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Microchip closes Arizona fab, impacting 500 employees

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December 5, 2024

December 5, 2024 /SemiMedia/ — Microchip Technology Inc. recently announced that it has revised its third-quarter revenue forecast downward and plans to shut down its Fab 2 facility in Tempe, Arizona, by the September quarter of 2025, affecting approximately 500 employees.

Microchip has faced slowing automotive chip orders as automakers reduce excess inventory accumulated during previous supply shortages amid economic uncertainty. The company adjusted its December quarter revenue outlook to approximately $1.03 billion, near the low end of its earlier forecast.

The Tempe Fab 2 facility, an 8-inch (200mm) wafer fab, has a monthly capacity of 20,000 wafers and supports processes ranging from 1μm to 250nm. Microchip also operates Fab 4 in Gresham, Oregon, Fab 5 in Colorado Springs, Colorado, and a small fab in Lawrence, Massachusetts.

In addition to operational adjustments, Microchip recently announced leadership changes. Former CEO and President Ganesh Moorthy retired on November 18 at age 65, with board chairman Steve Sanghi stepping in as interim CEO and President.

Sanghi explained that the Tempe facility closure reflects high inventory levels and sufficient capacity at other facilities, which can expand as needed. He noted that Microchip is grappling with a significant sales downturn, with annual revenue expected to drop by 40%.

In a statement, Sanghi added, “While my title is interim, I will serve as long as necessary, and there is no defined timeline for my successor.”

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