Microchip Technology Updates Financial Guidance for Second Quarter Fiscal 2007.

CHANDLER, Ariz. -- Microchip Technology Incorporated (NASDAQ:MCHP), a leading provider of microcontroller and analog semiconductors, today stated that it is updating its financial guidance provided in its July 20, 2006 press release for the second quarter of fiscal 2007 ending September 30, 2006.

The September quarter is usually a back-end loaded quarter because of the summer holidays in Europe and the start of Christmas builds in Asia. Additionally, the Company operates its primary assembly and test facility in Bangkok, Thailand where a state of emergency has been declared because of a military-led coup. The unrest in Bangkok may put challenges in the movement of product and may affect the Company's ability to meet demand in what is a back-end loaded period.

Because it is very difficult to provide specific guidance in this environment, we are broadening our guidance pending clearance of the political situation in Thailand and the effects of Christmas builds in Asia. As a result, net sales for the September quarter are expected to be flat to up 4% sequentially, and up approximately 16% to 20% over the year ago quarter. Gross margins are expected to be up approximately 20 basis points sequentially. Earnings per share on a GAAP basis are expected to be 36 to 37 cents, and earnings per share without the effect of share based compensation expense are expected to be 38 to 39 cents. Microchip and distributor inventory is expected to be essentially flat sequentially. No conference call will be held in conjunction with this guidance update.

"The first two months of the quarter have been seasonally normal. However, we are seeing the start of the Christmas builds in Asia pushing out by a couple of weeks. This could be potentially exacerbated by the situation in Thailand. Our European business continues to be strong after the return from summer holidays for much of that geography," said Steve Sanghi, Microchip's President and CEO.

"In the next two weeks, our focus will be to insure that we continue to get the needed product to our customers in a timely manner. We will provide a further update on or prior to our next scheduled earnings release as circumstances warrant," Sanghi concluded.

Microchip Technology will present at the Bank of America Semiconductor Conference on Wednesday, September 20, 2006 at 1:30 p.m. (Pacific Time). A live webcast and replay of the presentation will be made available by Bank of America, and can be accessed on the Microchip website 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 September being a back-end loaded quarter, the unrest in Bangkok putting challenges on the movement of product or affecting our ability to meet demand, our net sales, gross margin, GAAP and non-GAAP earnings per share and inventory guidance for the second quarter of fiscal year 2007, the start of Christmas builds in Asia pushing out by a couple of weeks, results being exacerbated by the situation in Thailand, European business continuing to be strong, continuing to get product to our customers in a timely manner and updating on or prior to our next scheduled earnings release as circumstances warrant 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 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 current or future tax audit or any litigation involving intellectual property, customers or other issues; disruptions in our business or the businesses of our customers or suppliers due to natural disasters, terrorist activity, armed conflict, war, worldwide oil prices and supply, public health concerns or disruptions in the transportation system; and general economic, industry or political conditions in the United States or internationally, including Thailand.

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. Further information regarding Microchip's use of non-GAAP information is contained in its July 20, 2006 press release.

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 September 20, 2006 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, Arizona, Microchip offers outstanding technical support along with dependable delivery and quality. For more information, visit the Microchip website at www.microchip.com.

The Microchip name and logo, PIC and dsPIC are registered trademarks of Microchip Technology Inc. in the USA and other countries. All other trademarks mentioned herein are the property of their respective companies.