Image Source: Pixabay
 

Introduction
 

Microchip Technology Incorporated (MCHP), a constituents in our AI Hardware (Semiconductor) Integrated Device Manufacturers Portfolio, has experienced  considerable weakness of late going DOWN 4% in July and another 8.5% last week ending August 8th as investors wait for clearer signs of demand recovery and margin stabilization before jumping back in.

About Microchip Technology
 

Microchip Technology, Inc., headquartered in Chandler, Arizona, develops, manufactures, and sells smart, connected, and secure embedded control solutions (see full company description here).

Reasons For Stock Decline
 

1. Q2 Earnings Conveyed Mixed Signals: Revenue was down 13% year-over-year, and operating margin was down almost 18% from last year and this steep decline spooked investors; 
2. Q3 revenue guidance was in line, but not inspiring;.
3. Continued High Inventory: Shipments remained below normalized demand underscoring weak sell-through;.
4. Workforce & Cost Pressures Continued: ​​​​​​​18,000 employees have experienced pay cuts and lack of bonuses since a major layoff in March and this has painted a picture of internal strain;
5. Analyst Downgrade: TD Cowen slashed its price target by 20% but maintained a Hold rating.

Our AI Hardware (Semiconductor) Integrated Device Manufacturers Portfolio
 

Below is how Microchip's stock performed last week (w/e August 8th) in ascending order compared to its peers: 

1. Microchip Technology (MCHP): DOWN 8.5% w/e August 8th
2. NXP Semiconductors (NXPI): DOWN 3.1% w/e August 8th
3. STMicroelectronics (STM): DOWN 1.5% w/e August 8th
4. Analog Devices (ADI): DOWN 0.3% w/e August 8th
5. Intel Corporation (INTC): UP 0.2% w/e August 8th
6. Texas Instruments (TXN): UP 3.4% w/e August 8th
7. Infineon Technologies (IFFNY): UP 5.3% w/e August 8th
8. Micron Technology (MU): UP 8.9% w/e August 8th

Summary
 

The portfolio was UP by only 0.5% w/e August 8th.
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