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Microchip Technology Incorporated F1Q09 (Qtr. End 06/30/08) Earnings Call Transcript

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2008-07-24 17:41:07.0

Tags: Microchip Technology Inc.

Question-and-Answer Session

Thank you. [Operator Instructions]. First we'll go to Chris Danely with JPMorgan Equity Research.

Christopher Danely - J.P. Morgan

Thanks Steve. It looks like I was a little off on my China prediction there. Can you just talk about what you saw as the area of strength there and then talk about other goes out in the world?

Steve Sanghi - Chairman, President and Chief Executive Officer

Well, thanks Chris. China was the strongest geography overall in the world. And overall, Asia did quite well too outside of China. China was up 18.2% and overall Asia was up about 11.5% or so that Gordon mentioned. Lot of the business we do in China are really exports back to mostly U.S., but some to Europe also. We will never know the exact number because of lot of the products really moves around. But a significant portion of the business that is done in China is really by multinationals doing manufacturing there.

So, at the end, the strength of overall business in China comes down to back to our strong demand creation efforts here in U.S., through our own efforts from the last two or three years and continuing efforts of demand creation in China and Asia, where we also added a lot of resources to further take control of the demand creation. And I think, we've been talking about it for a while and you kind of seeing the results now show through in the demand creation efforts, resulting into revenue.

We are doing business with record number of customers. At the last count, I think we had mentioned 60,000 customers, we didn't quite count them prior to this earnings call, I believe the number has grown further. We're doing business with lots of additional customers. However, because of the economy, every customer is buying less product than they are buying otherwise. So, run rates are smaller, but we're doing business with record number of customers. So, when you do the overall math, record number of customers even buying slightly less products overall is resulting into sequential growth, less sequential growth than we would like otherwise, nevertheless business is still growing.

We grew in March quarter 3%; we grew in June quarter 3%; we're guiding September quarter up 0% to 3%. So, you can see that we're heading for significant growth over the four quarters here compared to where some of the Dataquest and numbers SAE numbers are. And I was just handed a note, our total customer base worldwide is now over 63,000.

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