MICROCHIP TECHNOLOGY INCMCHP
MICROCHIP TECHNOLOGY INC Segments Disclosure
Geographic and Segment Information
The Company's business is made up of two operating segments, semiconductor products and technology licensing. These segments represent management's view of the business for which separate financial information is available and evaluated regularly by the Chief Operating Decision Maker (CODM), which is the Company’s Chief Executive Officer.
In the semiconductor products segment, the Company designs, develops, manufactures and markets mixed-signal microcontrollers, development tools and analog, interface, mixed-signal, timing, wired and wireless connectivity devices, and memory products. Under the leadership of the CODM, the Company is structured and organized around standardized roles and responsibilities based on product groups and functional activities. The Company's product groups are responsible for product research, design and development. The Company's functional activities include sales, marketing, manufacturing, information technology, human resources, legal and finance. The Company's product groups have similar products, production processes, types of customers and methods for distribution. In addition, the tools and technologies used in the design and manufacture of the Company's products are shared among the various product groups. The Company's product group leaders, under the direction of the CODM, define the product roadmaps and team with sales personnel to achieve design wins and revenue and other performance targets. Product group leaders also interact with manufacturing and operational personnel who are responsible for the production, prioritization and planning of the Company's manufacturing capabilities to help ensure the efficiency of the Company's operations and fulfillment of customer requirements.
The technology licensing segment includes sales and licensing of the Company's intellectual property.
The CODM uses segment gross profit for evaluating each segment's performance and allocating resources. The Company does not allocate operating expenses, interest income, interest expense, other income or expense, or provision for or benefit from income taxes to these segments for internal reporting purposes, as the Company does not believe that allocating these expenses is beneficial in evaluating segment performance. Additionally, the Company does not allocate assets to segments for internal reporting purposes as it does not manage its segments by such metrics.
The information that is regularly provided to the Company's CODM includes net sales, cost of sales and gross profit for each segment. The following tables include net sales, cost of sales and gross profit for each segment (in millions):
| Fiscal Year Ended March 31, 2026 | |||||||||||||||||
| Semiconductor products | Technology licensing | Total | |||||||||||||||
| Net sales | $ | 4,549.3 | $ | 163.8 | $ | 4,713.1 | |||||||||||
| Cost of sales | 1,992.0 | — | 1,992.0 | ||||||||||||||
| Gross profit | $ | 2,557.3 | $ | 163.8 | $ | 2,721.1 | |||||||||||
| Fiscal Year Ended March 31, 2025 | |||||||||||||||||
| Semiconductor products | Technology licensing | Total | |||||||||||||||
| Net sales | $ | 4,270.5 | $ | 131.1 | $ | 4,401.6 | |||||||||||
| Cost of sales | 1,933.7 | — | 1,933.7 | ||||||||||||||
| Gross profit | $ | 2,336.8 | $ | 131.1 | $ | 2,467.9 | |||||||||||
| Fiscal Year Ended March 31, 2024 | |||||||||||||||||
| Semiconductor products | Technology licensing | Total | |||||||||||||||
| Net sales | $ | 7,531.1 | $ | 103.3 | $ | 7,634.4 | |||||||||||
| Cost of sales | 2,638.7 | — | 2,638.7 | ||||||||||||||
| Gross profit | $ | 4,892.4 | $ | 103.3 | $ | 4,995.7 | |||||||||||
The Company sells its products to distributors and OEMs in a broad range of market segments, performs on-going credit evaluations of its customers and, as deemed necessary, may require collateral, primarily letters of credit. The Company's operations outside the U.S. consist of product assembly and final test facilities in Thailand, and sales and support centers and design centers in certain foreign countries. Domestic operations are responsible for managing the design, development and wafer fabrication of products, as well as the coordination of production planning and shipping to meet worldwide customer commitments. The Company's Thailand assembly and test facility is reimbursed in relation to value added with respect to assembly and test operations and other functions performed, and certain foreign sales offices receive compensation for sales
within their territory. Accordingly, for financial statement purposes, it is not meaningful to segregate sales or operating profits for the assembly and test and foreign sales office operations. Identifiable long-lived assets (consisting of property, plant and equipment net of accumulated depreciation and ROU assets) by geographic area are as follows (in millions):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| United States | $ | 806.0 | $ | 869.3 | |||||||
| Thailand | 101.5 | 123.7 | |||||||||
| Various other countries | 336.7 | 337.0 | |||||||||
| Total long-lived assets | $ | 1,244.2 | $ | 1,330.0 | |||||||
Sales to unaffiliated customers located outside the U.S., primarily in Asia and Europe, aggregated approximately 75% of consolidated net sales for each of fiscal 2026, fiscal 2025 and fiscal 2024. Sales to customers in Europe represented approximately 21%, 20% and 24% of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Sales to customers in Asia represented approximately 50%, 50% and 47% of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Within Asia, sales into China represented approximately 18%, 17% and 18% of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Sales into Taiwan represented approximately 15%, 16% and 12% of consolidated net sales for fiscal 2026, fiscal 2025 and fiscal 2024, respectively. Sales into any other individual foreign country did not exceed 10% of the Company's net sales for any of the three fiscal years presented.
With the exception of Arrow Electronics, the Company's largest distributor, which accounted for 12%, 10% and 12% of net sales in fiscal 2026, fiscal 2025 and fiscal 2024, respectively, no other distributor or direct customer accounted for more than 10% of net sales in either of fiscal 2026, fiscal 2025 or fiscal 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2026 | May 21, 2026 | Showing above |
| 2025 | May 23, 2025 | |
| 2024 | May 23, 2024 | |
| 2023 | May 25, 2023 | |
| 2022 | May 20, 2022 | |
| 2021 | May 18, 2021 | |
| 2020 | May 22, 2020 | |
| 2019 | May 30, 2019 | |
| 2018 | May 18, 2018 | |
| 2017 | May 30, 2017 | |
| 2016 | May 24, 2016 | |
About Segments Disclosures
Segment disclosures break a company into its reportable operating units, revealing revenue, profit, and asset allocation that consolidated financial statements obscure. Under ASC 280, segments must match how the chief operating decision maker views the business, providing a window into internal management structure and resource allocation priorities.
Key signals: compare segment margins to identify which units drive profitability and which destroy value. Watch for changes in the number of reportable segments — segment aggregation or disaggregation often coincides with strategic shifts or attempts to obscure declining performance. Intersegment elimination patterns reveal internal pricing practices. The reconciliation between segment totals and consolidated figures exposes corporate overhead allocation and unallocated items. Geographic revenue concentration highlights regulatory and currency exposure. Compare segment-level capital expenditure against segment revenue to assess where management is investing for future growth versus harvesting existing assets.