Microchip Sells Fab 3 in Puyallup, Washington for $30 Million

Microchip Technology Incorporated (NASDAQ: MCHP), a leading provider of microcontroller and analog semiconductors, announced the sale of its idled Fab 3 in Puyallup, Washington. The sale was completed on October 19, 2007, after the Company had received an unsolicited offer during September, 2007 for the facility. The facility was sold for $30 million at a loss of $16.5 million net of income taxes, or an earnings per share impact of 7.4 cents in the September quarter.

“We believe that the equipment currently in our remaining wafer fabs will take us to $1.6 billion in revenue with nominal capital equipment additions. With further equipment additions in our Fab 4 in Gresham, Oregon and some in Fab 2 in Tempe, Arizona, we can increase the total revenue capacity in our two fabs to $2.2 billion. We are also having success in producing several of our products in foundries. We believe that the capacity available from the foundries will augment our available capacity to $2.5 billion in revenues,” said Steve Sanghi, President and CEO.

“With our revised capacity analysis, we determined that we would not require Fab 3 for many years, allowing Microchip to accept the offer for Fab 3,” continued Mr. Sanghi.

“With the sale of Fab 3, it is expected that we will see an increase in gross margins of approximately 60 basis points in future quarters, as well as an addition of over $27.5 million to our treasury balances, which is net of disposal costs,” said Gordon Parnell, Vice President and Chief Financial Officer.

About Microchip
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.

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