Microchip Technology To Layoff 2,000 Employees Amid Restructuring

Microchip Technology Layoffs: The company anticipates restructuring costs between $30 million and $40 million, covering cash severance and other related expenses

The layoffs will be announced to employees this month and are expected to be fully carried out by the end of the June quarter

Source : ABPLIVE AI

Microchip Technology announced on Monday that it will reduce its workforce by approximately 2,000 jobs, or about 9 per cent, as part of a business restructuring aimed at addressing declining demand from automakers, according to a Reuters report.

The Chandler, Arizona-based chipmaker has been facing weak demand from automotive clients, who are struggling to deplete existing chip inventories. This has contributed to a more than 36 per cent drop in Microchip's shares last year, states the report.

The report further reveals that the layoffs will primarily impact the company's chip manufacturing facilities, or "fabs," in Gresham, Oregon, and Colorado Springs, Colorado, as well as its backend manufacturing facility in the Philippines. The company anticipates restructuring costs between $30 million and $40 million, covering cash severance and other related expenses.

The layoffs will be announced to employees this month and are expected to be fully carried out by the end of the June quarter.

Reducing Operating Expenses

The company will also close its Arizona chip manufacturing facilities in May, several months ahead of the previously expected timeline. These moves are anticipated to lower the company’s ongoing operating expenses by approximately $90 million to $100 million annually, as per the report.

Along with the $90 million in annual cash savings from the Arizona fab closure, which was announced in December, the additional layoffs at various facilities will further reduce employment-related costs in its factories by an additional $25 million.

Last month, the company projected fourth-quarter net sales and profits to fall short of Wall Street’s expectations, marking its fifth consecutive quarter of declining revenue.

Microchip also anticipates around $45 million in charges due to the cancellation or modification of long-term supply agreements with wafer foundries. Additionally, the company stated it will be reducing headcount across various business units and support groups but did not provide specific details on the segments affected by the layoffs, claims the report.