june 2021 needham automotive conference.060821

A Leading Provider of Smart, Connected and Secure Embedded Control Solutions

Needham Automotive Investor Conference 2021

June 8, 2021

Eric Bjornholt, CFOMatthias Kaestner, Vice President Automotive

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Safe HarborForward Looking Statement Safe Harbor: During the course of this presentation, we will make projections or other forward-looking statements regarding the future financial performance of the company (including our guidance) or future events, including our strategy, growth drivers, industry outlook, industry trends and market size. These statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements involve risks and uncertainties that could cause our actual results to differ materially, including, but not limited to: any continued economic uncertainty due to the impact of the COVID-19 pandemic, actions taken or which may be taken by the Biden administration or the new U.S. Congress, monetary policy, political, geopolitical, trade or other issues in the U.S. or internationally, any further unexpected fluctuations or weakness in the U.S. and global economies (including China), changes in demand or market acceptance of our products and the products of our customers and our ability to meet any increases in market demand; our ability to successfully integrate the operations and employees, retain key employees and customers and otherwise realize the expected synergies and benefits of our acquisitions; the impact of current and future changes in U.S. corporate tax laws (including the Tax Cuts and Jobs Act of 2017), foreign currency effects on our business; the mix of inventory we hold and our ability to satisfy short-term orders from our inventory; changes in utilization of our manufacturing capacity and our ability to effectively manage and expand our production levels to meet any increases in market demand; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; changes or fluctuations in customer order patterns and seasonality; the impact of any future significant acquisitions that we may make; our ability to obtain a sufficient supply of wafers from third party wafer foundries and the cost of such wafers, our ability to obtain additional capacity from our suppliers to increase production to meet any increases in market demand; the costs and outcome of any current or future litigation or other matters involving our Microsemi acquisition, the Microsemi business, intellectual property, customers, or other issues; the costs and outcome of any current or future tax audit or investigation regarding our business or the business of Microsemi, our actual average stock price in the June quarter and the impact such price will have on our share count; fluctuations in our stock price and trading volume which could impact the number of shares we acquire under our share repurchase program and the timing of such repurchases; disruptions in our business or the businesses of our customers or suppliers due to natural disasters (including any floods in Thailand), terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns (including the COVID-19 pandemic) or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally.For a detailed discussion of these and other risk factors, please refer to Microchip's filings on Forms 10-K and 10-Q. You can obtain copies of Forms 10-K and 10-Q and other relevant documents for free at Microchip's website (www.microchip.com) or the SEC's website (www.sec.gov) or from commercial document retrieval services. You are cautioned not to place undue reliance on our forward-looking statements, which speak only as of the date such statements are made. Microchip does not undertake any obligation to publicly update any forward-looking statements to reflect events, circumstances or new information after the date of this presentation or to reflect the occurrence of unanticipated events.

Use of Non-GAAP Financial Measures: In this presentation, we have included certain non-GAAP financial information, including for example, non-GAAP gross profit and operating profit. Our non-GAAP results, where applicable, the effect of share-based compensation, COVID-19 shelter-in-place restrictions on manufacturing activities, manufacturing excursion, expenses related to our acquisition activities (including intangible asset amortization, severance and other restructuring costs, and legal and other general and administrative expenses associated with acquisitions including legal fees and expenses for litigation and investigations related to our Microsemi acquisition), professional services associated with certain legal matters, IT security remediation costs, non-cash interest expense on our convertible debentures, losses on the settlement of debt, and gains related to equity investments. Our determination of our non-GAAP measures might not be the same as similarly titled measures used by other companies, and it should not be construed as a substitute for amounts determined in accordance with GAAP. There are limitations associated with using non-GAAP measures, including that they exclude financial information that some may consider important in evaluating our performance. Management compensates for this by presenting information on both a GAAP and non-GAAP basis for investors and providing reconciliations of the GAAP and non-GAAP results. Non-GAAP measures should not be considered in isolation or as an alternative to net income, cash from operations or other measures of profitability, liquidity or performance under GAAP. Certain supplemental information and reconciliations are available on our website at www.microchip.com/investors under the heading “Supplemental Financial Information”.

http://www.microchip.com/

http://www.sec.gov/

http://www.microchip.com/investors

Agenda

• Business Update

• Automotive Market

• Connected: EE Architecture for the Software defined car

• Electrified: Market on fast track

• Automated: Evlotion rather than Revolution

• The Human Machine Interface Revolution

3 MCHP Corporate Presentation Overview Rev 28-5 March 2020

Business Update

Q1FY22 Guidance and Investor Update• The strong bookings activity in the March 2021 quarter has continued in the

June 2021 quarter• Supply constraints continue to be wide-spread

• Q1FY22 net sales guidance on May 6, 2021 of up 3.5% to 7.5% sequentially with record non-GAAP gross margins of 64.1% to 64.5% and record non-GAAP operating margins between 40.6% and 41.4%

• Q1FY22 guidance for non-GAAP diluted EPS on May 6, 2021 of between $1.85 and $1.95 per share.

• Record quarterly dividend declared of 41.3 cents per share.• Paid down $369.2 million of gross debt during Q4FY21 and paid down $3.61

billion of debt over the last 11 quarters• Microchip is laser focused on achieving an investment grade rating• In May 2021 we refinanced a $1 billion 3-year senior secured note at an

interest rate of 0.983%

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Preferred Supply Program (PSP)• Launched program during the March 2021 quarter• Provide customers with priority in supply beginning 6 months after their

order in exchange for at least 12 months of non-cancellable, non-reschedulable orders

• Customer response to this program has been very positive• About 50% of our backlog is in the PSP program today• PSP backlog gives us a solid foundation to prudently acquire constrained

raw materials, invest in expanding factory capacity, and hire employees to support our factory ramps

• As the supply/demand imbalance subsides over time, we believe that some customers will still choose to continue to be in the program, particularly those will good long-term visibility of their demand.

• Approximately 80% of Automotive backlog is now in the PSP program

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Automotive Market Overview Covid-19 impact

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WW Car Production 2020-2021 – IC shortageStrong IC market + cancelled / late orders + Steep recovery + “lean mantra” => imbalance of semiconductor supply and demand.

1st CovidWave

IC shortage

depletingIC buffers

Source: Marklines

Automotive Megatrends

Connected Automated Electrified

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Connected: New ArchitecturesSoftware and Ethernet Centric

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Automotive value paradigm shift• Past –

Hardware defined car: handling, power, torque, etc.

• Future –SW defined car: ADAS, Infotainment, Connectivity – adding features through SW, over the air Updates and Upgrades, service as a revenue stream for car makers

Standardization of computing HW, value added through software, e.g. the “autonomous driving SW stack”

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PC Model – standardized and feature loaded

• Computing power (over) sized to handle Today’s AND Future SW needs for ADAS and Infotainment

• Standardized interfaces from the IT domain to reduce SW complexity: Ethernet, USB, PCIe => Microchip is a leader in those technologies

• Cars equipped with sensors by default to enable services –activation at a fee, functionality as a paid service…

=> More semiconductor content per car

Architecture enablers: Ethernet, PCIe, USB

Example: 10BASE-T1S Application• Sensor

• Ultrasonic• Radar• Microphones• Powertrain

• Actuator• Light• Speaker• Electric Motor

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• Ultrasonic sensor units• Radar sensor units• Front radar

10BASE-T1S Applications• Sensor



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• Handsfree• Emergency Call• 360o environment sensing




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• Position• Speed• Pressure• Temperature• Etc.

10BASE-T1S Applications – 10+ nodes / car• Sensor



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• Front-/Backlight• Indicator• Ambient Lighting




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• Door Speaker• Subwoofer• eSound• Emergency Call Unit• Etc.




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• Windows• Mirrors• Door-opener• Pumps• Windshield wiper

10BASE-T1S Enabling Zone Architecture

• Door• Bumper• Seat Zone• Roof• Engine Compartment• Battery• Etc.

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10BASE-T1S in Zone Architecture• Example Door Zone

• Window Lifter• Mirror Control• Speakers• Lock• Ultrasonic• Ambient Light• Indicator Light

Multiple applications on a single cable!

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Electrified: Market on fast trackFast Charging with highest Efficiency

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Electric Vehicles: Opportunities for Microchip

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Electric Motor• Motor Control• Motor Position Sensing• Silicon Carbide• Temp Sensing

Regenerative Braking System• Inverter• Pedal Inductive Sensing

DC/DC Converter• Silicon Carbide• Temp Sensing• MCU Control

eSound• DSP Processing• Networking• Power Monitoring• Temp Sensing

Thermal System/ Compressor• Motor Control• Temp Sensing

• Networking

EV Charging• Digital Control

• Analog Power & Sensing• Silicon Carbide

Battery Management System• Networking

• Thermal Management• Power/Current Monitoring• Silicon Carbide (HV E-fuse)

On-Board AC Charging• Vehicle Charging Communication

• Temp Sensing• Silicon Carbide

• MCU Control

24 10 June 2021 Microchip Technology Inc. and its subsidiaries©

• Efficient power conversion is key to charging!• Dedicated Digital Power Conversion MCUs• Highly efficient, fastest swicthing SiC MOSFETs & Diodes• AgileSwitch® Gate Drivers with Augmented Switching™ technology

Example: High Power EV ChargingFast growth of level 3 fast charging up to 250kW power

25 10 June 2021 Microchip Technology Inc. and its subsidiaries©

/ CAN

Level 3Fast Charger

Level 3 EV Charging

OBC

EVSE

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Automated: Progression through Autonomous Levels L1-L5

Evolution rather than Revolution

Driving Automation: many assist systems

Hands Off DetectionSteering Wheel

Rain Sensor

Traffic Sign Recognition

Parking Sensors

Back up Camera

Automatic Emergency Braking

Lane Departure

Lane Keep Assist

Front Collision Avoidance

Pedestrian Detection

Blind Spot Detection

Adaptive Cruise Control

LED Matrix Lighting

Adaptive Lighting

Autonomous Parking

Surround View Camera

Tire Pressure Management

Example: Steering Wheel Solution

Capacitive SensingHands Off Detection

Rain Sensor

Traffic Sign Recognition

Parking Sensors

Back up Camera

Automatic Emergency Braking

Lane Departure

Lane Keep Assist

Front Collision Avoidance

Pedestrian Detection

Blind Spot Detection

Adaptive Cruise Control

LED Matrix Lighting

Adaptive Lighting

Autonomous Parking

Surround View Camera

Tire Pressure Management

12V

HOD

MCU

TouchPad

Left Side

MCU

CAN FD

Ethernet

TouchPad

Right Side

MCU

Body Control

MCU

Display Control

MXT

Motor Driver

Haptic

Feedback

DC / DC LDOs

Motor Driver

Haptic

Feedback

LED Backlight

Control

2X MCU with touch HW2X power management1X LIN transceiverFunctional Safety

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Human Machine InterfaceThe Revolution Continues

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from Buttons and Switches (2013)...

Source: https://media.daimler.com/

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…to Screens and Touch (2021)

Source: https://media.daimler.com/

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Microchip HMI Solutions – on the road today

Touch buttonsHand gestures

Hands off detect

1st Touch screencontroller

Smart Surface control

Touch buttons

Ambient light switch

Small displaycontrol

Touch buttons

Touch padcontrol Ambient

light switch

2nd Touch screen

controller

Touch buttons

Ambient light switch

1 application node = 1 MCU + Pwr Mgmt + connectivity + dedicated CapSense Firmware

10 June 2021 Microchip Technology Inc. and its subsidiaries©

Next Generation HMI – Haptics added

• Rotary encoder knobglued onto the screen

• Enabled by Microchip MAXTouch Software

• No additional electronics

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Thank YouAny Questions?

june 2021 needham automotive conference.060821

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