Microchip Technology (NASDAQ:MCHP) reported third-quarter revenue of $1.186 billion, marking a 15.6% increase year-over-year. Its non-GAAP gross margins expanded to 60.5%, up from 52% a year ago, indicating its nine-point turnaround plan is gaining traction. In contrast, TE Connectivity (NYSE:TEL) delivered first-quarter fiscal year 2026 revenue of $4.67 billion, a 22% year-over-year increase, with record orders totaling $5.1 billion. The company saw 38% growth in its Industrial Solutions segment, driven by AI data center connectivity and grid hardening initiatives.
Microchip is currently focused on margin recovery as inventory levels normalize and factory utilization improves. TE Connectivity, however, is in a distinct growth phase, actively capturing current AI infrastructure spending. Its AI data center revenue has tripled from $300 million in fiscal year 2024 to over $900 million in fiscal year 2025.
Microchip’s Turnaround Gains Momentum
Microchip’s recovery is showing accelerating results. The company’s revenue of $1.186 billion represented a 4% sequential increase and a 15.6% rise year-over-year. Non-GAAP gross margins improved significantly to 60.5%, a notable jump from 52% just one year prior. CEO Steve Sanghi has implemented a methodical strategy involving the closure of underperforming fabrication plants, inventory normalization, and rebuilding customer relationships. This comprehensive nine-point recovery plan is now yielding tangible outcomes.
TE Connectivity Experiences Strong Growth
TE Connectivity is operating at a higher growth rate. Its first-quarter fiscal year 2026 revenue reached $4.67 billion, up 22% year-over-year. The company secured record orders amounting to $5.1 billion, an increase of 28%. The Industrial Solutions segment experienced robust growth of 38% year-over-year, primarily propelled by demand for AI data center connectivity and grid hardening projects. CEO Terrence Curtin highlighted the team’s performance, stating, “Our teams delivered strongly against our strategy, resulting in first quarter earnings growth over 30% and sales growth of more than 20%, both of which were above our guidance.””
Underlying Business Models: Microcontrollers vs. Connectors
Microchip Technology serves approximately 120,000 customers across the industrial, automotive, and aerospace sectors with its microcontrollers and analog chips. The company’s competitive advantage lies in its extensive product breadth and deep integration with its customer base. However, the business faces risks related to ongoing inventory normalization and potential slowdowns in recovery due to macroeconomic softness.
Conversely, TE Connectivity is a key player in providing connectivity solutions essential for modern infrastructure. Its growth is significantly boosted by investments in AI and the modernization of energy grids. The company’s strategic focus on these high-growth areas positions it to capitalize on current technological trends.
Our Analysis
While both Microchip Technology and TE Connectivity operate in the industrial technology sector, their current trajectories present distinct investment profiles. Microchip is demonstrating a successful turnaround, focusing on operational efficiency and margin improvement after a period of inventory correction. TE Connectivity, on the other hand, is a growth compounder, leveraging its strong position in high-demand areas like AI data centers and grid infrastructure. Investors seeking a recovery play might favor Microchip, while those looking for sustained growth driven by secular trends may find TE Connectivity more appealing.
Fonte: Yahoo Finance
