86TF212B 900MHz TRX

RE46C113 SMOKE

RE46C800 CO

Battery MIC5302 LDO

MIC2238

12Vdc

Battery

3.3Vdc 5.0Vdc

ATECC508A Crypto Auth

RE

15 ©December 2017

Base Station

PIC32MX170F512 Main CPU

Radio

UART UART

SQI

SPI SPI

BASE STATION FIRMWARE

RMII

SQI


Font Storage

WINC1500 WiFi Radio

SP

I

MCP1700 Regulator

Micrel

SST

Classic Microchip

Atmel

LAN8720A

Ethernet PHY

SPI

RM

II

PIC32MX795F512 Ethernet Bridge

MCP1700 Regulator

MIC5219

5V Regulator

SPI

MCP16301

Buck Regulator

UART

16 ©December 2017

GigE Switch

KSZ9477 7-Port Gigabit Switch

ATSAMA5D33 MPU

Micrel

Classic Microchip

Atmel

MIC25041 Buck

Regulator

ATECC508A Crypto

Element

MIC23303 Switching Regulator

MCP1826 Linear Regulator

DSC1101 125 MHz MEMS

Oscillator

MCP1826 Linear Regulator

PL902171 Jitter

Blocker

3.3V 2.5V

1.8V

1.2V

MIC826 Reset

Generator

17 ©December 2017

Cash Dispenser Machine

or

Cache Memory: 32kB I + 32kB D

256M DDR3

AT24MAC02

2 x ATA6561 CAN

SAMA5D28

32-Bit DDR Controller

CAN 0/1 i/f

SPI USART SDIO

LAN8710

Secure Back-up area

EMAC 10/100

PMIC

FPGA

USB2513 USB

AT24LC02 x 2

SDCARD 4GB EMMC

6 x MCP6002

I/F to PC

Classic Microchip

Atmel

SMSC

18 ©December 2017

MICROCHIP 2.0





profits

© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study

19

46%

43%

18%

13%

13%

11%

10%

10%

9%

9%

9%

8%

7%

3%

2%

2%

2%

2%

39%

34%

19%

17%

10%

10%

13%

8%

12%

11%

10%

9%

4%

2%

2%

1%

3%

2%

Microchip PICAtmel AVR

STMicroelectronics ST6, ST7, ST8Freescale HC

TI TMS370, 7000Intel 80xx, '251

NXP/Philips P80x, P87x, P89xAtmel 80xxRenesas H8

CypressPSoC 1 (M8C) / PSoC 3 (8051)Xilinx PicoBlaze (soft core)

SiLabs 80xxZilog Z8, Z80, Z180, eZ80Digi / Rabbit 2000, 3000

ParallaxToshiba

Infineon XC800, C500Maxim 80xx

2017 (N = 462)

2015 (N = 695)

Which of the following 8-bit chip families would you consider for your next embedded project?


20

45%

42%

22%

15%

11%

11%

10%

9%

6%

5%

4%

4%

3%

38%

43%

21%

19%

11%

12%

12%

7%

5%

3%

5%

6%

5%

Microchip PIC24 / dsPIC

TI MSP430

STMicroelectronics ST9, ST10

Freescale HC16

Intel 8086, '186, '286

Renesas RL78

Freescale HC12

Renesas R8C

AMD 186, '188

Zilog Z180, Z380

Maxim

Infineon XE166, XC2000, XC166, C166

Other2017 (N = 412)

2015 (N = 621)

*

*



21

30%

20%

17%

17%

16%

16%

14%

14%

13%

12%

12%

11%

11%

11%

11%

10%

9%

8%

8%

7%

7%

6%

6%

STMicro STM32 (ARM)

Microchip PIC 32-bit (MIPS)

Xilinx Zynq (with dual ARM Cortex-A9)

Freescale i.MX (ARM)

NXP LPC (ARM)

FreescaleKinetis (ARM/Cortex-M4/M0)

Atmel SAMxx (ARM)

TI Sitara (ARM)

Intel Atom, Pentium, Celeron, Core 2, Core iX

Altera (Intel FPGA) SoC-FPGA (with dual ARM Cortex-A9)

Arduino

Altera (Intel FPGA) Nios II (soft core)

TI SimpleLink (ARM)*

TI TM4Cx (ARM)

Atmel (AVR32)

Atmel AT91xx/ATSAMxx (ARM)

Cypress PSOC 4 ARM Cortex-M0/PSoC 5 ARM Cortex-M3

Renesas RX

Broadcom (any)

TI C2000 MCUs

Xilinx MicroBlaze (soft-core)

NVIDIA Tegra

TI Hercules (ARM)

2017 (N = 617)


5% 5% 4% 4% 4% 4% 4% 4% 4% 4% 3% 3% 3% 3% 2% 2% 2% 2% 2% 2% 2% 1% 1% 1% 1% 1% 1% 1% 1% 1%

4%

SiLABS Precision32 (ARM)Qualcomm (any)

Energy Micro EFM32Microsemi SmartFusion2 SoC FPGA (Cortex-M3)

Infineon XMC4000 (ARM)AMD Fusion, Athlon, Sempron, Turion, Opteron, Geode

Atmel AT91xxFreescalePowerQUICC

Renesas RH850Freescale PowerPC 55xx

Microsemi FPGA (Cortex-M1, softcore)Freescale PowerPC 5xx, 6xx

Intel ItaniumFreescale Vybrid (ARM)Freescale 68K, ColdFire

Microsemi SmartFusion SoC FPGA (Cortex-M3)IBM PowerPC 4xx, 7xx

Infineon XMC1000 (ARM Cortex-M0)Marvell

Infineon TricoreXilinx Virtex-5 (with PowerPC 405)

Infineon AURIX (TriCore-based)Cirrus Logic EP73xx, EP93xx (ARM)

AMD Alchemy (MIPS)SPARC (any)

Xilinx Virtex-4 (with PowerPC 405)Spansion (formerly Fujitsu) FM3 (ARM)

Infineon TriCoreInfineon TriCore-based 32-bit families AUDO MAX

AMCC PowerPC 4xxOther (please specify)


22

25%

68%

7%

26%

67%

8%

27%

65%

8%

The chip itself The ecosystem surrounding the chip(software, tools, support, etc.)

The chip's supplier/vendor

2017 (N = 719) 2015 (N = 960) 2014 (N = 1304)

What’s most important when choosing a microprocessor?


23

14%

14%

11%

11%

5%

5%

4%

4%

2%

2%

2%

2%

Microchip or Atmel (Microchip)

Texas Instruments (TI)

ST Microelectronics

NXP/Freescale/Qualcom

Xilinx

Intel, Intel Altera

ARM

Digi-Key

Cypress Semiconductor

Renesas

Arrow

Silicon Labs2017 (N = 328) Unaided

(Unaided Open End)

Which vendor has the best ecosystem for your needs?

24 ©December 2017

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

25 ©December 2017

Revenue by End Market

Industrial35%

Automotive25%

Consumer24%

Computing9%

Communi-cation

5%

Defense & Aerospace

2%

26 ©December 2017

Non-GAAP Net Sales

$0$250,000$500,000$750,000

$1,000,000$1,250,000$1,500,000$1,750,000$2,000,000$2,250,000$2,500,000$2,750,000$3,000,000$3,250,000$3,500,000$3,750,000$4,000,000

FY09

FY10

FY11

FY12

FY13

FY14

FY15

FY16

FY17

*RR

FY1

8

17.9% CAGR

* Run rate for FY18 represent Q1 + Q2 FY18 actual results multiplied by two

27 ©December 2017

Non-GAAP Net Income and Diluted EPS Growth

$0.00

$1.00

$2.00

$3.00

$4.00

$5.00

$6.00

$7.00

$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000

FY12

FY13

FY14

FY15

FY16

FY17

*RR

FY1

8

Non-GAAP Net Income $ Non-GAAP Diluted EPS

* Run rate for FY18 represent Q1 + Q2 FY18 actual results multiplied by two

28 ©December 2017

Free Cash Flow as a % of Revenue

0.0%3.0%6.0%9.0%12.0%15.0%18.0%21.0%24.0%27.0%30.0%33.0%36.0%39.0%42.0%

$0$100,000$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

$1,000,000$1,100,000$1,200,000$1,300,000$1,400,000

FY12

FY13

FY14

FY15

FY16

FY17

* RR

FY1

8

Free Cash Flow $ Free Cash Flow as a % of Sales

* Run rate for FY18 represent Q1 + Q2 FY18 actual results multiplied by two. Free cash flow = operating cash flow minus capital expenditures.

29 ©December 2017

EBITDA and Net Leverage

0.000.350.701.051.401.752.102.452.803.153.50

$0$50,000

$100,000$150,000$200,000$250,000$300,000$350,000$400,000$450,000$500,000

Q1F

Y17

Q2F

Y17

Q3F

Y17

Q4F

Y17

Q1F

Y18

Q2F

Y18

Q3F

Y18

fcst

EBITDA $ Net Leverage* EBITDA as calculated in accordance with Microchip’s Credit Facility. Net leverage excludes 2037 convertible debt, consistent with Credit Facility

30 ©December 2017

Financial Results, Guidance and Long-Term Model

Microchip does not utilize a GAAP long-term model. All figures in long-term model are non-GAAP. Excludes share-based compensation, acquisition related charges, non-recurring items. A reconciliation of our GAAP to non-GAAAP results is available at www.microchip.com.

Q3 FY18 GuidanceNet Sales $971.7 - $1,012.1Gross Margin % 61.0% -61.4%Operating Expense % 22.2% to 22.6%Operating Margin 38.4% to 39.2%Diluted EPS $1.30 - $1.40

Long Term ModelRevenue Growth 7% - 9%Gross Margin 62.5%Operating Expenses 22.5%Operating Margin 40.0%

Q1 FY17 Q2 FY17 Q3 FY17 Q4 FY17 Q1 FY18 Q2 FY18Net Sales $844.0 $873.8 $881.2 $902.7 $972.1 $1,012.1Gross Profit $471.1 $499.9 $509.7 $534.7 $587.2 $617.8Gross Margin 55.8% 57.2% 57.8% 59.2% 60.4% 61.0%Operating Expenses $240.0 $233.6 $220.6 $213.6 $222.9 $227.3Operating Income $231.1 $266.3 $289.1 $321.2 $364.3 $390.5Operating Margin 27.4% 30.5% 32.8% 35.6% 37.5% 38.6%Net Income $194.0 $219.6 $246.5 $276.9 $319.1 $344.1Diluted EPS $0.84 $0.94 $1.05 $1.16 $1.31 $1.41EBITDA $264.1 $298.8 $321.3 $356.5 $395.6 $422.5

Actual Results

http://www.microchip.com/

31 ©December 2017

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 middle of calendar

year 2018 before lead times are normal. Premium long-term non-GAAP financial model to 62.5% gross

margin, 22.5% operating expenses and 40% operating income. Executing on Microchip 2.0- Total system solutions- Smart,

connected and Secure.

Thank You!

��Business Update��MICROCHIP 1.0Slide Number 4Total MCU (8/16/32) Market Share %�Slide Number 6Analog Yearly Revenue (k$)Expanding Our Solutions Through AcquisitionsMicrochip 2.0�MICROCHIP 2.0�MICROCHIP 2.0SNMPV3/HTTPS�Gateway Inverter �Display ModuleWireless Fire AlarmBase StationGigE SwitchCash Dispenser Machine�MICROCHIP 2.0Slide Number 19Slide Number 20Slide Number 21Slide Number 22Slide Number 23Multiple Growth DriversRevenue by End MarketNon-GAAP Net SalesNon-GAAP Net Income and Diluted EPS GrowthFree Cash Flow as a % of RevenueEBITDA and Net LeverageFinancial Results, Guidance and Long-Term ModelSummaryThank You!

Investor Presentation December 2017.120117 · 2020. 11. 20. · ©December 2017 2 Business Update...

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