Microchip Technology, a leading semiconductor manufacturer based in Chandler, Arizona, announced plans to lay off approximately 2,000 employees, representing about 9% of its global workforce. This decision comes in response to weakening demand from the automotive sector and aims to streamline operations and reduce expenses.
The workforce reductions will primarily affect the company’s semiconductor fabrication plants, known as “fabs,” located in Gresham, Oregon (Fab 4), and Colorado Springs, Colorado (Fab 5). Additionally, layoffs will be implemented at Microchip’s backend manufacturing facility in the Philippines. The company employs approximately 850 individuals at its Gresham facility.
In a presentation to investment analysts, CEO Steve Sanghi stated that Microchip is “doing a slightly smaller layoff” at the Gresham facility while maintaining rotating, two-week time-off periods for workers for two more quarters. “This will allow us to ramp the fab back rapidly as needed by removing the [rotating time off],” Sanghi said.
The layoffs are expected to be completed by June 2025. Microchip anticipates that these actions will result in annual savings of approximately $90 million to $100 million. The company expects to incur restructuring costs between $30 million and $40 million, primarily consisting of cash severance payments and related expenses.
In addition to the layoffs, Microchip is accelerating the planned shutdown of its wafer fabrication facility in Tempe, Arizona (Fab 2), bringing the closure forward to May 2025, several months earlier than initially scheduled. The company has made the Fab 2 facility and equipment available for sale.
These measures come amid a broader downturn in Oregon’s semiconductor industry, which has faced challenges such as layoffs, declining sales, and missed opportunities for federal investment. Despite these setbacks, there are positive developments, including HP’s $53 million investment in its Corvallis facilities, creating new jobs.
Microchip’s restructuring efforts reflect the company’s response to changing market conditions and its commitment to maintaining operational efficiency in a challenging economic environment.