MICROCHIP TECHNOLOGY INCORPORATED 2004 EQUITY INCENTIVE PLAN

1.   Purposes of the Plan .  The purposes of this 2004 Equity Incentive Plan are:

2.   Definitions .  As used herein, the following definitions shall apply:

(a)   “ Administrator ” means the Board or any of its Committees as shall be administering the Plan, in accordance with Section 4 of the Plan.

(b)   “ Applicable Laws ” means the legal requirements relating to the administration of equity compensation plans under state and federal corporate and securities laws and the Code.

(c)   “ Award ” means, individually or collectively, a grant under the Plan of Options, Restricted Stock, Stock Appreciation Rights, Performance Shares, Performance Units or Deferred Stock Units.

(d)   “ Award Agreement ” means the written agreement setting forth the terms and provisions applicable to each Award granted under the Plan.  The Award Agreement is subject to the terms and conditions of the Plan.

(e)   “ Awarded Stock ” means the Common Stock subject to an Award.

(f)   “ Board ” means the Board of Directors of the Company.

(g)    “ Change of Control ” means the occurrence of any of the following events, in one or a series of related transactions:

(1)   any “person,” as such term is used in Sections 13(d) and 14(d) of the Exchange Act, other than the Company, a subsidiary of the Company or a Company employee benefit plan, including any trustee of such plan acting as trustee, is or becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company representing

(2)   fifty percent (50%) or more of the combined voting power of the Company’s then outstanding securities entitled to vote generally in the election of directors; or

(3)   a merger or consolidation of the Company or any direct or indirect subsidiary of the Company with any other corporation, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity) at least fifty percent (50%) of the total voting power represented by the voting securities of the Company or such surviving entity outstanding immediately after such merger or consolidation; or

(4)   the sale or disposition by the Company of all or substantially all of the Company’s assets; or

(5)   a change in the composition of the Board, as a result of which fewer than a majority of the directors are Incumbent Directors.  “Incumbent Directors” shall mean directors who either (A) are Directors as of the date this Plan is approved by the Board, or (B) are elected, or nominated for election, to the Board with the affirmative votes of at least a majority of the Incumbent Directors and whose election or nomination was not in connection with any transaction described in (1) or (2) above or in connection with an actual or threatened proxy contest relating to the election of directors of the Company.

(h)   “ Code ” means the Internal Revenue Code of 1986, as amended.

(i)   “ Committee ” means a committee appointed by the Board in accordance with Section 4 of the Plan.

(j)   “ Common Stock ” means the common stock of the Company.

(k)   “ Company ” means Microchip Technology Incorporated.

(l)   “ Consultant ” means any person, including an advisor, engaged by the Company or a Parent or Subsidiary to render services and who is compensated for such services.  The term Consultant shall not include Directors who are compensated by the Company only for their service as Directors.

(m)   “ Deferred Stock Unit ” means a deferred stock unit Award granted to a Participant pursuant to Section 13.

(n)   “ Director ” means a member of the Board.

(o)   “ Disability ” means total and permanent disability as defined in Section 22(e)(3) of the Code.

(p)   “ Employee ” means any person, including Officers and Directors, employed by the Company or any Parent or Subsidiary of the Company.  A Service Provider shall not cease to be an Employee in the case of (i) any leave of absence approved by the Company or (ii) transfers between locations of the Company or between the Company, its Parent, any Subsidiary, or any successor.  Neither service as a Director nor payment of a director’s fee by the Company shall be sufficient to constitute “employment” by the Company.

(q)   “ Exchange Act ” means the Securities Exchange Act of 1934, as amended.

(r)   “ Fair Market Value ” means, as of any date, the value of Common Stock determined as follows:

(1)   If the Common Stock is listed on any established stock exchange or a national market system, including without limitation the Nasdaq National Market of the National Association of Securities Dealers, Inc. Automated Quotation (“Nasdaq”) System, the Fair Market Value of a Share of Common Stock shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on such system or exchange (or the exchange with the greatest volume of trading in Common Stock) on the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable;

(2)   If the Common Stock is quoted on the Nasdaq System (but not on the Nasdaq National Market thereof) or is regularly quoted by a recognized securities dealer but selling prices are not reported, the Fair Market Value of a Share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the last market trading day prior to the day of determination, as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or

(3)   In the absence of an established market for the Common Stock, the Fair Market Value shall be determined in good faith by the Administrator.

(s)   “ Fiscal Year ” means a fiscal year of the Company.

(t)   “ Fiscal Quarter ” means a fiscal quarter of the Company.

(u)   “ Non-Employee Director ” means a member of the Board who is not an Employee.

(v)   “ Nonstatutory Stock Option ” means an Option not intended to qualify as an incentive stock option under Section 422 of the Code and regulations promulgated thereunder.

(w)   “ Notice of Grant ” means a written or electronic notice evidencing certain terms and conditions of an individual Award.  The Notice of Grant is part of the Option Agreement.

(x)   “ Officer ” means a person who is an officer of the Company within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.

(y)   “ Option ” means a stock option granted pursuant to the Plan.

(z)   “ Option Agreement ” means a written or electronic agreement between the Company and a Participant evidencing the terms and conditions of an individual Option grant.  The Option Agreement is subject to the terms and conditions of the Plan.

(aa)   “ Parent ” means a “parent corporation,” whether now or hereafter existing, as defined in Section 424(e) of the Code.

(bb)   “ Participant ” means the holder of an outstanding Award granted under the Plan.

(cc)   “ Performance Goals ” means the goal(s) (or combined goal(s)) determined by the Administrator (in its discretion) to be applicable to a Participant with respect to an Award.  As determined by the Administrator, the performance measures for any performance period will be any one or more of the following objective performance criteria, applied to either the Company as a whole or, except with respect to stockholder return metrics, to a region, business unit, affiliate or business segment or specific product or products, and measured either on an absolute basis or relative to a pre-established target, to a previous period's results or to a designated comparison group, and, with respect to financial metrics, which may be determined in accordance with United States Generally Accepted Accounting Principles ("GAAP"), in accordance with

(dd)   “ Performance Share ” means a performance share Award granted to a Participant pursuant to Section 11.

(ee)   “ Performance Unit ” means a performance unit Award granted to a Participant pursuant to Section 12.

(ff)   “ Plan ” means this 2004 Equity Incentive Plan.

(gg)   “ Restricted Stock ” means Shares granted pursuant to Section 10 of the Plan.

(hh)    “ Rule 16b-3 ” means Rule 16b-3 of the Exchange Act or any successor to Rule 16b-3, as in effect when discretion is being exercised with respect to the Plan.

(ii)   “ Section 16(b) ” means Section 16(b) of the Exchange Act, as amended.

(jj)   “ Service Provider ” means an Employee, Consultant or Non-Employee Director.

(kk)   “ Share ” means a share of the Common Stock, as adjusted in accordance with Section 19 of the Plan.

(ll)   “ Stock Appreciation Right ” or “ SAR ” means an Award granted pursuant to Section 9 of the Plan.

(mm)   “ Subsidiary ” means a “subsidiary corporation,” whether now or hereafter existing, as defined in Section 424(f) of the Code.

3.   Stock Subject to the Plan .  Subject to the provisions of Section 19 of the Plan, the maximum aggregate number of Shares which may be issued under the Plan is 20,400,000   Shares comprised of (i) any Shares remaining available for issuance pursuant to the Company’s 1993 Stock Option Plan as of the date upon

4.   Administration of the Plan .

(a)   Procedure .

(1)   Multiple Administrative Bodies .  The Plan may be administered by different Committees with respect to different groups of Service Providers.

(2)   Section 162(m) .  To the extent that the Administrator determines it to be desirable to qualify Options granted hereunder as “performance-based compensation” within the meaning of Section 162(m) of the Code, the Plan shall be administered by a Committee of two or more “outside directors” within the meaning of Section 162(m) of the Code.

(3)   Rule 16b-3 .  To the extent desirable to qualify transactions hereunder as exempt under Rule 16b-3, the transactions contemplated hereunder shall be structured to satisfy the requirements for exemption under Rule 16b-3.

(4)   Other Administration .  Other than as provided above, the Plan shall be administered by (A) the Board or (B) a Committee, which committee shall be constituted to satisfy Applicable Laws.

(b)   Powers of the Administrator .  Subject to the provisions of the Plan, and in the case of a Committee, subject to the specific duties delegated by the Board to such Committee, the Administrator shall have the authority, in its discretion:

(1)   to determine the Fair Market Value of the Common Stock, in accordance with Section 2(u) of the Plan;

(2)   to select the Service Providers to whom Awards may be granted hereunder (other than the automatic grants to Non-Employee Directors provided for in Section 17 of the Plan);

(3)   to determine whether and to what extent Awards or any combination thereof, are granted under the Plan;

(4)   to determine the number of shares of Common Stock or equivalent units to be covered by each Award granted under the Plan;

(5)   to approve forms of agreement for use under the Plan;

(6)   to determine the terms and conditions, not inconsistent with the terms of the Plan, of any award granted under the Plan.  Such terms and conditions include, but are not limited to, the exercise price, the time or times when Options or SARs may be exercised or other Awards vest (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any Award or the shares of Common Stock relating thereto, based in each case on such factors as the Administrator, in its sole discretion, shall determine;

(7)   to construe and interpret the terms of the Plan and Awards;

(8)   to prescribe, amend and rescind rules and regulations relating to the Plan, including rules and regulations relating to sub-plans established for the purpose of qualifying for preferred tax treatment under foreign tax laws;

(9)   to modify or amend each Award (subject to Section 21(c) of the Plan), including the discretionary authority to extend the post-termination exercisability period of Options and SARs longer than is otherwise provided for in the Plan;

(10)   to authorize any person to execute on behalf of the Company any instrument required to effect the grant of an Award previously granted by the Administrator;

(11)   to allow Participants to satisfy withholding tax obligations by electing to have the Company withhold from the Shares or cash to be issued upon exercise or vesting of an Award (or distribution of a Deferred Stock Unit) that number of Shares or cash having a Fair Market Value equal to the minimum amount required to be withheld (but no more).  The Fair Market Value of any Shares to be withheld shall be determined on the date that the amount of tax to be withheld is to be determined.  All elections by a Participant to have Shares or cash withheld for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

(12)   to determine the terms and restrictions applicable to Awards; and

(13)   to make all other determinations deemed necessary or advisable for administering the Plan.

(c)   Effect of Administrator’s Decision .  The Administrator’s decisions, determinations and interpretations shall be final and binding on all Participants and any other holders of Awards.

5.   Eligibility .  Restricted Stock, Performance Shares, Performance Units, Stock Appreciation Rights, Deferred Stock Units and Nonstatutory Stock Options may be granted to Service Providers.  Non-Employee Directors shall only receive Awards pursuant to Section 17 of the Plan.

6.   Limitations .

(a)   Nonstatutory Stock Option .  Each Option shall be designated in the Notice of Grant as a Nonstatutory Stock Option.

(b)   No Employment Rights .  Neither the Plan nor any Award shall confer upon a Participant any right with respect to continuing the Participant’s employment with the Company or its Subsidiaries, nor shall they interfere in any way with the Participant’s right or the Company’s or Subsidiary’s right, as the case may be, to terminate such employment at any time, with or without cause or notice.

(c)   162(m) Limitations .  The following limitations shall apply to grants of Options and Stock Appreciation Rights to Participants:

(1)   No Participant shall be granted, in any Fiscal Year, Options and Stock Appreciation Rights to purchase more than 1,500,000   Shares; provided, however, that such limit shall be 4,000,000 Shares in the Participant’s first Fiscal Year of Company service.

(2)   The foregoing limitations shall be adjusted proportionately in connection with any change in the Company’s capitalization as described in Section 19(a).

7.   Term of Plan .  The Plan is effective as of October 1, 2004 (the “Effective Date”).  It shall continue in effect until September 30, 2014, unless sooner terminated under Section 21 of the Plan.

8.   Stock Options .

(a)   Term .  The term of each Option shall be stated in the Notice of Grant; provided, however, that the term shall be ten (10) years from the date of grant or such shorter term as may be provided in the Notice of Grant.

(b)   Option Exercise Price .  The per share exercise price for the Shares to be issued pursuant to exercise of an Option shall be determined by the Administrator and shall be no less than 100% of the Fair Market Value per share on the date of grant.

(c)   No Repricing .  The exercise price for an Option may not be reduced.  This shall include, without limitation, a repricing of the Option as well as an Option exchange program whereby the Participant agrees to cancel an existing Option in exchange for an Option, SAR or other Award.

(d)   Waiting Period and Exercise Dates .  At the time an Option is granted, the Administrator shall fix the period within which the Option may be exercised and shall determine any conditions which must be satisfied before the Option may be exercised.  In so doing, the Administrator may specify that an Option may not be exercised until the completion of a service period.

(e)   Form of Consideration .  The Administrator shall determine the acceptable form of consideration for exercising an Option, including the method of payment.  Subject to Applicable Laws, such consideration may consist entirely of:

(1)   cash;

(2)   check;

(3)   other Shares which (A) in the case of Shares acquired upon exercise of an option have been owned by the Participant for more than six months on the date of surrender, and (B) have a Fair Market Value on the date of surrender equal to the aggregate exercise price of the Shares as to which said Option shall be exercised;

(4)   delivery of a properly executed exercise notice together with such other documentation as the Administrator and the broker, if applicable, shall require to effect an exercise of the Option and delivery to the Company of the sale proceeds required to pay the exercise price;

(5)   any combination of the foregoing methods of payment; or

(6)   such other consideration and method of payment for the issuance of Shares to the extent permitted by Applicable Laws.

(f)   Exercise of Option .