Microchip Technology To Cut Workforce By 2,000 Employees: Details

Shares of semiconductor company Microchip Technology Incorporated MCHP are trading nearly flat on Monday.

The company is planning additional restructuring efforts designed to lower operational expenses and streamline its manufacturing operations.

Previously, it had shared plans to close its wafer fabrication facility in Tempe, Arizona (Fab 2), with the shutdown now anticipated in May 2025, several months earlier than originally planned.

Also, the company’s Fab 2 facility and equipment are available for sale.

As part of these initiatives, Microchip Technology will also be cutting its workforce at various locations, including Fab 4 in Gresham, Oregon, Fab 5 in Colorado Springs, Colorado, and its backend manufacturing facility in the Philippines.

Approximately 2,000 employees will be affected, with the company estimating restructuring and severance costs between $30 million and $40 million.

In addition to the $90 million in annual cash savings that Microchip revealed in December 2024, related to its closure of Fab 2, the additional actions in Fab 4 and Fab 5 will reduce the company’s employment-related costs in its factories by approximately an additional $25 million.

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These changes are expected to be finalized by the end of June 2025. The restructuring is aimed at enhancing operational efficiency, with expected annual savings of $90 million to $100 million once fully implemented.

Along with the workforce reduction, Microchip anticipates incurring approximately $45 million in additional costs related to the cancellation or modification of long-term supply contracts with wafer foundries.

These adjustments are being made in response to changes in the company’s future wafer sourcing strategy.

Although these estimates reflect current expectations, Microchip has noted that the actual costs may differ as more information becomes available.

In the recently reported third-quarter results, Microchip’s earnings of 20 cents per share and revenue of $1.02 billion missed the consensus estimates.

Price Action: MCHP stock is up 0.59% at $59.21 at last check Monday.

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