Free cash flow generation remains volatile, with margins swinging from a 2.0% low in 2025Q2 to a 45.0% peak in 2024Q3, complicating the sustainability of the $274.4M quarterly dividend payout.
| Metric | Mar'26 | Mar'25 | Mar'24 | Mar'23 | Mar'22 | Mar'21 | Mar'20 | Mar'19 | Mar'18 | Mar'17 | Mar'16 | Mar'15 | Mar'14 | Mar'13 | Mar'12 | Mar'11 | Mar'10 | Mar'09 | Mar'08 | Mar'07 | Mar'06 | Mar'05 | Mar'04 | Mar'03 | Mar'02 | Mar'01 | Mar'00 | Mar'99 | Mar'98 | Mar'97 |
|---|
| Cash from Operations | 962.1M | 898.1M | 2.89B | 3.62B | 2.84B | 1.92B | 1.54B | 1.67B | 1.42B | 1.06B | 744.48M | 721.18M | 676.56M | 446.18M | 396.46M | 582.66M | 452.05M | 308.65M | 447.31M | 429.77M | 437.32M | 352.71M | 343.08M | 260.19M | 178.83M | 254.36M | 239.69M | 102.64M | 136.54M | 77.59M |
| Operating CF Margin % | 20.41% | 20.4% | 37.89% | 42.91% | 41.68% | 35.24% | 29.27% | 31.31% | 35.66% | 31.09% | 34.26% | 33.59% | 35.03% | 28.21% | 28.66% | 39.18% | 47.7% | 34.17% | 43.19% | 41.34% | 47.13% | 41.65% | 49.06% | 39.94% | 31.3% | 35.54% | 48.35% | 25.25% | 34.4% | 23.21% |
| Operating CF Growth % | 7.13% | -68.95% | -20.11% | 27.38% | 48.33% | 24.14% | -7.82% | 17.98% | 33.99% | 42.31% | 3.23% | 6.59% | 51.64% | 12.54% | -31.96% | 28.89% | 46.46% | -31% | 4.08% | -1.73% | 23.99% | 2.81% | 31.86% | 45.5% | -29.7% | 6.12% | 133.53% | -24.83% | 75.99% | 5.7% |
| Net Income | 230M | -500K | 1.91B | 2.24B | 1.29B | 349.4M | 570.6M | 355.9M | 255.4M | 164.64M | 323.93M | 365.32M | 395.28M | 127.39M | 336.7M | 418.95M | 217M | 245.59M | 297.75M | 357.03M | 242.37M | 213.78M | 137.26M | 88.23M | 94.81M | 142.84M | 102.04M | 50.09M | 64.37M | 51.13M |
| Depreciation & Amortization | 689.3M | 750.1M | 879.5M | 998.4M | 1.14B | 1.15B | 1.22B | 876.4M | 615.9M | 469.21M | 283.17M | 278.3M | 189.14M | 204.1M | 99.42M | 106.61M | 90.06M | 96.05M | 100.32M | 116.17M | 110.68M | 120.47M | 111.63M | 111.08M | 109.04M | 104.33M | 68.47M | 65.15M | 53.77M | 40.15M |
| Stock-Based Compensation | 255.4M | 180.4M | 177.5M | 170.4M | 210.2M | 198.3M | 170.2M | 166.4M | 93.2M | 128.16M | 71.42M | 58.6M | 53.79M | 52.07M | 38.29M | 36.81M | 36.78M | 32.48M | 32.85M | 0 | 578K | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Deferred Taxes | -64.6M | -143.3M | -27.2M | 205.5M | 7.9M | -138.9M | -490.3M | -62.2M | 51.2M | -126.89M | -60.42M | -32.81M | 5.32M | -28.37M | 21.95M | 24M | 18.62M | 20.53M | 9.56M | 9.02M | 17.52M | 16.87M | -12.19M | -17.1M | -28.31M | -8M | 8.96M | 1.69M | -9.42M | -3M |
| Other Non-Cash Items | 129.7M | 11.3M | 32.7M | 25M | 161.4M | 381.4M | 144.4M | 153.6M | 139.4M | 129.52M | 47.51M | 60.73M | 17.66M | 13.83M | 8.3M | 9.44M | 90.04M | -62.25M | 16.99M | 0 | 28.38M | 14.07M | 68.39M | 88.61M | 23.8M | 57.12M | 16.28M | 29.77M | 14.3M | 11.88M |
| Working Capital Changes | -277.7M | 100.1M | -76.7M | -16M | 34.2M | -27M | -66.7M | 184.7M | 264.5M | 294.82M | 78.88M | -8.96M | 14.89M | 77.16M | -108.22M | -13.16M | 2.09M | -28.36M | -10.16M | -79.54M | 37.8M | -12.48M | 37.99M | -10.63M | -20.52M | -41.92M | 43.94M | -44.06M | 13.53M | -22.58M |
| Change in Receivables | -204.5M | 454M | 161.6M | -232.7M | -74.9M | -63.7M | -53.3M | 238.8M | -85.3M | -46.83M | -2.15M | -15.89M | -12.51M | 386K | 11.85M | 6.34M | -49.08M | 50.83M | -13.76M | 14.8M | -26.27M | -5.2M | -13.84M | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Change in Inventory | 264.3M | 31.6M | 12.8M | -483.2M | -177.8M | 18.4M | 28.8M | 341.6M | -59.2M | 223.71M | 48.24M | 25.52M | -18.5M | 65.87M | -35.24M | -22.07M | 15.24M | -4.11M | -2.9M | -2.66M | -11.3M | -9.21M | 7.36M | -19.82M | 1.95M | -47.45M | 7.64M | -5.15M | -11.61M | -2.57M |
| Change in Payables | 26M | -345.6M | -148.4M | 323.4M | 192.7M | 17.6M | 11.4M | -180.7M | -13.9M | -16.07M | -20.84M | -33.99M | -11.63M | -40.91M | -61.45M | -638K | 29.58M | -25.1M | 12.08M | -75.98M | 72.05M | 1.18M | 30.9M | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Investing | -195.5M | -287.8M | -392.1M | -599.5M | -477.7M | -173.3M | -133.2M | -6.81B | -1.01B | -2.84B | 800.4M | -678.32M | -503.28M | -936.76M | -256.48M | -187.85M | -195.26M | -19.83M | 55.66M | -442.22M | -136.6M | -370.73M | -267.62M | -376.75M | -44.15M | -440.52M | -208.73M | -42.99M | -145.3M | -79.01M |
| Capital Expenditures | -91.1M | -126M | -285.1M | -486.2M | -370.1M | -92.6M | -67.6M | -228.9M | -206.8M | -75.31M | -97.89M | -149.47M | -113.07M | -50.82M | -62.37M | -124.45M | -47.6M | -102.37M | -69.83M | -60.04M | -76.29M | -63.21M | -63.51M | -80.39M | -44.69M | -441.15M | -213.97M | -45.46M | -145.3M | -79.01M |
| CapEx % of Revenue | 1.93% | 2.86% | 3.73% | 5.76% | 5.43% | 1.7% | 1.28% | 4.28% | 5.19% | 2.21% | 4.5% | 6.96% | 5.85% | 3.21% | 4.51% | 8.37% | 5.02% | 11.33% | 6.74% | 5.77% | 8.22% | 7.46% | 9.08% | 12.34% | 7.82% | 61.64% | 43.16% | 11.18% | 36.61% | 23.64% |
| Acquisitions | 0 | 0 | 0 | 0 | 0 | 0 | 0 | -7.85B | 0 | -2.75B | -359.2M | -659.93M | -11.19M | -752.3M | -38.58M | -125.73M | 0 | 0 | 27.52M | 0 | 0 | 0 | 0 | -235.39M | 0 | -1.33M | 0 | 0 | 0 | 0 |
| Investments | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - | - |
| Other Investing | 6.4M | -161.8M | -107M | -113.3M | -107.6M | -80.7M | -68.3M | -18.4M | 3.2M | 12.8M | 7.2M | -6.66M | 7.17M | -4.42M | -5.41M | 15.1M | 100K | 166K | -3.29M | 902K | -1.25M | 1.66M | 1.63M | -5.42M | 537K | 692K | -1.49M | 0 | 0 | 0 |
| Cash from Financing | -1.3B | -158.3M | -2.41B | -3.1B | -2.33B | -1.86B | -1.44B | 4.66B | -415.3M | 595.5M | -59.94M | 98.55M | -235.02M | 382.17M | -208.15M | -183.02M | -210.98M | -330.23M | -182.7M | -385.34M | 195.82M | -18.59M | -24.04M | -3.12M | 16.07M | 109.54M | 129.96M | -73.92M | -2.05M | 13.37M |
| Debt Issued (Net) | -235.6M | -377.7M | -542.3M | -1.47B | -1.38B | -1.44B | -1.08B | 5.04B | -75.4M | 927.08M | 587.22M | 368.88M | 22.03M | 620M | 0 | 0 | 0 | 0 | 1.13B | -268.95M | 223.5M | 45.45M | 0 | 0 | 0 | -9M | -23.02M | -3.45M | 16.9M | -26.68M |
| Equity Issued (Net) | -120.4M | 1.42B | -900M | -863.5M | -355.1M | 24.5M | 58.8M | 42.6M | 42M | 42.21M | -335.11M | 34.43M | 37.45M | 35.7M | 57.46M | 71.94M | 36.48M | -90.37M | -1.08B | 68.72M | 92.43M | -21.04M | -714K | 5.01M | 16.07M | 118.54M | 146.46M | -70.47M | -19M | 40.05M |
| Dividends Paid | -1.09B | -975.7M | -911.5M | -695.3M | -503.8M | -388.3M | -350.1M | -344.4M | -337.5M | -315.4M | -291.09M | -286.48M | -281.2M | -273.82M | -266.18M | -256.81M | -249.56M | -246.66M | -251.96M | -207.9M | -120.11M | -43M | -23.32M | -8.13M | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -182.1M | -96.5M | -982.1M | -945.8M | -425.6M | -35.8M | 0 | 0 | 0 | 0 | -363.8M | 0 | 0 | 0 | 0 | 0 | 0 | -123.93M | -1.14B | 0 | -3.32M | -68.28M | -53.86M | -26.52M | -27.78M | 0 | -4.77M | -87.44M | -31.5M | -19.46M |
| Other Financing | 150.5M | -223.3M | -61.1M | -75.8M | -84.2M | -64.6M | -68.1M | -71.8M | -44.4M | -58.4M | -20.96M | -18.29M | -13.29M | 297K | 576K | 1.85M | 2.09M | 6.8M | 21.18M | 22.79M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Net Change in Cash | -531.4M | 452M | 85.7M | -83.4M | 37.4M | -121M | -27.6M | -472.7M | -7.4M | -1.18B | 1.48B | 141.21M | -61.73M | -107.42M | -68.17M | 211.79M | 45.8M | -41.41M | 320.26M | -397.8M | 496.54M | -36.6M | 51.42M | -119.69M | 150.74M | -76.62M | 157.29M | -1.36M | -10.81M | 11.9M |
| Free Cash Flow | 871M | 772.1M | 2.61B | 3.13B | 2.47B | 1.82B | 1.48B | 1.45B | 1.21B | 984.14M | 646.59M | 571.71M | 563.49M | 395.36M | 334.09M | 458.21M | 404.44M | 206.28M | 377.48M | 369.73M | 361.03M | 289.5M | 279.57M | 179.8M | 134.14M | -186.78M | 27.33M | 63M | -8.76M | -1.43M |
| FCF Margin % | 18.48% | 17.54% | 34.16% | 37.15% | 36.25% | 33.54% | 27.99% | 27.03% | 30.47% | 28.88% | 29.75% | 26.63% | 29.18% | 25% | 24.15% | 30.81% | 42.68% | 22.84% | 36.45% | 35.56% | 38.91% | 34.18% | 39.98% | 27.6% | 23.48% | -26.1% | 5.51% | 15.5% | -2.21% | -0.43% |
| FCF Growth % | 12.81% | -70.39% | -16.82% | 26.78% | 35.57% | 23.55% | 2.1% | 19.22% | 23.23% | 52.21% | 13.1% | 1.46% | 42.53% | 18.34% | -27.09% | 13.29% | 96.06% | -45.35% | 2.1% | 2.41% | 24.71% | 3.55% | 55.49% | 34.04% | 171.81% | -783.41% | -56.62% | 819.14% | -514.31% | 96.64% |
| FCF per Share | 1.59 | 1.44 | 4.76 | 5.62 | 4.37 | 3.37 | 2.88 | 2.89 | 2.44 | 2.10 | 1.49 | 1.28 | 1.29 | 0.96 | 0.82 | 1.18 | 1.08 | 0.55 | 0.89 | 0.84 | 0.84 | 0.68 | 0.66 | 0.43 | 0.32 | -0.46 | 0.07 | 0.16 | -0.02 | -0.00 |
| FCF Conversion (FCF/Net Income) | 4.76x | -1796.20x | 1.52x | 1.62x | 2.21x | 5.49x | 2.71x | 4.71x | 5.56x | 6.44x | 2.30x | 1.95x | 1.71x | 3.50x | 1.18x | 1.39x | 2.08x | 1.26x | 1.50x | 1.20x | 1.80x | 1.65x | 2.50x | 2.95x | 1.89x | 1.78x | 2.08x | 2.21x | 2.12x | 1.52x |
| Interest Paid | 0 | 236.2M | 191.2M | 181.5M | 207.8M | 265.4M | 355.2M | 347.9M | 85.3M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
| Taxes Paid | 0 | 175.2M | 517.1M | 482.6M | 141.4M | 87.3M | 101.3M | 77.6M | 25.9M | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 |
Cyclical inventory destocking pressure
Based on quarterly financial data, MCHP exhibits significant volatility in cash conversion, with the OCF/NI ratio fluctuating wildly from -14.82 in 2026Q1 to 9.78 in 2026Q3, underscoring a disconnect between accounting net income and the actual cash-generating capacity of the underlying semiconductor manufacturing operations.
The extreme variance in the OCF/NI ratio suggests that reported net income is currently a poor proxy for cash flow, likely distorted by non-cash charges and cyclical working capital swings. Investors should monitor whether this divergence narrows as the company moves past the recent inventory destocking phase.
As reported in recent filings, MCHP's free cash flow margin has demonstrated extreme sensitivity to the business cycle, swinging from a low of 2.0% in 2025Q2 to a peak of 45.0% in 2024Q3, reflecting the high operating leverage inherent in its internal manufacturing model.
The sharp contraction in FCF margins during 2025 highlights the vulnerability of the company's cash generation to factory utilization rates. While the recent recovery to 18.5% in 2026Q4 is encouraging, the inconsistency of these margins suggests that cash flow remains highly dependent on external demand stability.
According to the cash flow statements, working capital changes have acted as a significant headwind, with a $204.9M outflow in 2026Q2, indicating that the company's cash position is frequently impacted by the timing of inventory builds and the subsequent collection cycles from its distribution partners.
The erratic nature of working capital movements suggests that MCHP is struggling to optimize its supply chain efficiency during this period of demand uncertainty. This volatility warrants further investigation into whether these outflows represent strategic inventory positioning or an inability to effectively manage channel sell-through.
Based on reported figures, MCHP has maintained consistent dividend payments of approximately $270M per quarter despite significant net income compression, which suggests a management priority on shareholder returns that may be increasingly difficult to sustain if operating cash flow does not show more consistent growth.
The decision to prioritize dividends while net income has been negative or thin suggests a high degree of confidence in a cyclical rebound. However, the reduction in share repurchases compared to 2024 levels indicates that management is becoming more cautious with cash deployment as the industrial sector remains sluggish.
Quick answers to the most common questions about buying MCHP stock.
Microchip Technology Incorporated (MCHP) generated $962.1M in net cash from operating activities in 2026. This reflects the cash generated directly from core business operations.
Microchip Technology Incorporated (MCHP) generated $871.0M in free cash flow in 2026. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Microchip Technology Incorporated (MCHP) spent $91.1M on capital expenditures in 2026. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
In 2026, Microchip Technology Incorporated (MCHP) returned $1.09B to shareholders via cash dividends and spent $182.1M on share repurchases. This shows the company's commitment to returning capital to its equity investors.