Microchip (MCHP) Secures NASA Deal to Develop New Processor
Microchip Technology MCHP has won a $50-million federal contract grant to develop the next-generation processor for spaceflight computing.
Microchip is selected by NASA’s Jet Propulsion Laboratory to design a high-performance spaceflight computing (HPSC) in a three-year project. The HPSC is expected to deliver 100 times the computing capacity of the computers currently in use.
MCHP is collaborating with NASA to design the computer platform, which will deliver comprehensive ethernet networking, advanced artificial intelligence/machine learning processing and connectivity support, crucial to space missions.
Also, even though the new processor is primarily designed for spacecraft computing, it is expected to help address certain key mega trends in the market, such as commercial systems, industrial automation, edge computing, time-sensitive ethernet data transmission, artificial intelligence and the IoT, which are at the front of the fourth industrial revolution.
Microchip Technology Incorporated Price and Consensus
Microchip Technology Incorporated price-consensus-chart | Microchip Technology Incorporated Quote
Microchip’s Collaboration With NASA to Drive Performance
The entire Semiconductor - Analog and Mixed industry is reeling under various operational challenges due to the macro-economic turmoil and geopolitical tensions. This, in turn, affected Microchip’s shares along with its peers, namely Analog Devices ADI and NXP Semiconductors NXPI.
Microchip shares have fallen 16.5% in the year-to-date period (YTD) compared with the Zacks Semiconductor - Analog and Mixed industry’s decline of 29.7%.
ADI shares are down 3.2% YTD period even though it continues enjoying solid demand for high-performance analog and mixed-signal solutions, which consistently impacted its revenue growth positively. Overall negative sentiment in the market made investors bearish on the stock.
NXPI shares have tumbled 19.8% in the YTD period. All-time high inflation, which increases input costs, is one of the primary macro-economic reasons inducing a fall in its share price.
However, even though Microchip still grapples with a negative supply-chain impact, it was awarded the contract a week after the U.S. President had Joe Biden has signed the CHIPS and Science Act, supporting investments in the domestic semiconductor manufacturing and reducing dependence on foreign markets like China. MCHP peer onsemi ON is already benefiting from the recent declaration of the act by the government.
onsemi shares have increased 7.9% in the YTD period, reflecting positive impacts from the newly-signed act and bullish investor sentiments as it provides returns in double digits in the high-growth industries like automotive.
The latest contract will provide significant research and development resources to MCHP for creating new products, making its services stand out from the rest.
To diversify income from its microcontroller business, riddled with supply-chain disturbances, Microchip continues developing and introducing a wide range of innovative and proprietary new linear, mixed-signal, power, interface and timing products to spur growth in the analog business. These factors will enable this Zacks Rank #3 (Hold) company to maintain sustainable revenue growth and expand its margins in the long run. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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