Gross Margin % is calculated as gross profit divided by its revenue. Microchip Technology's Gross Profit for the
three
months ended in Dec. 2023 was $1,120 Mil. Microchip Technology's Revenue for the
three
months ended in Dec. 2023 was $1,766 Mil. Therefore, Microchip Technology's Gross Margin % for the quarter that ended in Dec. 2023 was 63.43%.
The historical rank and industry rank for Microchip Technology's Gross Margin % or its related term are showing as below:
MCHP'
s Gross Margin % Range Over the Past 10 Years
Min: 51.56 Med: 59.63 Max: 67.52
Current: 67.03
During the past 13 years, the highestGross Margin % of Microchip Technology was 67.52%. The lowest was 51.56%. And the median was 59.63%.
MCHP's Gross Margin % is ranked better than 94.75% of 972
companies
in the Semiconductors industry
Industry Median: 28.165
vs MCHP: 67.03
Microchip Technology had a gross margin of 63.43% for the quarter that ended in Dec. 2023 => Durable competitive advantage
The 5-Year average Growth Rate of Gross Margin for Microchip Technology was 3.10% per year.
Microchip Technology Gross Margin % Historical Data
The historical data trend for Microchip Technology's Gross Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Competitive Comparison of Microchip Technology's Gross Margin %
For the Semiconductors subindustry, Microchip Technology's Gross Margin %, along with its competitors' market caps and Gross Margin % data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Microchip Technology's Gross Margin % Distribution in the Semiconductors Industry
For the Semiconductors industry and Technology sector, Microchip Technology's Gross Margin % distribution charts can be found below:
* The bar in red indicates where Microchip Technology's Gross Margin % falls into.
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.
Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.
Durable competitive advantage creates a high Gross Margin % because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin %
1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key
Microchip Technology had a gross margin of 63.43% for the quarter that ended in Dec. 2023 => Durable competitive advantage
Be Aware
If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin % and Operating Margin % closely helps avoid value trap situations.
Microchip Technology Gross Margin % Related Terms
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Microchip Technology (Microchip Technology) Business Description
Microchip Technology became an independent company in 1989 when it was spun off from General Instrument. More than half of revenue comes from MCUs, which are used in a wide array of electronic devices from remote controls to garage door openers to power windows in autos. The company's strength lies in lower-end 8-bit MCUs that are suitable for a wider range of less technologically advanced devices, but the firm has expanded its presence in higher-end MCUs and analog chips as well.
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