introducing microchip 2 presentation june... · introducing microchip 2.0- total system solutions-...
TRANSCRIPT
Steve Sanghi, CEO
Eric Bjornholt, CFO ©June 2017
Introducing Microchip 2.0
2 ©June 2017
Business Update Net sales for Q1FY18 expected to be +4.5% to +6% sequentially
(previous guidance +2% to +7%).
Non GAAP EPS for Q1FY18 expected to be between $1.22 to $1.26
per share (previous guidance $1.17 to $1.27 per share).
Business conditions continue to be very strong. Backlog is
strong. Lead times stretching out.
Significant capacity challenges to persist for up to one year before
lead times are normal.
Long-term updated non-GAAP financial model is now 62.5% gross
margin, 22.5% operating expenses and 40% operating profit.
Introducing Microchip 2.0- Total system solutions- Smart,
connected and Secure.
3 ©June 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 ©June 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
MCU Analog Memory Licensing MMO
Annual Net Sales Growth
$ M
illi
on
106 consecutive quarters of profitability!
5 ©June 2017
Total MCU (8/16/32) Market Share %
0
2
4
6
8
10
12
14
16
CY
94
CY
95
CY
96
CY
97
CY
98
CY
99
CY
00
CY
01
CY
02
CY
03
CY
04
CY
05
CY
06
CY
07
CY
08
CY
09
CY
10
CY
11
CY
12
CY
13
CY
14
CY
15
CQ
216
%
CQ2 16 includes Atmel
6 ©June 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 ©June 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
8 ©June 2017
30
35
40
45
50
55
60
65
Q1F
Y02
Q2F
Y02
Q3F
Y02
Q4F
Y02
Q1F
Y03
Q2F
Y03
Q3F
Y03
Q4F
Y03
Q1F
Y04
Q2F
Y04
Q3F
Y04
Q4F
Y04
Q1F
Y05
Q2F
Y05
Q3F
Y05
Q4F
Y05
Q1F
Y06
Q2F
Y06
Q3F
Y06
Q4F
Y06
Q1F
Y07
Q2F
Y07
Q3F
Y07
Q4F
Y07
Q1F
Y08
Q2F
Y08
Q3F
Y08
Q4F
Y08
Q1F
Y09
Q2F
Y09
Q3F
Y09
Q4F
Y09
Q1F
Y10
Q2F
Y10
Q3F
Y10
Q4F
Y10
Q1F
Y11
Q2F
Y11
Q3F
Y11
Q4F
Y11
Q1F
Y12
Q2F
Y12
Q3F
Y12
Q4F
Y12
Q1F
Y12
Q2F
Y13
Q3F
Y13
Q4F
Y13
Q1F
Y14
Q2F
Y14
Q3F
Y14
Q4F
Y14
Q1F
Y15
Q2F
Y15
Q3F
Y15
Q4F
Y15
Q1F
Y16
Q2F
Y16
Q3F
Y16
Q4F
Y16
Q1F
Y17
Q2F
Y17
Q3F
Y17
Gross Margin % (Non-GAAP*)
(%)
Fab 4 Production start
Higher Utilization
Richer Product Mix
Worldwide Financial
Crisis
Record
*Excludes share-based compensation and acquisition-related expenses. A reconciliation of our GAAP to non-GAAAP results is available at www.microchip.com.
SST Acquisition
Business
Downturn
62.5%
Long-term
GM goal
Atmel
Acquisition
9 ©June 2017
~ $4.5B Returned To Shareholders
$0.00
$0.05
$0.10
$0.15
$0.20
$0.25
$0.30
$0.35
$0.40
$0.45
$0.50
$0
$10,000
$20,000
$30,000
$40,000
$50,000
$60,000
$70,000
$80,000
$90,000
$100,000 Q
1F
Y0
7
Q2
FY
07
Q3
FY
07
Q4
FY
07
Q1
FY
08
Q2
FY
08
Q3
FY
08
Q4F
Y08
Q1
FY
09
Q2
FY
09
Q3
FY
09
Q4
FY
09
Q1
FY
10
Q2
FY
10
Q3F
Y10
Q4
FY
10
Q1
FY
11
Q2
FY
11
Q3
FY
11
Q4
FY
11
Q1
FY
12
Q2F
Y12
Q3
FY
12
Q4
FY
12
Q1
FY
13
Q2
FY
13
Q3
FY
13
Q4
FY
13
Q1
FY
14
Q2
FY
14
Q3
FY
14
Q4
FY
14
Q1
FY
15
Q2
FY
15
Q3
FY
15
Q4
FY
15
Q1
FY
16
Q2
FY
16
Q3
FY
16
Q4
FY
16
Q1
FY
17
Q2
FY
17
Q3
FY
17
Q4
FY
17
Total Dividend Dividend per Share
~ $3.1B in dividends and ~$1.4B in share buy-backs!
10 ©June 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
11 ©June 2017
Microchip 2.0
Be The Very Best Embedded Control Solutions Company Ever
12 ©June 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
13 ©June 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
14 ©June 2017
Automotive Water Pump
3x MOSFET
pairs
3 phase
BLDC
Motor
Micrel
Classic
Microchip
Atmel
MIC2920A
LDO
MIC28512/3
Sw. Reg
MIC4605 x 3
85V MOSFET
Driver
ATA663211
LIN
Transceiver
dsPIC33EP6
4MC504
MCU
MCP6L04
Op Amp
MCP1700
LDO
24LC16B
Serial EE
15 ©June 2017
Router
3G module
12V
Micrel
Classic
Microchip
Atmel
MIC4576
Sw. Reg
MIC69101
(1.8V)
LDO
MIC69101
(3.3V)
LDO
KSZ8081
Ethernet PHY
KSZ8995
Ethernet Sw.
AT91SAM9
G20B
MPU
16 ©June 2017
Alarm Panel Uplink
Micrel
Classic
Microchip
Atmel
MIC2128
Controller
MIC4723
Sw. Reg
MIC4723
Sw. Reg
MIC2875
Boost Sw. Reg
MIC95410
Load Switch
MIC5353
LDO
MIC94355
Ripple Blocker
MIC2039
Load Switch
MIC2039
Load Switch
MIC2039
Load Switch
MIC2039
Load Switch
MIC2039
Load Switch
MCP73833
Batt. Charger
MIC6143
Op Amp
MCP23017
I/O Expander
SMSC
USB4604
USB Hub
17 ©June 2017
PC Dock
Micrel
Classic
Microchip
Atmel
UCS3205 USBPD
Power Switch
MIC261201
Sw Reg
PIC32
USBC Manager & Bridge
SMSC
UPD350
Type C
Controller
20V Vin ECC508
Authentication
20
V V
in
USB5826
USB3.1 6 Port Controller/Hub
UPD360 Type
C Controller
MIC2033
Load Switch
UPD360
Type
C Controller
MIC2033
Load Switch
USB5744
4 Port USB Controller/Hub
MIC2033
Load Switch
MIC2033
Load Switch
MIC2033
Load Switch
USB 3.0
Type-A
USB 3.0
Type-A
USB 3.0
Type-A
USB 3.0
Type-A
USB 2.0
Type-A
Type-C
Type-C Type-C
DP-Hub
18 ©June 2017
Display Module
PIC32MZ2048EFG100
Host
LCD Display
w/ ITO Layer
I2C/SPI/USB I2C/SPI/USB I2C/SPI/U
SB
EBI/PMP Parallel
RGB
SQI GPIO GPIO I2C
GPIO GPIO
mXT337TPTP
PCAP Touch
Controller
I2C
LCC FIRMWARE
RX lines
Analog
Driver
INT SYNC
Vsync
Hsync
Pclk
SQ
I
SST26VF016B
SQI Flash
Font Storage
MIC2293-15YML
Backlight
Controller
PW
M
DSC1001
MEM’s 24MHz
Oscillator
Micrel
SST
Classic
Microchip
Atmel
MIC94300YMT
Ripple Blocker
3.3V
Power
19 ©June 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
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
20
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 PIC
Atmel AVR
STMicroelectronics ST6, ST7, ST8
Freescale HC
TI TMS370, 7000
Intel 80xx, '251
NXP/Philips P80x, P87x, P89x
Atmel 80xx
Renesas H8
CypressPSoC 1 (M8C) / PSoC 3 (8051)
Xilinx PicoBlaze (soft core)
SiLabs 80xx
Zilog Z8, Z80, Z180, eZ80
Digi / Rabbit 2000, 3000
Parallax
Toshiba
Infineon XC800, C500
Maxim 80xx 2017 (N = 462)
2015 (N = 695)
Which of the following 8-bit chip families would you
consider for your next embedded project?
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
21
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
Other 2017 (N = 412)
2015 (N = 621)
*
*
Which of the following 16-bit chip families would
you consider for your next embedded project?
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
22
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)
Which of the following 32-bit chip families would
you consider for your next embedded project?
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 EFM32
Microsemi SmartFusion2 SoC FPGA (Cortex-M3)
Infineon XMC4000 (ARM)
AMD Fusion, Athlon, Sempron, Turion, Opteron, Geode
Atmel AT91xx
FreescalePowerQUICC
Renesas RH850
Freescale PowerPC 55xx
Microsemi FPGA (Cortex-M1, softcore)
Freescale PowerPC 5xx, 6xx
Intel Itanium
Freescale Vybrid (ARM)
Freescale 68K, ColdFire
Microsemi SmartFusion SoC FPGA (Cortex-M3)
IBM PowerPC 4xx, 7xx
Infineon XMC1000 (ARM Cortex-M0)
Marvell
Infineon Tricore
Xilinx 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 TriCore
Infineon TriCore-based 32-bit families AUDO MAX
AMCC PowerPC 4xx
Other (please specify)
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
23
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?
© 2017 Copyright by AspenCore. All rights reserved. 2017 Embedded Markets Study
24
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 Labs 2017 (N = 328) Unaided
(Unaided Open End)
Which vendor has the best ecosystem for your
needs?
25 ©June 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
26 ©June 2017
Gross Margin Drivers
1. Increasing Fab utilization
2. Savings from Micrel Fab closure
3. Increasing back end plants utilization
4. Porting Atmel products to Microchip assembly/test
technology
5. Transfer of Micrel and Atmel’s U.S. test areas to
Thailand
6. Stable to rising pricing environment
7. Richening product mix
27 ©June 2017
Operating expense leverage drivers
1. Consolidation of Atmel’s G&A
2. Synergy in roadmaps on MCU, analog, wireless and
memory
3. Convergence of Microchip and Atmel to common
process technology platforms
4. Synergy in common development of IP libraries
5. Synergy in development of tools echo-system
6. Synergy in marketing - trade shows, technical
conferences, website, training
7. Lower incremental opex for sales growth
28 ©June 2017
Revenue by End Market
Industrial35%
Automotive25%
Consumer24%
Computing9%
Communi-cation
5%
Defense & Aerospace
2%
29 ©June 2017
Industrial (35% of Sales)
30 ©June 2017
Automotive (25% of sales)
31 ©June 2017
Consumer (24% of sales)
32 ©June 2017
Computing (9% of sales)
33 ©June 2017
Communications (5% of sales)
34 ©June 2017
Defense and Aerospace (2% of sales)
35 ©June 2017
MCHP Financial Information Consolidated
Q1FY18
Actual Guidance Long-Term
Mar. 31, 2017 June 30, 2017 Model****
Net Sales ($MM ) $902.7 $943.3 – $956.8
Gross Margin** 59.2% 59.75% - 60.0% ~ 62.5%
Operating Expenses**
(% of Sales) 25.7% 23.0% - 23.25% ~ 22.5%
Operating Profit 35.6% 36.50% - 37% ~ 40%
EPS*** (Non-GAAP***) $1.16 $1.22 – $1.26
EPS*** (GAAP) $0.57 $0.62 – $0.64
* 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 and adoption of ASC Subtopic 470-20.
*** A reconciliation of our GAAP to non-GAAAP results is available at www.microchip.com.
Actual Guidance
36 ©June 2017
Summary
A consistent revenue grower and market share gainer with multiple
growth drivers
High margin business model and shareholder friendly
Currently strong business conditions with June quarter revenue
guidance increased and now expected to be up 4.5% to 6%
sequentially
Significant capacity challenges to persist for up to one year before
lead times are normal.
Revised long-term non-GAAP financial model to 62.5% gross
margin, 22.5% operating expenses and 40% operating income.
Launching Microchip 2.0- Total system solutions- Smart, connected
and Secure.
Thank You!