Microchip Reports Record Revenue as it Struggles to Keep Up with Demand; $83 Fair Value Estimate

Wide-moat Microchip Technology reported strong fiscal third-quarter results and provided investors with a solid outlook for the March quarter amid the global semiconductor shortage. Microchip backlog of non-cancellable chip orders remains massive and grew even further in the quarter. For the bulk of 2022, we expect the company to ship virtually every chip it can manufacture this year, as demand is well in excess of supply. We maintain our $83 fair value estimate and view shares as modestly undervalued.