Microchip to cut 2,000 jobs in manufacturing footprint restructure
Microchip Technology has unveiled a significant restructuring plan aimed at streamlining costs and optimizing its manufacturing operations. This initiative expands on the company’s earlier decision to shut down its Fab 2 wafer fabrication facility in Tempe, Arizona, ahead of schedule.
“Our manufacturing footprint is too large for the size of our business, resulting in significant underutilization charges every quarter. So, we are rightsizing our manufacturing facilities and closing one of the fabs, called Fab 2,” Microchip's CEO and President Steve Sanghi said during a Business Update Call on March 3, 2025.
It was back in early December last year that Microchip announced the planned closure of Fab 2. The company now expects to complete the shutdown by May 2025, months ahead of its original timeline. The Fab 2 facility and its equipment are also going up for sale.
Beyond the Fab 2 closure, Microchip is implementing workforce reductions across several locations, including Fab 4 in Gresham, Oregon, Fab 5 in Colorado Springs, Colorado, and its backend manufacturing facility in the Philippines. Additionally, the company is cutting jobs in various business units and support departments.
The restructuring will affect approximately 2,000 employees, with estimated costs ranging between USD 30 million and USD 40 million to cover severance payments and related expenses. Microchip anticipates completing these workforce reductions by the end of the June 2025 quarter, according to an SEC filing.
Once fully executed, the company expects these measures to lower its annual operating expenses by approximately USD 90 million to USD 100 million.
With these restructuring initiatives, Microchip is looking to enhance operational efficiency as it adapts to evolving market conditions.
