The Smart Techie was renamed Siliconindia India Edition starting Feb 2012 to continue the nearly two decade track record of excellence of our US edition.

Nowhere to go but UP

Pradeep Shankar
Thursday, March 4, 2010
Pradeep Shankar
Last month, Microchip Technology’s Chairman, CEO & President Steve Sanghi began his company’s annual shareholder meeting greeting his executive assistant—Loretta Torens—on her birthday. “She has been working for me for the last 16 years,” he announced to make all his board members and shareholders sing “The Birthday Song.”

Sanghi is a no-frills person. He turned Microchip from a dead division of General Instrument in 1989, into a semiconductor heavyweight with a $7.5 billion market cap that has remained highly profitable. Year after year, Microchip makes a brand new record, achieves higher sales with significant growth, and gains more market share in the microcontrollers business. Microcontrollers are tiny computer brains used in many household appliances, automobiles, computers, telecommunication devices and many other day-to-day gears.

With $80 million revenue in 1993, the company hit the $1billion mark [trailing twelve month results]. Since its public offering in 1993, Microchip rocket-shipped its stock up nearly 6000 percent—60 times the original initial public offering price. With a customer base of over 50,000, Microchip is also the best performing semiconductor stock. Out of 200-some companies in related semiconductor businesses, Microchip’s stock has had the best performance for the last 13 years. Even though the semiconductor industry continues to be cyclical, Microchip has shown the lowest volatility in revenues and earnings than any company in the semiconductor industry. The company has grown every year in the last 13 years being public, excepting one during the tech bust of 2000-2001. It’s a strong financial company, profitable, and the highest dividend paying company in the semiconductor industry. “Financially, we’re among the most profitable semiconductor companies, one of the top three or four,” says Sanghi.

The 8-bit controller
For Microchip, 8-bit microcontroller market is a clear winning story. “We are numero uno company in 8-bit microcontrollers. We continue to gain more territory, quarter-after-quarter and year-after-year,” says Sanghi.

Microchip started in 8-bit marketplace back in 1990, as a small private company, underfunded with non-standard product architecture. Back then, the company was in the 20th position among market players. It started competing in a market which was crowded by some of the largest competitors from the U.S, Europe, Asia and Japan. By 2002, Microchip became No.1 in this market, and its market share since then has continued to grow. What contributed to Microchip’s rise up was the significant innovation it brought into the market. Microchip’s 8-bit microcontrollers were better architected, offered superior performance at lower power. The company’s low overhead and tight-fisted manufacturing policy has propelled it steadily to rank among the leaders in this crowded market.

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