Microchip Technology Reiterates Revenue and EPS Guidance for Third Quarter Fiscal 2006 and Raises Long-Term Gross Margin Guidance.

CHANDLER, Ariz. -- Microchip Technology Inc. (Nasdaq: MCHP), a leading provider of microcontroller and analog semiconductors, today stated that it is reaffirming its guidance for net sales and earnings per share for the third quarter of fiscal 2006 ending Dec. 31, 2005. Net sales are expected to be about $234 million and earnings per share are expected to be about 32 cents. No conference call will be held in conjunction with this guidance update. Microchip plans to announce its financial results for the third quarter of fiscal 2006 after market close on Thursday, Jan. 19, 2006.

"Our revenue growth in the current quarter is being led by our analog division which is expected to grow about 20% sequentially, and by more than 40% over the third quarter of fiscal 2005, driven by several key design wins turning to production. Our microcontroller business is seasonally normal while our serial EEPROM memory business seems flattish," said Steve Sanghi, Microchip's president and CEO. "Over the last few weeks, we have seen the first signs of lead-time push outs, driven by strong demand on certain products and package types. Our overall bookings in October and November are at record levels, allowing us to anticipate higher sequential backlog entering the March 2006 quarter."

Microchip also revised its long-term gross margin guidance from 60% to 62% after an analysis of various elements of its business.

"After completing a thorough analysis of our richening product mix, an aggressive conversion to Flash and mixed-signal microcontrollers, the ramp of Fab 4, depreciation rolling off in our other factories, as well as our ability to take advantage of selective pricing opportunities in the marketplace, we have revised our long-term gross margin guidance (two to three years out) from 60% to 62%. We believe that the combination of these elements demonstrates the appropriate balance in our business model," Sanghi concluded.

Microchip Technology will present at the Credit Suisse First Boston Annual Technology Conference on Wednesday, Nov. 30, 2005, at 2:30 p.m. (Mountain Standard Time). A live webcast and replay of the presentation will be made available by CSFB, and can be accessed on the Microchip Web site at www.microchip.com. The replay of the webcast will be available for a period of seven days following the presentation.

The statements in this release relating to our net sales and earnings per share guidance for the third quarter of fiscal year 2006, sequential and year-over-year growth in our analog division, seasonally normal microcontroller business, flattish EEPROM business, lead-time push outs, overall bookings, our anticipation of higher sequential backlog entering the March 2006 quarter, the richening product mix, an aggressive conversion to Flash and mixed-signal microcontrollers, the ramp of Fab 4, depreciation rolling off in our other factories, our ability to take advantage of selective pricing opportunities, revised long-term gross margin guidance, and our belief that we are providing an appropriate balance in our business model are forward-looking statements 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: changes in demand or market acceptance of our products and the products of our customers; the mix of inventory we hold and our ability to satisfy short-term orders from our inventory; changes in utilization of our manufacturing capacity; our ability to continue to secure sufficient assembly and testing capacity; competitive developments including pricing pressures; the level of orders that are received and can be shipped in a quarter; the mix of products sold; the level of sell-through of our products through distribution; changes or fluctuations in customer order patterns and seasonality; foreign currency effects on our business; costs and outcome of any tax audit or any litigation involving intellectual property, customers or other issues; disruptions in our business or our customers' businesses due to terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns, natural disasters 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 Web site (www.microchip.com) or the SEC's Web site (www.sec.gov) or from commercial document retrieval services.

Stockholders of Microchip 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 this Nov. 29, 2005, press release, or to reflect the occurrence of unanticipated events.

Microchip Technology Inc. is a leading provider of microcontroller and analog semiconductors, providing low-risk product development, lower total system cost and faster time to market for thousands of diverse customer applications worldwide. Headquartered in Chandler, Ariz., Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip Web site at www.microchip.com.

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