Microchip Is Firing on All Cylinders, Yet Still Can't Catch Up to Demand; Maintain $83 FVE

Wide-moat Microchip Technology reported solid fiscal second-quarter results and provided investors with an upbeat outlook for the December quarter, as broad-based demand from the company’s chips is well in excess of supply, consistent with the ongoing global semiconductor shortage. We maintain our $83 fair value estimate and view shares as fairly valued. Our long-term thesis for Microchip remains intact--although supply and demand will come back into balance at some point down the line, Microchip’s content within cars, industrial equipment, and a host of other gadgets is still rising.