Microchip Technology Inc., a manufacturer of semiconductor chips for automotive and consumer electronics, announced the closure of its facility in Tempe, Arizona, which will affect around 500 employees. The decision comes amid slower-than-expected orders, leading the company to lower its revenue forecast for the December quarter to near the low end of its previous estimate of approximately $1.03 billion.
Steve Sanghi, the board chairman who has stepped in as interim CEO, explained that the Tempe plant shutdown is planned for the September 2025 quarter. He noted that high inventory levels and sufficient capacity at other facilities made the closure feasible, while emphasizing that expansions at existing sites could meet future demands.
Microchip, headquartered in Chandler, Arizona, is currently facing significant challenges, with revenue projections indicating a decline of around 40% for the year. Sanghi, who had previously held the CEO position, returned to lead the company last month, taking over from Ganesh Moorthy.
In his statement, he clarified his commitment to the role of interim CEO, assuring investors that he would remain in the position for as long as necessary without a set timeline for his successor. The shutdown of the Tempe plant reflects the ongoing struggles within the semiconductor industry, as companies adjust to shifting market conditions and demand dynamics.
As the company navigates these difficulties, it will be crucial to manage the impact on employees and the surrounding community while seeking to stabilize operations in other facilities. This strategic move is part of Microchip's broader effort to align its manufacturing capacity with the current economic landscape. As the semiconductor market continues to evolve, Microchip's leadership will need to demonstrate agility and foresight to adapt to ongoing challenges.
