Microchip Tech expects weak revenue as customers try to clear excess inventory

Chipmaker Microchip Technology forecast second-quarter net sales below Wall Street estimates on Thursday, anticipating weak demand from customers yet to clear excess inventory stockpiled during the pandemic.

Shares of the Chandler, Arizona-based company fell more than 5% in extended trading.

Slowing demand for electric vehicles at a time when customers are trying to clear excess semiconductor inventory has hurt demand for companies such as Microchip Technology.


"While the 'green shoots' we observed last quarter have continued, they have not developed as robustly as anticipated," CEO Ganesh Moorthy said in a statement.

"The macro environment particularly for industrial and automotive markets, especially in Europe and the Americas, continues to be weaker than expected, resulting in an extended period over which the inventory correction is playing out."

Last week, peer NXP Semiconductors also forecast third-quarter revenue below estimates on sluggish demand from automotive customers.

Microchip expects net sales of $1.12 billion to $1.18 billion for the second quarter ending in September, compared with analysts' average estimate of $1.31 billion, according to LSEG data.

The company's first-quarter net sales fell about 46% to $1.24 billion from a year earlier, but was in line with estimates.

Its adjusted profit per share for the quarter ended June 30 came in at 53 cents, slightly above expectations of 52 cents.