Microchip Technology forecasts weak Q4 sales, falls short of estimates

Microchip Technology has revised its forecasts for fourth-quarter net sales and profit, projecting figures below Wall Street estimates due to a significant drop in demand for automotive chips. The Chandler, Arizona-based company anticipates net sales between $920 million and $1 billion, compared to analysts' expectations of $1.06 billion. This downturn follows a period when automakers stockpiled chips during the pandemic, resulting in an oversupply as demand wanes. CEO Steve Sanghi noted that while there has been some inventory destocking, the correction cycle is ongoing, prompting the company to evaluate its operations to enhance competitiveness. Shares of Microchip fell nearly 5% following the announcement, reflecting broader concerns in the semiconductor industry, as evidenced by similar forecast adjustments from peer NXP Semiconductors. Analysts predict that weakness in the automotive market will persist into the first half of the year, indicating potential challenges ahead for semiconductor firms.