Microchip Is Latest Chipmaker to Foresee Earnings Hit From Virus

(Bloomberg) -- Microchip Technology Inc. cut its projection for revenue in the current quarter and withdrew its earnings guidance, citing “very weak demand” in China and other parts of Asia related to the COVID-19 virus outbreak.

The company expects sales in the fiscal fourth quarter to be flat from the previous period, it said in a statement late Monday. Microchip had previously predicted an increase of between 2% and 9% during its Feb. 4 earnings call. Business in Europe and the Americas is still in line with previous expectations, it said.

Customers are returning to work at a slower pace than expected and the supply chain is also slower to return to normal, according to the company. Microchip said it isn’t able to provide updated earnings per share guidance now and so is withdrawing its previous EPS forecast. The company’s fourth quarter ends in March.

The maker of microcontrollers and analog chips for a wide range of industries joins the list of chip companies predicting worse-than-expected earnings as economic activity in their largest market, China, is hit by efforts to contain the virus outbreak. The world’s most populous nation is the biggest consumer of many of the products that are the largest market for chips - including personal computers and cell phones - and its factories install electronic components in devices that are sold around the world.

Microchip’s shares fell about 2.8% in extended trading following the announcement. They closed up 5% at $95.22 in regular New York trading.

To contact the reporter on this story: Ian King in San Francisco at ianking@bloomberg.net

To contact the editors responsible for this story: Alistair Barr at abarr18@bloomberg.net, Molly Schuetz

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