2014SUSTAINABILITY

R E P O R T

T A B L E O F

C O N T E N T S

L E T T E R F R O M T H E C E O 4

A B O U T M I C R O C H I P 6

E N V I R O N M E N TA L R E S P O N S I B I L I T Y 1 6

W O R K P L A C E I N I T I AT I V E 2 5

S U P P LY C H A I N R E S P O N S I B I L I T Y 3 6

P R O D U C T S T E WA R D S H I P 3 8

C O M M U N I T Y I N V O LV E M E N T 4 3

U N G L O B A L C O M PA C T 4 7

G R I C O N T E N T I N D E X 4 8

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When evaluating Microchip and its business, you should give careful

consideration to the factors listed in our Form 10-K and in other documents

that we file with the U.S. Securities and Exchange Commission. Our

actual results could differ materially from the results described in these

responses. Although we believe that the matters reflected in these responses

are reasonable, we cannot guarantee future results, levels of activity,

performance or achievements. You should not place undue reliance on these

responses. We disclaim any obligation to update information contained in any

of these responses.

D I S C L A I M E R

This is Microchip Technology’s second sustainability report covering

our performance from FY 2012 – FY 2014. We have engaged

Strategic Sustainability Consulting (SSC), an independent party to

support our sustainability reporting efforts. We believe that this

report contains information that is accurate, timely and balanced.

While the report and the data within have not been formally assured,

we have completed an internal assessment process in conjunction

with SSC to review the contents for clarity. This report is based on

the Global Reporting Initiative’s G4 Guidelines. We welcome your

feedback to Alan Abbott at Alan.Abbott@microchip.com.

Because of this report’s length and intense colors, Microchip

recommends printing in black and white on a high-efficiency network

printer. For printing, Microchip suggests using high post-consumer

fiber white ledger paper or white ledger paper produced from rapidly

renewable resources.

A B O U T T H I S R E P O R T

E N V I R O N M E N T A L S U G G E S T I O N

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ER F

ROM

THE

CEO

L E T T E R F R O M

T H E C E O

I am pleased to announce Microchip’s 2014 Sustainability Report. This report details our activities throughout the past three years at Microchip sites around the

globe, from our environmentally-preferred products to our community involvement and workplaces initiatives. As a global company, it is important for us to

not only focus our sustainability efforts at our home base in the United States, but at our facilities in the ASEAN and Europe regions where we operate.

In 2013, Microchip joined the United Nations Global Compact (UNGC), a voluntary initiative based on the idea that businesses have a role to play in advancing human rights, labor, environment, and anti-corruption principles through their own operations and through collaborative innovation. While Microchip has always placed great emphasis on complying with the laws and policies in the regions where we operate, we also value our position as a global leader and believe in the value of engaging in voluntary environmental and social initiatives. We believe, and are finding through empirical evidence, that effective integration of sustainability into our operations, our products, and our workforce help

us become a stronger and more resilient company.

I am particularly proud of the environmental contributions that our low-power components make to a more sustainable world. Currently used in thousands of products across a range of industries, manufacturers choose Microchip products to help dramatically reduce their products energy consumption, extend their products useful life, and improve the user experience. This report highlights a few of the many examples of Microchip products that contribute to making the world a better place. We are excited to share these innovations with you and look forward to how the application of our products will continue to shape the future.

Ensuring a healthy and happy workplace is vital to Microchip’s success as a company. I am pleased to share a few of the initiatives we have put in place for our employees’ health and wellbeing. One of the more innovative new developments has been the introduction of our benefits mascot, Chip. Chip is a fun character who appears around our facilities to raise employee awareness concerning the benefits available to them and their families.

At Microchip Technology Incorporated (Microchip), our vision to be the leading supplier

of embedded control solutions includes a corporate commitment to acting in ethical and

responsible way. Our focus on environmental and social responsibility, transparency, and

engagement guides our decision-making processes and helps keep us accountable as we

continuously improving all aspects of our business.

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Whether it is healthcare at our on-site clinics, company-sponsored guided meditation, or financial planning for our family’s future, Microchip employees benefit most from the benefits they understand. Chip has been doing a great job of raising that critical awareness.

As in previous years, our workplace initiatives are recognized externally.

I am honored that once again our Thailand facilities have won multiple government-sponsored awards for welfare, safety,

public health, and labor; and I congratulate our Gresham facility

for winning the prestigious Patriotic Employer Award from the United States Department of Defense for Microchip’s efforts to support our troops during deployment.

Community support and outreach are very important to Microchip, and we continue to provide support around the world in a variety of areas including education, environmental protection, and international aid and humanitarian relief. As a high-tech company, we believe that Microchip has a special role to play in science, technology, engineering, and math (STEM) through financial contributions, in-kind giving, and volunteerism. At a corporate level, we continue to provide support for robotics teams and competitions, and many of our employees are

involved locally in supporting STEM, robotics, and other engineering education opportunities for students in their local communities. I am extremely proud of the impact that Microchip has in STEM initiatives, and believe that our involvement will ensure that students enter the workforce ready to take on the next generation of engineering challenges.

Microchip continues our commitment to the good works and ideals expressed by the United Way with the organization’s efforts to end homelessness, end hunger, and promote the educational attainment that is critical for our children and youth to succeed. To that effect, Microchip has again been recognized as a leader in our local community as our United Way Committee continues their fine efforts to support this remarkable organization.

Looking to the future, I believe that sustainability will continue to play an important role in Microchip’s success, particularly as the demand for energy-efficient products continues to grow. I believe that we are well-positioned, with expert talent and capable facilities, to meet this evolving landscape. At the same time, Microchip must be prepared for the highly cyclical nature of the semiconductor industry. Ultimately, I believe that thoughtful sustainability practices will help us weather these storms and continue our remarkable track record of success. I look forward to sharing this journey with you.

LETT

ER F

ROM

THE

CEO

ST E V E S A N GH I Chairman of the Board, President and Chief Executive Officer

“ C O M M U N I T Y S U P P O R T A N D O U T R E AC H A R E V E RY I M P O R TA N T T O M I C RO C H I P, A N D W E C O N T I N U E T O P ROV I D E S U P P O R T A RO U N D T H E WO R L D I N A VA R I E T Y O F A R E A S I N C L U D I N G E D U C AT I O N , E N V I RO N M E N TA L P R O T E C T I O N , A N D I N T E R N AT I O N A L A I D A N D H U M A N I TA R I A N R E L I E F.”

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CHIP

A B O U T

M I C R O C H I P

Headquartered in Chandler, Arizona, Microchip Technology provides microcontroller and

analog semiconductors, with low-risk product development, lower total system cost, and

faster time to market. With locations around the world, we offer a wide range of products

that make global innovation possible.

Microchip’s vision is to be the very best embedded controller solutions company ever, and in order to do so, we must identify market opportunities, develop and manufacture product timely and cost effectively, and market it appropriately. We actively continue to strive to be the best while operating in an ethical and sustainable manner to protect our economic stability and reputation for our customers, shareholders, employees, and communities.

M I C R O C H I P T E C H N O L O G Y A T A G L A N C E

Countries with Manufacturing Facilities and Design Centers

United States, Thailand, China, Taiwan, Philippines, India, Hungary, Romania, Switzerland, Germany, and the United Kingdom

Employees 9,500+

Products 10,000+

Product Categories PIC® Microcontrollers, Amplifiers & Linear, Data Converters, Interface, Motor Drivers, Power Management, Safety & Security, Thermal Management, Memory Touch and Input Sensing, Wireless, Real-Time Clock

Governance For more information about our company, Board of Directors, executive structure, investor information, and more, visit our website. www.microchip.com

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L E A D E R S H I P A N D G O V E R N A N C E

Microchip is led by a 5-member board of directors, who provide governance and oversight to the company.

When considering a candidate for a director position, the Nominating and Governance Committee looks for demonstrated character, judgment, relevant business, functional and industry experience, and a high degree of skill. The Board of Directors and the Nominating and Governance Committee believe it is important that the members of the Board of Directors represent diverse viewpoints. Accordingly, the Nominating and Governance Committee considers issues of diversity in identifying and evaluating director nominees, including differences in education, professional experience, viewpoints, technical skills, individual expertise, ethnicity and gender.

M A T T H E W W . C H A P M A NBoard Member

L . B . D A YBoard Member

S T E V E S A N G H IChairman of the Board, President

and Chief Execut ive Of f icer

E S T H E R J O H N S O NBoard Member

W A D E F . M E Y E R C O R DBoard Member

B O A R D O F D I R E C T O R S

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All of Microchip’s corporate officers bring excellent leadership to the table.

C O R P O R A T E O F F I C E R S

S T E V E S A N G H IChairman of the Board,

President and Chief Execut ive Of f icer

E R I C B J O R N H O L TVice President and Chief

F inancial Of f icer

S T E P H E N D R E H O B LVice President , MCU8 Div is ion

M I T C H E L L L I T T L EVice President ,

Worldwide Sales and Appl icat ions

RICHARD SIMONCICVice President , Analog,

Power and Inter face Div is ion

G A N E S H M O O R T H YChief Operat ing Of f icer

M E M B E R S H I P S, A S S O C I A T I O N S, A N D C E R T I F I C A T I O N S

▫ SONY GREEN PARTNER CERT I F I ED Sony awards this certification for suppliers that help produce environmentally sensitive products

▫ SAMSUNG ECO -PARTNER CERT I F I ED Samsung gives its suppliers this certification to companies that make an effort to develop environmentally-friendly products

▫ CANON CERT I F ICATE OF GREEN ACT I V I TY Suppliers that adhere to Canon’s “Green Procurement Standards” are awarded this certificate

▫ UN I TED NAT IONS GLOBAL COMPACT MEMBER The UN Global Compact works with businesses to help create a more sustainable world

▫ CARBON D ISCLOSURE PROJECT ( CDP ) PART IC IPANT Microchip discloses our greenhouse gas emissions and our emissions reduction initiatives to CDP

▫ CONFL ICT FREE SOURC ING IN I T IAT I VE MEMBER CFSI helps companies make informed choices about conflict minerals in their supply chain

H E L P F U L L I N K S

Information for investors, including financial performance, can be found at www.microchip.com/investorshome.aspx

Microchip’s charters regarding the Nominating and Governance Committee, the Audit Committee, and the Compensation Committee are located at

www.microchip.com/corporateresponsibility

Board member and executive officer information can be found atwww.microchip.com/pagehandler/en-us/aboutus/leadership/home.html

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Our supply chain is global and begins in the local communities that provide the products and services that make Microchip’s product possible. As a guiding value, Microchip believes suppliers, representatives, and distributors are our partners. We strive to maintain professional and mutually beneficial partnerships with those suppliers, representatives, distributors, design houses, and consultants who are an integral link in the achievement of our mission and guiding values.

H O W D O W EC O M M U N I C A T E ?

W H A T D O T H E Y W A N T F R O M U S ?

W H A T D O W E W A N T F R O M T H E M ?

We communicate with our suppliers in a variety of ways, from basic policies that set out our expectations to multi-day on-site visits to walk through their facilities and delve into their capabilities and practices.

Our suppliers want our business at a fair price and with consistent expectations. They are usually open to our sustainability-related requests that conform to industry standards and norms. We believe in understanding, transparency, and education to ensure we are all working toward the same goals and understand the reason why they are important.

We seek suppliers that understand their sustainability impacts and make authentic efforts to minimize those impacts across the entire product life cycle.

Responsibly-produced electronics are a topic of great interest to a variety of advocacy groups. We are also actively involved in our local communities’ social causes.

H O W D O W EC O M M U N I C A T E ?

We spend a significant amount of time understanding communities’ and advocates’ concerns and providing information about our policies and practices. This includes feedback through surveys, participation in key initiatives like the Carbon Disclosure Project, Electronics Industry Citizenship Coalition/GeSI’s Conflict Free Sourcing Initiatives, and United Nations Global Compact among others. Microchip also offers financial support for approved community initiatives and supports volunteer efforts from our employees.

S U P P L I E R S A N D S E R V I C E P R O V I D E R S

C O M M U N I T Y A N D A D V O C A C Y G R O U P S

S T A K E H O L D E R E N G A G E M E N T

At Microchip, stakeholder engagement is an ongoing process of dialogue. As expectations for high tech companies change, we are constantly reviewing and improving our business practices to adapt to our customer’s needs and to the best practices in our industry.

A key element of our success is how well we understand what our stakeholders want and how well we communicate our message back to them.

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W H A T D O T H E Y W A N T F R O M U S ?

W H A T D O W E W A N T F R O M T H E M ?

These stakeholders want to know that we’ve heard and understand their concerns and that we’re doing what is within our power to find solutions that benefit all parties involved.

We welcome thoughtful, constructive dialogue with our civil society counterparts and their insights regarding how we can best improve our practices to mitigate our business’ negative impacts on society and the environment.

Our products are sold in nearly every sector of the electronics industry. As such, we have diverse customer needs and are highly cognizant of the need to be responsive, accurate, and relevant when engaged in customer and consumer dialogues.

H O W D O W EC O M M U N I C A T E ?

W H A T D O T H E Y W A N T F R O M U S ?

W H A T D O W E W A N T F R O M T H E M ?

Our entire company is highly engaged with our customers and has regular meetings both at our facilities and at customer sites. We also participate in trade shows and other industry events, culminating with our Master’s Conference, where we can interact with our peers and customers, while spotting trends in our respective sectors. Through our website, dedicated staff of industry experts, and social media presence, we are able to provide information on our company and our products.

We see sustainability issues beginning to play a larger part in customers’ questions and purchasing decisions and are planning our engagement efforts accordingly.

We want Microchip integrated circuits, modules, and development boards to be recognized and known for their excellence and for the safe, responsible, and sustainable way that they are produced.

C U S T O M E R S A N D C O N S U M E R S

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E T H I C S A N D I N T E G R I T Y

Our commitment to conducting our business operations with integrity and in an ethical manner is an integral component of our Guiding Values. It is our goal—from every employee to our board of directors—to treat our customers and partners with respect and deal with them ethically and responsibly during every interaction.

Be the very best embedded control solutions company ever.

V I S I O N

Microchip Technology Incorporated is a leading supplier of field-programmable embedded control solutions by delivering the popular PIC® microcontrollers; a broad spectrum of innovative analog products, related non-volatile memory products and Flash-IP solutions. In order to contribute to the ongoing success of customers, shareholders and employees, our mission is to focus resources on high value, high quality products and to continuously improve all aspects of our business, providing an industry leading return on investment.

M I S S I O N

Microchip is a values-based company. We operate on an overriding Vision and Mission, and eleven Guiding Values. These values dictate our day-to-day decisions and establish our corporate culture. Our Guiding Values convey our overall philosophy.

Our Guiding Values cover many aspects of corporate responsibility:

▫ Quality comes first ▫ Customers are our focus ▫ Continuous improvement is essential ▫ Employees are our greatest strength ▫ Products and technology are our foundation ▫ Total cycle times are optimized ▫ Safety is never compromised ▫ Profits and growth provide for everything we do ▫ Communication is vital ▫ Suppliers, representatives and distributors are our partners ▫ Professional ethics are practiced

Each has its place in making Microchip a company you can be proud to choose, whether as a supplier, an employee, an investor, or a contributing business partner in your community. Microchip’s Vision, Mission and the expansion of our Guiding Values can be viewed at:www.microchip.com/corporateresponsibility.

G U I D I N G V A L U E S

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C O M P L I A N C E W I T H L A W S

Microchip is headquartered in the United States, but has global operations. As a global company, our operations are subject to numerous laws and regulations. In this regard, Microchip requires its employees, directors, and officers to comply with all mandatory laws applicable to its business operations. We also require our personnel to abide by a code of business conduct and ethics, which defines Microchip’s vision of ethical behavior and embodies compliance with the law. Microchip’s Code of Business Conduct and Ethics and associated policies that include Compliance with Laws, Confidentiality, Conflicts of Interest, Insider Trading and Reporting Legal Non-Compliance are located at www.microchip.com/corporateresponsibility.

Compliance with international laws is a key aspect of conducting the business of Microchip in an ethical manner. Our Code of Business Conduct and Ethics outlines and defines Microchips’ requirement that our staff,

suppliers, and customers comply with international laws that prohibit bribery and similar acts to gain additional business or other favorable treatment. These laws include, but are not limited to: the United States Foreign Corrupt Practices Act (“FCPA”), UK Bribery Act, and the People’s Republic of China’s Criminal Law. Global anti-corruption laws

make it a crime for companies to bribe or provide anything of value to government officials and other individuals in order to obtain new

business, maintain existing business, or receive other benefits.

It is unacceptable for any Microchip executive, director, or employee to act in any manner that is contrary to these laws. Further, we consider our suppliers, representatives, and distributors as critical to achieving our mission. Therefore, we expect our partners to similarly abide by our ethical guiding values, including compliance with global anti-corruption laws. We encourage our partners to not only comply with these laws, but to participate in the enforcement of our policies by reporting suspected violations of these laws by any person to Microchip pursuant to HR-675 Reporting Legal Non-Compliance available at: www.microchip.com/corporateresponsibility. We take our obligation to follow all relevant laws and regulations seriously. In the chart below, we have outlined our compliance record on a number of sustainability-related issues.

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T O P I C 2 0 1 2 2 0 1 3 2 0 1 4

Environment 0 0 1*

Labor & Workplace 0 0 0

Health & Safety 0 0 0

Corporate Governance 0 0 0

Product Stewardship 0 0 0

* In 2014, Microchip purchased the Supertex Fab in San Jose, California. During the acquisition and start-up process, we discovered several issues of noncompliance. During a subsequent December 2014 inspection by Santa Clara County, 17 environmental violations were identified, primarily related to permitting and record-keeping for hazardous waste and wastewater. We worked collaboratively with the County to resolve the violations, all of which were remediated and closed in January 2015.

L E G A L C L A I M S A G A I N S T M I C R O C H I P

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E N V I R O N M E N TA L

R E S P O N S I B I L I T Y

Our commitment to environmental responsibility begins with compliance with laws and regulations

in each of the areas where we operate, regardless of global location. We have dedicated

environmental, health and safety (EHS) team that ensures we meet all local, state, national,

and international requirements. We have an environmental policy in place at all manufacturing

facilities, and we have an environmental management system in place at our Gresham Fab 4. Both

of Microchip’s Thailand facilities operate under a certified ISO14001 Environmental Management

System.

M I C R O C H I P ’ S C O R P O R A T E E N V I R O N M E N T, H E A L T H A N D S A F E T Y ( E H S ) P O L I C Y

I N C L U D E S T H E F O L L O W I N G C O M P O N E N T S :

Microchip is committed to compliance with all relevant environmental laws and regulations

Microchip actively manages its business in an environmentally responsible manner, consistent with its Mission and Guiding Values and the principles set

forth in this policy

Microchip is committed to prevention of pollution through such strategies as minimizing utility usage, minimizing raw material usage and

encouraging recycling

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F A C I L I T Y 2 0 1 2 2 0 1 3 2 0 1 4

United States 106,421 131,446 169,195

Europe 20 29 18

Asia/Pacific 778 1,185 1,213

Total 107,219 132,660 170,426

S C O P E 1 E M I S S I O N S ( M E T R I C T O N S C O 2 E )

C O U N T R Y 2 0 1 2 2 0 1 3 2 0 1 4

United States 129,735 105,107 112,714

Europe 327 1,188 1,599

Asia/Pacific 47,120 63,371 81,590

Total 177,182 169,666 195,903

S C O P E 2 E M I S S I O N S ( M E T R I C T O N S C O 2 E )

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As our company grows and we add production capability and new facilities, our carbon footprint has grown. Nevertheless, we are committed to managing our emissions through cost-effective emissions-reduction activities. Our focus on energy efficiency in our facilities is paying off, and we have a variety of successful programs across our global facilities.

In addition to tackling specific emissions reductions initiatives in our facilities, we also track and report our carbon footprint each year, including participation in the Carbon Disclosure Project (CDP).

In addition to our mandated carbon reporting for two of our semiconductor manufacturing sites, we also voluntarily report emissions from all of our manufacturing, design, and logistics facilities worldwide. This commitment to measuring and reporting our carbon footprint is helping us to be more consistent in identifying emissions-reductions opportunities and to be more transparent in communicating our environmental performance with stakeholders.

E M I S S I O N S A N D C L I M A T E C H A N G E

. . . W E A L S O V O L U N TA R I LY R E P O R T E M I S S I O N S F R O M A L L O F O U R M A N U FA C T U R I N G , D E S I G N , A N D L O G I S T I C S FA C I L I T I E S W O R L D W I D E .

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E N E R G Y U S E

Microchip’s energy use has increased as we have grown and engaged in several large acquisitions that have increased our footprint, number of facilities, and headcount significantly. We recognize the increased

responsibility that comes with the privilege of growth. Accordingly, during that same time period, we have implemented over 10 new projects in Thailand alone and a handful in our already efficient United States locations that have helped reduce our energy use by over two million kWh/year. Moreover, Microchip continues to strive for efficiency and the resulting energy savings. As such, we actively migrate the production of products to our most efficient manufacturing centers wherever possible.

E N E R G Y T Y P E 2 0 1 2 2 0 1 3 2 0 1 4

Electricity 311,061 348,993 406,124

Natural Gas 81,436 60,729 90,845

Liquefied Petroleum Gas 965 961 989

Distillate Fuel Oil 254 297 505

Total 393,716 410,980 498,460

E N E R G Y U S A G E ( M W H )

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R E C E N T E N E R G Y I M P R OV E M E N T S

Microchip/SMSC, Hauppauge, NY

▫ Microchip’s Hauppauge, NY, design facility uses an innovative groundwater extraction and re-injection system to provide low-energy input cooling capacity satisfying a portion of HVAC needs. Energy savings: 345 MWH/yr.

Microchip’s Tempe, AZ, Fab 2

▫ Microchip’s Fab 2 replaced a old, direct drive motor on wet scrubber 7-1 with a high efficiency motor and variable frequency drive. Energy savings: 135,780 KWH/yr.

Fuel quantities shown are reported in alignment with the US EPA GHG Reporting Rule calculation methodology. Additional diesel fuel used for “exempt” applications, such as weekly readiness testing, is excluded.

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W A S T E D I V E R S I O N A N D R E C Y C L I N G

Regardless of where Microchip is located, we make sure that every site has the option to recycle. In 2014 alone, five different Microchip facilities recycled over 3 million pounds of waste. With 18 different recycling options available, we are making sure that we can divert as much waste as possible from our communities’ landfills, wastewater treatment sites, and atmosphere.

Why do we recycle batteries?Most batteries contain corrosives and/or heavy metals; some contain reactive lithium metal. If incinerated or landfilled, the chemicals and heavy metals from these batteries—lead, cadmium and mercury—contaminate our air, land, and water and poison our food chain. Recycling significantly reduces the dangers these batteries pose to our health and the environment by diverting them from landfills and incinerators.

Recycling can also keep the cost of batteries down by reducing the landfill and clean-up costs. Many countries have directives or regulations in place requiring some form of battery recycling. Here at Microchip, we

B A T T E R Y R E C Y C L I N G

abide by these regulations and packaging requirements by separating, preparing, and packaging batteries to prevent short circuits,

dangerous evolution of heat, and damage to terminals, spillage, or environmental issues during transportation or physical harm to those handling them. Instructions have been posted at our battery collection stations to further assist employees in ensuring they have taken all necessary steps. In addition, Microchip continues to remind employees that the reduction of waste and environmental exposure starts

with prevention. We purchase and encourage our staff to use battery testers to minimize the disposal of good batteries and to choose rechargeable batteries. They are encouraged to purchase a battery tester to minimize the disposal of good batteries and to choose rechargeable batteries.

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R E C Y C L E D M A T E R I A L S ( L B S )

2 0 1 2 2 0 1 3 2 0 1 4

Paper and Cardboard 715,085 1,279,636 968,056

Plastics 740,325 732,310 837,589

Metals 190,597 252,635 163,113

Electronic and Universal Waste 47,992 242,308 374,510

Site Specific Recycle 25,024 845,034 601,181

Equivalent Reuse Post Consumer Fiber

66,447 90,200 87,000

Rapidly Renewable Resource

8,825 21,499 10,611

Total 1,794,295 3,463,571 3,042,060

R E C Y C L I N G D ATA

For six weeks out of the year, every building at our Chandler site has the opportunity to house a collection site for “Dump Your Junk” – Microchip’s annual “spring cleaning” event. Dump Your Junk allows employees to clean

out their offices, cubicles, and work areas and recycle many common office items, such as monitors, laptops, software, hardware, office supplies, batteries, precious metals and other e-waste items or chemicals

items that might be harder to recycle than your traditional paper and plastic. By clearing out our workspace, not only do we have the opportunity to recycle common workplace materials, but it also helps keep our work environment uncluttered and safe! We are proud of the results of our efforts that have been reflected by a steady increase in our company’s recycling efforts.

D U M P Y O U R J U N K I N I T I A T I V E

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D U M P YO U R J U N K A L L OW S E M P L OY E E S T O C L E A N O U T T H E I R O F F I C E S , C U B I C L E S , A N D W O R K A R E A S A N D R E C Y C L E M A N Y C O M M O N O F F I C E I T E M S . . .

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W A T E R U S E

As an instrumental requirement for semiconductor manufacturing, water usage has been on the rise at various Microchip facilities that corresponds with our increased production. Microchip has been taking notice and seeking to apply innovative measures to reduce our use. We are committed to continuing to find ways to curb our total water usage and to decrease our effluent wastewater.

F A C I L I T Y 2 0 1 2 2 0 1 3 2 0 1 4

Chandler 20,510,000 25,044,000 22,109,000

Gresham 322,530,597 289,038,908 318,192,365

Tempe 292,305,500 279,475,500 296,299,800

MTHAI 142,583,959 143,884,743 154,485,174

MMT 69,166,055 57,577,355 64,623,880

Total 826,586,111 769,976,506 833,601,219

P R O D U C T I O N FA C I L I T I E S ’ WAT E R U S E ( G a l l o n s )

F A C I L I T Y 2 0 1 2 2 0 1 3 2 0 1 4

Chandler 5,070,843 5,486,176 5,171,787

Gresham 247,206,441 239,143,774 262,006,769

Tempe 220,961,472 209,502,361 171,386,221

MTHAI 77,075,630 78,585,109 86,820,409

MMT 40,134,867 37,830,494 41,517,808

Total 585,378,410 565,061,738 561,731,207

PRODUCT ION FAC I L I T I ES ’ EFFLUENT WASTE (Ga l l ons )

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A point of pride for Microchip is the Gresham Site Services Reverse Osmosis and De-Ionization (RODI) Team received a Gold Award from the City of Gresham for 11 consecutive years of operating their acid waste neutralization (AWN) system with 100% Pretreatment Compliance. The facility has received no AWN compliance violations for the last 11 years.

In fall 2014, a new initiative to improve indoor office health was introduced in the Chennai, India Development center: “A Plant at Your Desk”. The motivation to launch this program came from studies that have concluded that plants can

enhance employee productivity, prevent fatigue during attention-demanding work, and reduce ambient noise within an office.

Each employee was offered a plant along with a plant holder, and if any person chose to take a plant, they were expected to take part in minimal plant

maintenance (like watering and exposing the plan to sunlight). With over 50% of Chennai employees taking part in the initiative, they were taking part in making

their workplace a healthier place!

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3 R s A W A R D( R e d u c e , R e u s e & R e c y c l e )

2013Depar tment of Industr ia l Works

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In 2012, MTHAI Ozone Club organized an activity that

allowed Microchip employees and their family members

to plant mangroves in Klong Klone village in the

Samutsongkram province. This initiative, which helped

aid restoration of the mangrove forest in the region,

was filled with activities and events such as planting,

sightseeing, and observing local mangrove animals. The

impact of this trip was paramount, as it helped to maintain

forest resources, protect native trees, and strengthen the

ecological system.

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I N I T I AT I V E S

Microchip is a US company with operations around the world, and it is our goal to provide

strong benefits, wellness programs, safe workplaces, and equal opportunity no matter

where our employees are based.

2 0 1 2 2 0 1 3 2 0 1 4

North America 2,346 2,691 3,006

Europe 350 509 542

Asia/Pacific 4,329 5,260 5,846

E M P L OY E E S B Y L O C AT I O N

An important tool in our commitment to ethical business practices is our Open Door Policy. This policy allows Microchip employees to raise any work related issues – such as job, wages, performance reviews, and more – at the level they think is the most appropriate for quick and fair resolution. This policy applies from the top down, with everyone from our C-Suite Executives to our Junior Management required to be accessible, and available anytime they are not in a meeting. We believe communication is vital, and we encourage open, honest, constructive, and ongoing dialogue to resolve issues whenever possible.

To ensure the right of each employee to equal employment opportunities, our EEO policy prohibits discrimination based on the basis of sex and makes provision for employees to work in an environment free of intimidation or harassment. We also have a separate sexual harassment policy that explicitly outlines appropriate behavior in the office and grievance procedures if problems arise.

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Microchip is a United States headquartered company with global operations. These operations include primary manufacturing located in the United States, assembly and test operations in Thailand, and engineering design centers and sales offices located around the world. Microchip complies with all legal requirements related to labor, including prohibitions on forced or compulsory labor, child labor, and discrimination. Additionally, with very few exceptions for internship-type programs in the United States which are allowed by law, Microchip requires all employees to be 18 years of age or older.

While none of Microchip’s employees are unionized, we do acknowledge the right to collective bargaining where allowed by law. We have strong employee programs to support workers and their families, including robust benefits plan and career development opportunities.

We want to make sure we give back to our employees in many ways, and one such way is by providing extensive benefits, such as:

▫ Family and Medical Leave of Absence ▫ Paid vacation and holidays ▫ Tuition Reimbursement ▫ 401(k) Retirement Savings Plan ▫ Health benefits, such as medical and dental coverage ▫ Bridging of Service, for those Microchip employees that are rehired

▫ Long term disability ▫ Employee stock grants

The Microchip Learning Center perpetuates Microchip’s strategic and competitive culture in alignment with the Guiding Values. In order to support our internal customers’ continuous improvement, we design, deliver, and coordinate programs using a variety of systems, methods, and tools to meet performance development needs. We believe continuous education and training are critical to maintaining Microchip’s competitive edge.

Microchip invests in our employees future, by ensuring access to our training is available in native languages and during times that

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accommodate our global presence and workforce and offering employees the opportunity to pursue relevant higher education.

Learning and Development at Microchip is a joint effort between employees, managers and the Global Organizational Learning and Development department. In addition to the 33 full time and 16 part-time

training professionals around the world, in 2014, 442 managers and employees got involved in delivering practical leadership and technical training to their peers.

Microchip’s courses cover a range of training topics: orientation to the company, team skills, communication skills, leadership skills, technical knowledge of Microchip products applications, sales process training, computer skills, and operational manufacturing skills.

We are proud to have been recognized many times for our successes and accomplishment related to our employee training programs.

I N A D D I T I O N T O T H E 3 3 F U L L T I M E A N D 1 6 PA R T - T I M E T R A I N I N G P R O F E S S I O N A L S A R O U N D T H E W O R L D , I N 2 0 1 4 , 4 4 2 M A N A G E R S A N D E M P L OY E E S G O T I N V O LV E D I N D E L I V E R I N G P R A C T I C A L L E A D E R S H I P A N D T E C H N I C A L T R A I N I N G T O T H E I R P E E R S .

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In 2013 and 2014, our San Jose, CA area facilities were honored with the “Top Workplaces

Program” award from the Bay Area News. This program looks at surveys filled out by

employees and then ranks companies based off the survey results.

In 2012 and 2013, Microchip received the “Training Top 125” award from Training

Magazine, which recognizes companies with robust workforce training and development

programs.

Each year, the City of Gresham looks to recognize individuals and business for the

advancement of the local economy. In 2013 and 2014, Microchip was awarded their

Gresham Resource Efficiency Assistance to (Great) Businesses program award. Microchip

was recognized for its commitment to workforce training using Mt. Hood Community

College in addition to our nationally recognized internal training and employee development

programs, partnering with our local community college and employment department for

screening and hiring, investing in new equipment and facility upgrades, and supporting

community outreach programs such as FIRST Robotics.

This award, given out by Thailand’s Labor Department, recognizes factories that urge all

employees to be aware of illegal drugs or any substance abuse problem, mutually campaign

for the continuous prevention of the spreading of illegal drugs to the workplace and

encourage all employees to effectively spend their free time to enhance the quality of their

lives and that of their families.

Microchip Technology (Thailand) is one of 551 companies from a total of more than

200,000 companies to receive the “Thailand National Safety Award 2014” from the Prime

Minister. MTHAI received this award from 2010 to 2014.

The award is presented by the Ministry of Labor to outstanding companies in Occupational

Health and Safety, Management system. Every company must pass the “Best practice”

regulation from the Thailand Labor Department. The regulation supports a safe and happy

workplace for every employee in Thailand. Receiving this award means that we are the best

among the best in terms of safety, health and environment. Together, everyone at MTHAI

made a major contribution to our success. Some example activities are as follows:

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▫ Employee Safety Self-inspection: an activity where everyone checks their own safety in the workplace before starting to work

▫ Supervisor communication center: an activity where supervisors and managers transfer safety information from our intranet database to employees on the manufacturing production line

▫ Safety Committee’s regular inspection

In 2014, Microchip won the Alfred P. Sloan Awards for Excellence in Workplace

Effectiveness and Flexibility for eight straight years. The award distinguishes Microchip as

one of the top practitioners of workplace flexibility in the United States, which have created

exemplary workplace environments that support employees’ need for flexibility. The award

is part of the When Work Works flexible-workplace initiative, a partnership between the

Society for Human Resource Management (SHRM) and the Families and Work Institute

(FWI).

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▫ WE Award for Outstanding Employee Labor and Welfare - Thailand Ministry of Labor ▫ Thailand Work Place Learning Award - Thailand of Skill Dev. Of Labor Incorporation ▫ National Safety Award – Thailand Ministry of Labor ▫ Clean Food Good Taste Award – Thailand Ministry of Public Health

▫ ER Award for Outstanding Employee Labor and Welfare – Thailand Ministry of Labor ▫ National Safety Award – Thailand Ministry of Labor ▫ Model Company in Happy Workplace – The Federation Of Thai Industries Chachoengsao (MTHAI & MMT)

▫ Zero Accident Award – Thailand Ministry of Labor ▫ Clean Food Good Taste Award – Thailand Ministry of Labor

▫ ER Award for Outstanding Employee Labor and Welfare – Thailand Ministry of Labor ▫ National Safety Award – Thailand Ministry of Labor ▫ Clean Food Good Taste Award – Thailand Ministry of Labor

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One popular program that Microchip offers is its trip reduction programs for Chandler, Tempe, and Gresham facilities, which give employees incentives to use a carpool, take a bus, bike, or walk to work.

T R I P R E D U C T I O N P R O G R A M I N C H A N D L E R A N D T E M P EAt Microchip’s Arizona locations, we offer a variety incentives and initiatives to help reduce our single occupancy vehicle rate. If an employee chooses to ride the bus, we provide a 100% bus subsidy, with Smart Cards for bus and light rail. If someone chooses to bike or walk to work, they can participate in the free lunch program, attend the bike and walk event that is held every spring, and have access to secure bike racks and lockers. Finally, carpool and alternative fuel vehicles have access to premium

parking spots that are especially prized during the warm summer months in the Valley of the Sun.

No matter what method of transportation a Microchip employee uses through the Trip Reduction Program, you will be guaranteed a

ride home for emergencies, access to shower facilities, trip reduction SharePoint site, and incentives and events such as catered meals, gift

cards, and prizes.

We have over 60 people participating in the bus program, with another 200 people who carpool at both the Chandler and Tempe sites.

T R I P R E D U C T I O N P R O G R A M I N G R E S H A MJust like the Trip Reduction Program in Tempe and Chandler, our Gresham Trip Reduction Program offers many incentives to our employees in order to reduce our single occupancy vehicle rate. At our Oregon facility, we offer annual Tri Met passes for under $70/year, the option to participate in telecommuting or flextime, secure bike lockers and shower facilities, a guaranteed ride home for personal emergencies, reserved parking for carpools, hybrid vehicles, and motorcycles, and more.

Since 2003, our single occupancy vehicle rate has decreased by 26% at our Gresham location.

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Chandler 84% 96% 96%

Tempe 87% 79% 79%

Gresham 64% 64% 64%

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Workplace health and safety is very important to Microchip, and we are committed to providing a safe and healthy place to work. Microchip provides and maintains safe and healthy working conditions and follows operating procedures that safeguards employees, contractors, vendors, and the communities in which we work. We provide health and safety programs that are consistent with the highest standards of professional practice. Being OHSAS 18001 Certified, Microchip Technology (Thailand) has met international standards for having knowledge and control over occupational health and safety risks.

2 0 1 2 2 0 1 3 2 0 1 4

Chandler 2 0 2

Tempe 7 3 7

Gresham 4 2 3

MTHAI 2 3 4

MMT 3 0 0

L O S T T I M E I N C I D E N T S

2 0 1 2 2 0 1 3 2 0 1 4

Chandler 0.22 0.00 0.09

Tempe 1.37 0.60 1.22

Gresham 1.19 0.52 0.68

MTHAI 0.06 0.08 0.11

MMT 0.55 0.00 0.00

OSHA Industry Injury Rate 1.30 1.30 1.30

I N J U R Y R AT E ( C A S E S ) P E R 1 0 0 E M P L OY E E S

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A H A P P Y W O R K P L A C E

E U R E S T C A F E T E R I A

Microchip is proud to work with Eurest to bring sustainable, healthy options to our Tempe and Chandler cafeterias. Through Eurest, Microchip’s cafeterias will

follow the CORE4 Sustainability Platform for our food options:

1. Buy Local2. Advocate for Sustainable Oceans3. Certified Humane/Cage Free Eggs4. Poultry produced without the

routine use of human antibiotics5. rBGH Free Yogurt and Milk6. Waste Reduction

7. Packaging from plant based renewable resources

8. Social and ecological certified coffee

9. Customer Nutrition, Health & Wellness

10. Compass Associate Nutrition, Health & Wellness

Microchip Technology (Thailand) operations uses a program called Happy 8, where our employees can focus on bettering their overall happiness by focusing on the following concepts:

▫ Happy Body ▫ Happy Heart ▫ Happy Society ▫ Happy Relax

To ensure the overall happiness of our employees, MTHAI takes part in a number of activities throughout the year. Some of these activities and events include:

▫ Annual company New Year’s Party ▫ Songkran Day – a traditional Thai New Year Day when people will celebrate new beginning

▫ Buddhist Lent Day – a national Thai holiday where employees present collected money and candles for monks to use

▫ Mother’s Day Activities ▫ Table Tennis Competition ▫ Christmas Day Activities ▫ New Year’s Merit Making – an opportunity for employees to offer food to the monks to help create good spiritual blessings for the upcoming year

▫ Happy Brain ▫ Happy Soul ▫ Happy Money ▫ Happy Family

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From 2012-2014, we have had five customers audit our Thai facilities, and the overall findings were excellent. In 2014, a Workplace Conditions Assessment was completed as well. With an overall facility score of 95%, Microchip is leading the way both in Thailand, where the national average facility score is 79%, and globally as well (global average being 78%). Our MTHAI facility achieved a perfect score in four out of the six assessment areas: labor, health & safety, environment, and business practices. Overall, auditors were impressed, noting that our record keeping system is among “the top percentile of the population”.

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For the past three years, Microchip Thailand’s Academic Program has been

providing universities throughout Thailand with academic support through our development tools. Working with MTHAI’s HR department and the Development Tools team, Microchip is allowing university students to gain experience with our products to help enhance their academic advancement.

One of the first universities in Thailand to add Microchip products to their curriculum, Khonkaen University, were greatly appreciative of Microchip development tools and soon added our products to labs and learning centers throughout the university. There has been a notable shift in preference for our product, with many students now choosing to use Microchip products for their own projects once they had to opportunity to work with our development tools in class.

As more of the university students graduate, we hope that they will join our Microchip team or bring our products to other companies in Thailand.

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T E A M B U I L D I N G ATT H E R O M A N I A D E S I G N C E N T E R

When the Romania Design Center relocated to a brand new facility in October 2012, the following year saw huge growth for the team, and that’s why in September 2013 the design center knew the entire team would benefit from a day of team building. Working with a large influx of new people means dealing with new situations, and an informal setting, like a day of team building, can allow for employees to strengthen working relationships. The day was spent completing exercises that allowed team members to come up with mechanisms that would allow everyone to get to know each other through effective teamwork and communications.

FA R E A S T N E W L E A D E R P R O G R A M

Microchip believes that our

employees are our greatest strength, and we are 100% committed to developing the talents of our staff. Outstanding leadership is a critical element to the success of any company, and in order to make sure that our supervisors and managers have the best leadership skills possible, we developed the Far East New Leader Program. This program is designed to support and increase the knowledge and competencies of new supervisors and managers at Microchip through quarterly classroom training, online learning, self-study, development plans, self-assessment tools, as well as coaching activities.

2 N D A N N U A L M T H A IM I N I M A S T E R O F B U S I N E S S

Microchip believes that our The

second annual MTHAI Mini Master of Business Administration, a cooperative effort between Microchip Technology (Thailand) and Mahidol University, was held from September 2012 through March 2013. This program allowed 45 senior and management participants from MTHAI and MMT to gain new knowledge and leadership capabilities through three course objectives: self-management, functional integration, and corporate strategy.

The classes were held after working hours, with 3-hour sessions twice a week. The 108 hour program required participants to study 14 different subjects, covering a wide range of topics, such as problem solving and decision making, project management and execution, and strategic change and management. At the end of the program, all attendees had to present a final summary presentation to top management.

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Microchip supports regulatory and industry-driven effor ts to ensure our global staff

and suppliers are treated ethically. Microchip’s Code of Business Conduct and Ethics

requires compliance to laws and ethical behavior by its employees, agents, contractors

and consultants. The Code includes reporting procedures and accountability provisions

that may include immediate termination of employment or business relationships at

Microchip’s discretion.

Microchip Technology shares the global concern regarding the human tragedies occurring in the Democratic Republic of the Congo and the adjoining countries associated, in part, with the mining of columbite-tantalite (tantalum), cassiterite (tin), wolframite (tungsten), and gold (3TG).

These minerals originate from various continents, but armed groups engaged in, or interfering with mining operations within the Democratic Republic of the Congo and the adjoining countries (the Dodd-Frank “Covered Countries”) are subjecting people to human rights violations and using proceeds from the sale of these Conflict Minerals to finance and sustain regional conflicts.

Microchip supports responsible materials sourcing. We recognize the need to develop programs that allow for improved transparency in the 3TG supply chains. Our goal is to provide reasonable assurance that all integrated circuits manufactured by Microchip are DRC conflict free. In

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Microchip’s Code of Business Conduct and Ethics includes the following components:

▫ Compliance with applicable governmental laws, rules, and regulations

▫ Reporting suspected non-compliance ▫ Disciplinary actions

Read the entire Code of Business Conduct and Ethics here: www.microchip.com/pagehandler/en-us/sustainability/corporate/ethics.html

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calendar year 2014, with due diligence extending through March 4, 2015, we made substantial progress toward that goal. We successfully removed smelters from our integrated circuits supply chain that were uncooperative with the CFSI Conflict Free Smelter Program. Where mineral sourcing risks were identified, they were presented to our executive management for discussion and, as appropriate, action.

Microchip is diligently working toward the goal of assuring our products are manufactured and sourced from socially responsible supply chains. In pursuit of that goal Microchip is doing the following:

▫ Participating with the Electronic Industry Citizenship Coalition (“EICC”) and Global e-Sustainability Initiative’s (“GeSI”) Conflict Free Sourcing Initiative (CFSI) that is facilitating certification programs for smelters and refiners.

▫ Conducting Reasonable Country of Origin Inquiries (due diligence) and performing smelter sourcing due diligence as required by the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Microchip uses the EICC/GeSI Conflict Minerals Due Diligence Request Template for this purpose.

▫ Providing information to customers and suppliers and expecting each to source materials from environmentally and socially responsible supply chains.

▫ Publicly disclosing our policy and implementation progress at http://www.microchip.com/pagehandler/en-us/aboutus/conflictminerals.html.

▫ Encouraging smelters not yet certified or actively working to certification to work with the CFSI to become certified as DRC Conflict Free.

▫ Ultimately expecting to provide reasonable assurance our products are DRC conflict free.

Microchip submitted its first Form SD and Conflict Minerals Report required by Dodd-Frank in June 2014.

Our Form SD and CMR was reviewed by an interdependent study and ranked the 7th Best CM Filing by Tulane University’s Dodd-Frank Section 1502 - RY2014 Filing Evaluation Report.

Microchip’s current Conflict Minerals Reporting Template (CMRT) for integrated circuits and other conflict minerals programs documents are available on Microchip’s website, at http://www.microchip.com/conflictminerals.

It is important for us as a company to make sure there is no used of use of child labor in our supply chain. In order to do so, we have policies prohibiting the use of convict labor, forced labor, indentured labor, and child labor.

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At Microchip, we are passionate about making a positive difference in the world

and in people’s lives by providing products and technologies that are used in a wide

variety of applications. Every year we make significant investments in developing or

strategically acquiring new technologies and products which enable our customers the

freedom to innovate for today and tomorrow. Over 80,000 customers and partners use

Microchip’s products in innovative embedded designs such as reducing energy or battery

consumption, expanding options for home medical care or ensuring the safety and

security of a building, car or home.

Microchip believes in designing the safest and most reliable products possible by adhering to the legal requirements that are driving companies toward increased substance transparency. To that affect, Microchip has developed a rigorous materials compliance specification and internally developed Hazardous Substance Process Management (HSPM) system to ensure we remain in compliance with international product stewardship laws. Microchip’s innovation provides a robust assessment of our suppliers’ compliance information against our bi-annually reviewed global regulatory survey.

These efforts have resulted in a compliance program that has mitigated and/or eliminated the use of dangerous and hazardous materials that could potentially cause harm or health concerns to customers and waste stream workers in developing nations whom often come into contact with electronic waste. Our success has been evidenced by the absence of any regulatory violations associated with global restriction of hazardous substance (RoHS); global harmonized system implementations (for example EU REACH); and the Consumer Product Safety Commission Reform Act.

Microchip is also proud to be able to declare our products meet the requirements for low halogen, low antimony, and perfluoroactanoic acid (PFOA) free labeling requirements.

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Microchip specializes in high-efficiency semiconductor microcontrollers, analog, wireless, and human interface products. These products are vital to making our customers’ design and manufacture environmentally-preferable products possible. For example, our products are used in “smart home” energy monitoring, LED lighting applications, and low-power home appliances (which allow appliances to cycle into sleep modes to save energy). We see the continued development of high-efficiency products

to be central to the future of both our company and the global economy.

Microchip innovates with sustainability and energy efficiency in mind.

Our focus on research and development provides customers with an outstanding portfolio

of environmentally preferable options and makes us a supplier of choice for environmentally conscious customers. These efforts combined with our commitment to the utmost quality have earned Microchip numerous accolades including early green partner certifications from

▫ Sony Green Partner Program – Sony awards this certification for suppliers that help produce environmentally sensitive products

▫ Samsung Eco-Partner Program –Samsung gives its suppliers this certification to companies that make an effort to develop environmentally-friendly products

▫ Canon Green Activity Program – suppliers that adhere to Canon’s “Green Procurement Standards” are awarded this certificate

However, producing environmentally-preferable products is not a static exercise. It takes continuous innovation, which is why we are proud to share some of our emerging product lines capabilities and our vision regarding how they will continue our efforts toward developing environmentally preferred Integrated Circuits.

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O U R F O C U S O N R E S E A R C H A N D D E V E L O P M E N T P R OV I D E S C U S T O M E R S W I T H A N O U T S TA N D I N G P O R T F O L I O O F E N V I R O N M E N TA L LY P R E F E R A B L E O P T I O N S A N D M A K E S U S A S U P P L I E R O F C H O I C E F O R E N V I R O N M E N TA L LY C O N S C I O U S C U S T O M E R S .

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Each year, millions of Americans have to change and replace the batteries in their smoke detectors. According to the National Fire Protection Association, there are roughly 120 million households in America containing an average of 3 smoke detectors in each home. With a typical battery change of once a year for smoke detectors, over 350 million smoke detectors will need to have their batteries disposed. Often, batteries are not properly disposed of to begin with, so by the end of the decade, over a billion batteries could be sitting in a landfill.

Through Microchip’s low power technology ICs, the RE46C190 makes it possible to run a

R E D U C I N G B A T T E R Y W A S T E F R O M S M O K E D E T E C T O R S

smoke detector for 10 years on a single battery. By having a single smoke detector battery in use for 10 years, it could save tens of millions of batteries from entering our landfills, while increasing the reliability of these life saving

devices. The reduction of battery use itself would save over 138 metric tons of greenhouse gas emissions, which is equivalent to:

▫ 49.4 tons of waste diverted from the landfill

▫ 29 passenger cars off the road ▫ Power 19 homes’ electricity for one year

▫ 15,518 gallons of gasoline not consumed

▫ Carbon sequestered by 113 acres of US forest in a year

Power measurement is most commonly thought of as an electric utility meter or industrial power meter application, but companies in a broad range of industries are increasingly realizing the value of adding power monitoring options into their industrial, infrastructure and consumer products. Real-time power monitoring can be used within a system to improve robustness by adjusting performance over varying power conditions and/or monitoring system efficiency and sending an alert if it deteriorates below a certain level. Power monitoring also allows these products to display power usage to the consumer as a tool for reducing energy and their utility bills.

U S I N G R E A L - T I M E P O W E R M E A S U R E M E N T T O I M P R O V E E F F I C I E N C Y

Microchip’s MCP39F5xx PM one-chip solution and technical support simplifies the implementation within systems for customers with little or no experience with metrology.

Microchip is helping expand power monitoring from just metering to a wide range of applications including:

▫ Commercial lighting, street lighting, and other connected lighting applications

▫ Home monitoring for smart plugs, appliances, HVAC and parts of the Internet of Things environment

▫ Power supplies for servers, networking, and storage

▫ Industrial machinery and power meters

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Electronic devices, such as wearables, sensors and portable medical are controlled by microcontrollers, and these microcontrollers control the overall system power of the device, but they can also be one of the largest consumers of power within the system. In order to understand how much power is being consumed within the microcontrollers, the consumption can be broken down into two categories: how much power is being used when the microcontroller is doing its task at hand (run) or when the system is not running the task, but still has voltage applied to it (sleep).

E X T E N D I N G L I F E S P A N B Y U S I N G E X T R A L O W P O W E R

These applications along with many of today’s connected applications must consume minimum power and may be required to

run off a single battery for up to 15–20 years. Using low power XLP technology, Microchip has been able to reduce the run current by 62% from early generations of products and Microchip’s products have the industry leading, lowest sleep current. With these advancements in microcontroller technology, Microchip’s

XLP technology extends battery life and reduces the number of batteries disposed each year.

At Microchip, we recognize the importance of energy efficiency in motor control applications because these systems may run for extended periods of time and often consume large amounts of energy. Electric motors account for more than half of the energy used. With Microchip’s dsPIC® family of microcontrollers, which serves motor control application, we are able to:

I M P R O V I N G E F F I C I E N C Y W I T H B E T T E R M O T O R C O N T R O L

▫ Reduce power consumed by 80% and increase performance speed by 75%

▫ Implement motor control and sensor-less field oriented control to increase overall system efficiency by 35%

▫ Implement fully digitally controlled power supplies to increase efficiencies by 94%, which meets the Energy Star CSCI Platinum Level

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I N V O LV E M E N T

Microchip is an active par ticipant in local communities all around the globe – from

Arizona to Thailand. We give back by supporting and donating to schools, clubs, and

charities. Over the past three years, our community support focused on two key areas:

STEM education and support for international health and aid relief.

As Microchip has grown to a company with revenue of almost $2 billion, we acknowledge that we have a greater responsibility to influence and impact the education of the next generation of engineers to create a stronger, better educated workforce through engagement with Science, Technology, Engineering and Math (STEM).

One of the ways we bring STEM outreach to the local community is through FIRST and VEX robotics competitions. Throughout the past few years, we host FIRST Robotics Competitions (FRC) and VEX teams at

Microchip MASTERS for an evening robotics event. Employees are always willing to donate their time as a volunteer for both events, and we also offer space in the Tempe facility for the FRC Community Team to build

their robot every year.

As a founding sponsor for FIRST in Arizona, we are involved in many ways. Our CEO, Steve Sanghi is a FIRST board member, as well as a

co-chair in the Arizona FIRST Volunteer Planning Committee, along with Carol Popovich. Microchip has donated money to numerous FRC Arizona

evens, as well as offering scholarships to two Arizona FRC students. Microchip has donated funds to the Robotics Engineering Competitions (REC) Foundation to start 20 VEX teams in Arizona for the third year in a row, and we are also offered a $20,000 matching funds grant in Arizona to the REC Foundation as well.

In fact, Steve Sanghi and Carol Popovich are so involved in local STEM outreach, they were listed in the movie credits (Special Thanks) for the movie, “Spare Parts”, which is based on the true story of 4 students from Carl Hayden High School in Phoenix that beat MIT in an underwater robot competition.

S T E M O U T R E A C H

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Since 2007, Project C.U.R.E has been utilizing approximately 46,000 square feet of space donated by Microchip to store and ship medical supplies and equipment.

Project C.U.R.E. is the world’s largest distributor of donated medical supplies and equipment. Since 1987, they have shipped life-giving

supplies to over 132 nations worldwide. Project C.U.R.E accomplishes this by taking excess unused items from local medical facilities and shipping them to under-stocked hospitals in developing countries.

Microchip has found the perfect way to support a local organization that provides medical supplies and equipment to those in need

around the world, and at the same time re-purpose warehouse space not currently used in Tempe, AZ.

Project C.U.R.E. responded to the Ebola crisis in 2014 by providing 16 Ebola response containers and infection

prevention kits, valued at over $5 million, to hospitals in Sierra Leone, Liberia, and Guinea. Microchip provided the space and

removed what would typically have been a large expense on their balance sheet, and Project C.U.R.E. leverages that assistance to respond to the medical needs of many developing countries.

P R O J E C T C . U . R . E .

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Number of Shipments 135 22 24

Total Value of Shipments

$53 million

$10.7 million

$10.7 million

P R O J E C T C . U . R . E . ( P H O E N I X C E N T E R ) M E D I C A L S U P P L I E S S H I P M E N T S

Microchip is dedicated to giving back to the community, and one of the ways we have given back to the Phoenix area is by donating our

time and money to the Valley of the Sun United Way (VSUW). This local United Way chapter is helping to ensure the education of children,

putting forth resources to end hunger and homelessness, and increase the financial stability of families and individuals in the area. Microchip

helps take part in these initiatives by participating in VSUW training events annually, donating on average $250,000 each year, and creating educational opportunities of employees so they can also make a difference in the community.

V A L L E Y O F T H E S U N U N I T E D W A Y

Reinforcing that “Employees Are Our Greatest Strength”, Microchip Thailand’s “Back to School” scholarships not only include our employees, but also their children as members of our large family. The program provides scholarships to employees at the beginning of a new academic semester. As parents have to spend a lot of money for their children’s education—including tutorial fees, uniforms, stationery and lunches—

these scholarships can help ease the burden of providing all of these academic requirements.

In every year since 2012, we have awarded between 70 and 80 scholarships each year to the children of employees.

M I C R O C H I P T E C H N O L O G Y ( T H A I L A N D ) “ B A C K T O S C H O O L ” S C H O L A R S H I P P R O G R A M

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C O M M U N I T Y

P A R T N E R S H I P A W A R D

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Every year, Mt. Hood Community College (MHCC) awards local community

organizations that has worked closely with the college over the

years with the Community Partnership Award, and in 2013, MHCC awarded

Microchip’s Gresham facility with the award. Ever since Microchip first

purchased the Gresham facility we have worked closely with the

college, with MHCC providing customized training to our employees and

explore grant funding opportunities to provide technical training at a

reduced cost. Microchip supports the college by helping MHCC students

learn about the semiconductor industry through offering tours and

internship opportunities to students.

T H A I L A N D

C O M M U N I T Y A N D

C O R P O R A T E S O C I A L

R E S P O N S I B I L I T Y

A W A R D S

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▫ Outstanding Woman of The Year Award awarded to Mrs. Wanphen L., Sr. Director of HR Department – Ministry of Labor

▫ CSR–DIW AWARD Corporate Social Responsibility – Thailand Department of Industrial Works

▫ CSR–DIW AWARD for Corporate Social Responsibility – Thailand Department Of Industrial Works

▫ The Standard on Prevention and Solution to Drug Problems in an Establishment Thailand Ministry of Labor (MTHAI & MMT)

▫ Outstanding White Factory of Chachoengsao Province – Thailand Office of The Narcotics Control Board

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Ethical business conduct is critical to our business. In addition to compliance to

applicable laws and our Code of Business Conduct and Ethics and associated policies,

Microchip became a par ticipant in the UN Global Compact. The United Nations developed

a global compact that includes ten principles in the areas of human rights, labor, the

environmental and anti-corruption. Microchip supports the UN Global Compact’s core

principles as stated in our commitment letter. Learn more at

https://www.unglobalcompact.org/

I S S U E P R I N C I P A L P A G E

Human Rights 1: Businesses should support and respect the protection of internationally proclaimed human rights

14, 27, 36-37

2: Make sure that they are not complicit in human rights abuses 14, 36-37

Labor 3: Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining

27

4: The elimination of all forms of forced and compulsory labor 27

5: The effective abolition of child labor 27

6: The elimination of discrimination in respect of employment and occupation

25

Environment 7: Business should support a precautionary approach to environmental challenges

16

8: Undertake initiatives to promote greater environmental responsibility

17-24

9: Encourage the development and diffusion of environmentally friendly technologies

15, 19, 26, 39-42

Anti-Corruption 10: Businesses should work against corruption in all its forms, including extortion and bribery

13-14

S U M M A R Y O F R E P O R T I N G T O U N G L O B A L C O M PA C T P R I N C I P L E S

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G R I C O N T E N T I N D E X

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C O N T E N T P A G E

STRATEGY AND ANALYSIS

G4-1 Letter from the CEO 4-5

ORGANIZATIONAL PROFILE

G4-3 Name of the organization 6

G4-4 Primary brands, products, and services 6

G4-5 Location of the organization’s headquarters 6

G4-6 Countries of operation 6

G4-7 Ownership and legal form 9

G4-8 Markets served 6

G4-9 Scale of the operations 6

G4-11 Collective bargaining 27

G4-15 Sustainability charters and principles 9

G4-16 Memberships and associations 9

STAKEHOLDER ENGAGEMENT

G4-24 Stakeholder groups 10-11

G4-26 Approach to stakeholder engagement 10-11

G4-27 Key topics and concerns 10-11

REPORT PROFILE

G4-28 Reporting period 3

G4-30 Reporting cycle 3

G4-31 Point of contact 3

G4-32 Level of GRI alignment 3

G4-33 External assurance 3

GOVERNANCE

G4-34 Governing bodies 7-8

G4-38 Board of directors 7

G4-39 Board leadership independence 7-8

G4-40 Board selection process 7

ETHICS AND INTEGRITY

G4-56 Code of ethics 36

G4-58 Mechanisms for reporting concerns 36

ENERGY

G4-DMA Approach to energy 18

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G4-EN3 Energy consumption 18

G4-EN6 Reduction of energy consumption 18

G4-EN7 Reductions in energy requirements of products and services 42

WATER

G4-DMA Approach to water 22

G4-EN8 Water withdrawals 22

EMISSIONS

G4-DMA Approach to emissions 17

G4-EN15 Scope 1 emissions 17

G4-EN16 Scope 2 emissions 17

EFFLUENTS AND WASTE

G4-DMA Approach to effluents and waste 20-22

G4-EN22 Water discharge 22

G4-EN23 Waste disposal 20-21

PRODUCTS AND SERVICES

G4-DMA Approach to products and services 38-42

G4-EN27 Environmental improvements to products 15, 19, 26, 39-42

COMPLIANCE

G4-DMA Approach to compliance 14

G4-EN29 Significant fines and sanctions 14

EMPLOYMENT

G4-DMA Approach to employment 25

G4-LA1 Employee demographics 25

G4-LA2 Benefits 27

OCCUPATIONAL HEALTH AND SAFETY

G4-DMA Approach to health and safety 32

G4-LA6 Injury and illness rates 32

TRAINING AND EDUCATION

G4-DMA Approach to training and education 27-28

G4-LA10 Training and skills development programs 27-28

DIVERSITY AND EQUAL OPPORTUNITY

G4-DMA Approach to diversity 25

LABOR PRACTICES GRIEVANCE MECHANISMS

G4-DMA Approach to labor grievances 25

FREEDOM OF ASSOCIATION AND COLLECTIVE BARGAINING

G4-DMA Approach to freedom of association 27

CHILD LABOR

G4-DMA Approach to child labor 27

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C O N T E N T P A G E

G4-HR5 Operations and suppliers at risk of child labor 27, 34

FORCED OR COMPULSORY LABOR

G4-DMA Approach to forced labor 27

G4-HR6 Operations and suppliers at risk of forced labor 27, 34

SUPPLIER HUMAN RIGHTS ASSESSMENT

G4-DMA Approach to supplier human rights 36-37

G4-HR11 Human rights impact in the supply chain 36-38

LOCAL COMMUNITIES

G4-DMA Approach to local communities 43

G4-SO1 Operations with community engagement programs 43-46

ANTI-CORRUPTION

G4-DMA Approach to anti-corruption 13

G4-SO5 Incidents of corruption 14

ASPECT: ANTI-COMPETITIVE BEHAVIOR

G4-DMA Approach to anti-competitive behavior 13

G4-SO7 Legal actions and sanctions 14

COMPLIANCE

G4-DMA Approach to compliance 13

G4-SO8 Fines and sanctions related to corruption 14

G4-PR9 Fines related to products and services 14