Microchip Technology — Supply Chain & Business Relationships

Page 2 Mr. Sanghi added, “Our operational metrics strengthened during the quarter, with inventory days declining from 185 days on March 31 to 175 days on June 30 and non-GAAP gross margin expanding sequentially to 63.8%, above the high end of our guidance range.

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Distribution sell-through increased meaningfully, bookings remained strong with a book-to-bill ratio well above 1, and customer activity improved across several key end markets. We also saw PCIe Gen6 connectivity design wins double sequentially from six programs at the end of the March quarter to 12 programs exiting the June quarter, reflecting growing momentum in data center and connectivity applications. Taken together, these trends reinforce our confidence in both the recovery underway and our long-term growth opportunities.” Eric Bjornholt, Microchip's Corporate Senior Vice President and Chief Financial Officer, said, "Our June quarter financial performance demonstrates the strength of our operating model and the significant leverage embedded in the business as revenue recovers.

Page 2 “A key lesson from the last cycle was the importance of disciplined inventory, capacity, and working capital management, and that continues to guide how we are operating the business,” Sanghi added. “As conditions have improved, we are encouraged by the progress we made during the last five quarters in reducing inventory levels across the company and the channel.

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We now expect lower inventory and improving demand to support higher internal factory utilization, which will further drive operating leverage and progress toward our long‑term gross and operating margin objectives.” “Our March quarter results reflect improved operating leverage and continued progress in strengthening our balance sheet and working capital profile,” said Eric Bjornholt, Microchip's Senior Vice President and Chief Financial Officer. "During the quarter, we reduced inventory by $22.3 million and lowered days of inventory from 201 days in December to 185 days in March, while distributor inventory declined to 26 days, near the low end of our historical range.

Page 2 Mr. Sanghi added, "We have made substantial progress on inventory reduction, which is positioning us to improve operational efficiency as we ramp manufacturing capacity in the March quarter. Our non-GAAP gross margins have expanded significantly from 52% in the March 2025 quarter to 60.5% this quarter, reflecting the cumulative impact of our operational improvements.

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As we continue to normalize inventory and improve factory utilization, we expect our gross margins to expand further toward our long-term target of 65%." Eric Bjornholt, Microchip's Chief Financial Officer, said, "Our third quarter results demonstrate the strength of our operational model, which is now generating meaningful cash flow improvement. This quarter, we reduced net debt by $26 million, as our operating cash flow resumed covering our debt obligations and dividend payments.

on February 5, 2026. Cautionary Statement: The statements in this release relating to net sales for third quarter of fiscal 2026 ended December 31, 2025 being about $1,185 million, that we continue to experience a fairly broad-based recovery in most of our end markets driven by progress we have made in inventory correction in distribution as well as direct customers, and with new customer designs

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turning to production, that our bookings activity was very strong in December quarter, that our March quarter starting backlog started out much better than that for the December quarter, that we have made substantial progress on most elements of our nine-point recovery plan as well as our strategic initiatives, that we have seen a substantial reduction in our internal inventory which will begin to lower our level of inventory write-offs, that we are preparing to - - more - - Microchip Technology Incorporated 2355 West Chandler Blvd.

Page 2 Mr. Sanghi added, "Our Total System Solutions strategy continues to drive strong customer engagement across key growth markets, with design activity spanning across our diversified portfolio.

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We are seeing robust momentum in data center applications where customers are re-engaging following inventory corrections, and in aerospace and defense markets where accelerating global spending is driving demand for our integrated solutions." Eric Bjornholt, Microchip's Chief Financial Officer, said, "Our second quarter results demonstrate the strength of our operational model and the disciplined cost management embedded in our business. The combination of improved operational efficiency and careful capital allocation is generating meaningful cash flow improvements that we expect will allow us to reduce our debt levels over the coming quarters." Rich Simoncic, Microchip's Chief Operating Officer, said, "Our launch of the industry's first 3nm PCIe Gen 6 switch represents a significant technological milestone demonstrating our commitment to process technology leadership and innovation.

Page 2 Mr. Sanghi added, "As a key objective of our recovery plan, we delivered a substantial inventory reduction in the June quarter, reducing overall inventory dollars by $124.4 million, with distribution inventory days reduced by 4 days to 29 days and inventory days on our balance sheet declining to 214 days, improving our working capital efficiency.

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This continued progress on our inventory optimization demonstrates the effectiveness of our manufacturing improvements and positions us with increased operational flexibility as demand conditions continue to strengthen." Eric Bjornholt, Microchip's Chief Financial Officer, said, "Our first quarter results highlight the leverage in our business model, with incremental non-GAAP gross margins of 76% and incremental non-GAAP operating margins of 82% showcasing our ability to translate revenue growth directly to profitability. We achieved solid sequential margin expansion driven by operational improvements, including declining inventory write-offs and reduced underutilization charges.