Microcontroller manufacturer Microchip Technology has announced it will be laying off around 2,000 employees as part of a cost-cutting and restructuring effort.
According to a report from Reuters, the job cuts will impact workers at its chip fabs in Gresham, Oregon; Colorado Springs, Colorado; and its backend manufacturing facility in the Philippines.
Employees will be informed of the job cuts this month, and the restructuring efforts are expected to be finalized by June.
Microchip will also cease operations at its Arizona chip fab in May, affecting around 500 employees. While the company had previously announced that decision in December 2024, its May closure is ahead of the initial timeline that had been outlined.
The Verdict reported that the Arizona facility and its equipment have already been listed for sale.
In an SEC filing, Microchip said it expects to incur restructuring costs between $30 million and $40m as a result of the job cuts. However, the company noted that it expects these measures will ultimately save it approximately $90m to $100m on an annualized basis.
The company also expects to incur an additional $45m in charges related to the cancellation or modification of long-term supply agreements with foundries.
Microchip has suffered five successive quarters of revenue decline. Following a slowdown in sales during Q3 of 2023, at the start of 2024 the company announced it would be furloughing employees at its Gresham, Oregon plant for two weeks in March, with a further two-week temporary shutdown slated for June.
Ten days prior to announcing its plan to furlough staff, the company signed a preliminary agreement with the US government to receive $162m in CHIPS and Science Act funding. At the time, Microchip said $72m of the total funding package had been earmarked to expand the company’s site in Gresham, with the other $90m to be spent modernizing and expanding its Colorado Springs facility.
In December 2024, Bloomberg reported that Microchip had paused its CHIPS Act funding application.
“I have put the negotiations with the Chips office on hold for now,” CEO Steve Sanghi said during a UBS conference that same month, adding: “The grant was applied to maybe almost a year ago, when everybody thought that the factory capacity was never enough, and the world was gonna build silicon fabs forever. Today, we have too much capacity.”
