Microchip Technology Incorporated has released its annual report for the fiscal year ending March 31, 2025. The company reported a decrease in net sales, attributing it primarily to adverse economic conditions such as slowing economic activity, increasing business uncertainty, persistent inflation, high interest rates, and shorter product lead times. This resulted in many customers holding higher levels of inventory and delaying or reducing orders. Despite these challenges, the company settled an ongoing legal matter with a licensee, which contributed $13.3 million to both revenue and profits during the fiscal period. In terms of financial metrics, the cost of sales increased to 43.9% of net sales compared to 34.6% in the previous fiscal year, leading to a decrease in gross profit from 65.4% to 56.1%. Operating income also declined, registering at 6.7% of net sales compared to 33.7% in the prior year. The company noted a significant rise in research and development expenses, which accounted for 22.4% of net sales, up from 14.4% in the previous year. Selling, general, and administrative expenses increased to 14.0% from 9.6%, and amortization of acquired intangible assets rose to 11.2% from 7.9%. Microchip Technology continues to operate in two industry segments, focusing on the design, development, manufacture, and sale of semiconductor products. The company also licenses its SuperFlash and other technologies to distributors and OEMs across various markets. Distributors accounted for approximately 45% of net sales, a slight decrease from 47% in the previous fiscal year.