"Our Microcontroller businesses performed very strongly in the June quarter with revenue being up 9.5% sequentially compared to the March quarter, setting a new record in the process," said Ganesh Moorthy, President and Chief Operating Officer.  "We continue to see customers using microcontrollers that originated from Atmel’s heritage express confidence in Microchip’s stewardship of these product families.  As a result we are seeing more designs that are in the pipeline going to production and ramping in volume.  We are also seeing continued growth in our design-in funnel which we expect will drive future growth as these designs progress into production over time."

Mr. Moorthy added, "Our analog product revenue was up 3.7% sequentially in the June quarter compared to the March quarter, and also set a new record in the process.  Our transformation to Microchip 2.0 with a more powerful Total System Solution approach is enabling us to successfully find more opportunities to attach Microchip’s vast portfolio of analog products to Atmel microcontrollers and microprocessors at multiple customers and applications.  This effort should contribute to further revenue over time as these new design wins go to production."

Eric Bjornholt, Microchip's Chief Financial Officer, said, "Cash flow from operations in the June quarter was a record $345 million.  As of June 30, 2017, the consolidated cash and total investment position on our balance sheet was $1.65 billion."

Mr. Bjornholt added, "Our inventory at June 30, 2017 was at 100 days and was the lowest in 7 years.  Our distributor inventory at 31 days was also on the low end of our normal range.  Despite our recent manufacturing ramp, we have not been able to grow our inventories since all of the additional output is getting shipped for revenue.  We are projecting Microchip’s inventory at September 30, 2017 to be between 99 and 101 days, which is essentially flat to the June quarter levels."

Commenting on the business environment, Mr. Sanghi added, "We are continuing to see a very strong business environment for our products worldwide and have a number of company specific demand drivers. Our bookings rate in the June quarter was extremely strong.  We are continuing to add capacity in our internal fabs, assembly and test plants, foundries and subcontractors.  Our lead times are still long, but with the increased output from our recent efforts, we believe we have managed to stabilize lead times to create a soft landing without triggering over ordering in our customer base."

Mr. Sanghi concluded, "We expect total net sales to be up approximately 3% sequentially which would represent 14.6% growth on a non-GAAP basis year-over-year and 14.9% growth on a GAAP basis year-over-year."

Microchip's Highlights for the Quarter Ended June 30, 2017:

• Microchip announced the industry’s first microcontroller (MCU) with integrated 2D GPU and integrated DDR2 memory.  Our PIC32MZ DA family provides groundbreaking capabilities for an MCU.
   
• The latest Digitally Enhanced Power Analog (DEPA) buck controller from Microchip performs power conversion, measurement and management functions.  We believe that the MCP19123 offers more flexibility than any other analog control architecture on the market today.
   
• Microchip simplified the design of low-power Liquid Crystal Display (LCD) applications with the launch of the PIC16F19197 MCU family.  The PIC16F19197 MCU family combines battery-friendly LCD drive with Core Independent Peripherals (CIPs) and intelligent analog.
   
• Microchip announced the industry’s first CAN flexible data-rate and CAN partial networking transceiver family with automotive grade 0 qualified parts.  The ATA65XX family adds six new devices to Microchip’s CAN portfolio.
   
• Microchip’s eXtreme Low Power (XLP) was expanded to PIC32 devices. The latest PIC32MM “GPM” MCUs are available with USB support, CIPs and memory scalable to 256 KB in compact packages.  The latest additions to the PIC32MX1/2 XLP family also include XLP technology to increase performance while reducing power consumption.
   
• A fully certified Wi-Fi^® Software Development Kit (SDK) with Apple HomeKit support is now available from Microchip.  The SDK enables MFi licensees to create fast, low-power designs and is the industry’s first hardware cryptography enabled Wi-Fi-based development kit for HomeKit.
   
• Microchip announced a new family of maXTouch^® touchscreen controllers for large-screen automotive Human Machine Interface (HMI) designs.  The MXT1665T-A family brings the experience of multi-touch HMI into automotive displays.
   
• Microchip unveiled the SAM R30 System in Package (SiP). Combining an ultra-low power MCU with an 802.15.4 radio, the SAM R30 enables long-lasting battery life for a wide variety of wirelessly connected devices.
   
• Microchip continued to prove that MOST^® technology remains a leading standard for automotive infotainment.  Microchip announced the OS81119, the latest MOST technology Intelligent Network Interface Controller (INIC) which enables daisy-chain communications in automotive applications.
   
• Microchip debuted its Unified Centralized Network Stack (UNICENS) software, which makes interfacing to high-speed infotainment in-vehicle networks easy and flexible.  UNICENS is a software module available at no charge to customers using Microchip INICs.
   
• Silicon Storage Technology (SST), Microchip’s licensing subsidiary, announced the qualification of Smartbit™ One-Time Programmable (OTP) Non-Volatile Memory (NVM) technology for ON Semiconductor’s 110 nm Complementary Metal-Oxide Semiconductor (CMOS) process.
   
• Microchip was named one of the 2017 Top Workplaces by Bay Area News Group and also received a 2017 Preferred Supplier Award from Flex.  Additionally, Steve Sanghi was honored with the Lifetime Achievement Award from Arizona Genius.

Second Quarter Fiscal Year 2018 Outlook:

The following statements are based on current expectations.  These statements are forward-looking, and actual results may differ materially.  The table below provides our guidance on both a GAAP and non-GAAP basis for the September 30, 2017 quarter:

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