Microchip to shut down its Arizona wafer fab
Microchip Technology lowers its revenue guidance and unveils manufacturing restructuring plans.
"In the first two weeks of my newly appointed role as Interim CEO and President, I have done a deep dive into the operations of the Company and determined that certain actions are necessary," said Steve Sanghi, Microchip's CEO, President and Chair of the Board, in a press release.
Mr Sanghi continues to say that, as the company indicated during its earnings call in early November, significant turn orders were required to achieve the midpoint of the company's December 2024 quarter revenue guidance. These turn orders have been slower than anticipated, and Microchip now expects its December 2024 revenue to be close to the low end of the original guidance – which is USD 1.025 billion.
"With inventory levels high and having ample capacity in place, we have decided to shut down our Tempe wafer fabrication facility that we refer to as Fab 2. Many of the process technologies that run in Fab 2 also run in our Oregon and Colorado factories, which both have ample clean room space for expansion," Mr. Sanghi continues in the press release.
Microchip plans to shut down Fab 2 by September 2025, aiming to save around USD 90 million annually. The closure is expected to start reducing inventory levels by March 2025. However, the restructuring will cost USD 3–8 million in the short term.
"The fab restructuring is a big step in right-sizing our manufacturing footprint, and we will continue to evaluate any further actions that are required to position Microchip for outsized growth and financial performance," Mr. Sanghi concluded.
