Microchip appears to be on a recovery path, albeit a bit later than some of its peers. Recently revised its long GM target to 65% from 68% and OPM to 40% from 45%. In QMar, the underlying GM was 67% (ex-inventory write-offs and underutilization charges).
After 7 straight quarters of decline Microchip guided a q/q growth for QJun and even raised the lower-end of the guidance recently after seeing highest monthly bookings in May in 2 yrs. Early last year also saw green shoots but couldn't sustain. QJun guidance is still 54% below the previous quarterly peak. Will take a few more quarters to reduce write-offs and pick up utilization rate. In the upturn, inventory that's written off will boost GM.Source: Sravan Kundojjala
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