March 4, 2025 – Microchip Technology, a leading semiconductor company based in Chandler, Arizona, announced on Monday its plans to lay off approximately 2,000 employees, representing 9% of its total workforce. The move, part of a broader business restructuring initiative, comes in response to sluggish demand from automotive manufacturers, who have been facing a buildup of chip inventories.
The layoffs, which are expected to generate related expenses of between 30millionand40 million, including cash severance payments and restructuring costs, will primarily affect the company’s chip manufacturing facilities, known as fabs, located in Gresham, Oregon, and Colorado Springs, Colorado. Additionally, Microchip Technology revealed plans to reduce its workforce at a backend manufacturing site in the Philippines.
According to the company, the layoffs will be communicated to employees this month and are anticipated to be completed by the end of June. Furthermore, Microchip Technology intends to shut down its Arizona-based chip manufacturing plant in May, several months ahead of previous projections. These measures, the company predicts, will result in a reduction of annual operating costs by approximately 90millionto100 million.
Beyond the cash savings of roughly 90millionassociatedwiththeclosureoftheArizonafabannouncedlastDecember,thelayoffsareexpectedtofurtherloweremployee−relatedcostsatthecompany’sfactoriesbyabout25 million. Microchip Technology had previously forecasted that its fourth-quarter net sales and profits would miss Wall Street expectations, with the company’s revenue declining for five consecutive quarters. Additionally, the company anticipates incurring expenses of approximately $45 million due to the cancellation or modification of long-term supply agreements with foundry partners.
While Microchip Technology confirmed that it is trimming its workforce across various business units and support teams, it did not disclose the specific departments involved. The announcement comes as the semiconductor industry continues to navigate challenges posed by shifting market demands and global economic conditions.
